Wall Street, Banks, and American Foreign Policy

first appeared in World Market Perspective (1984) and
later as a monograph published by the Center for libertarian
Studies (1995). Afterword By Justin Raimondo.

or manufacturers can either be genuine free enterprisers or
statists; they can either make their way on the free market
or seek special government favors and privileges. They choose
according to their individual preferences and values. But bankers
are inherently inclined toward statism.

bankers, engaged as they are in unsound fractional reserve
credit, are, in the free market, always teetering on the edge
of bankruptcy. Hence they are always reaching for government
aid and bailout.

bankers do much of their business underwriting government
bonds, in the United States and abroad. Therefore, they have
a vested interest in promoting deficits and in forcing taxpayers
to redeem government debt. Both sets of bankers, then, tend
to be tied in with government policy, and try to influence and
control government actions in domestic and foreign affairs.

the early years of the 19th century, the organized capital market
in the United States was largely confined to government bonds
(then called “stocks”), along with canal companies and banks
themselves. Whatever investment banking existed was therefore
concentrated in government debt. From the Civil War until the
1890s, there were virtually no manufacturing corporations; manufacturing
and other businesses were partnerships and had not yet reached
the size where they needed to adopt the corporate form. The
only exception was railroads, the biggest industry in the U.S.
The first investment banks, therefore, were concentrated in
railroad securities and government bonds.

first major investment-banking house in the United States was
a creature of government privilege. Jay Cooke, an Ohio-born
business promoter living in Philadelphia, and his brother Henry,
editor of the leading Republican newspaper in Ohio, were close
friends of Ohio U.S. Senator Salmon P. Chase. When the new Lincoln
Administration took over in 1861, the Cookes lobbied hard to
secure Chase the appointment of Secretary of the Treasury. That
lobbying, plus the then enormous sum of $100,000 that Jay Cooke
poured into Chase’s political coffers, induced Chase to return
the favor by granting Cooke, newly set up as an investment banker,
an enormously lucrative monopoly in underwriting the entire
federal debt.

and Chase then managed to use the virtual Republican monopoly
in Congress during the war to transform the American commercial
banking system from a relatively free market to a National Banking
System centralized by the federal government under Wall Street
control. A crucial aspect of that system was that national banks
could only expand credit in proportion to the federal bonds
they owned – bonds which they were forced to buy from Jay

Cooke & Co. proved enormously influential in the post-war
Republican administrations, which continued their monopoly in
under-writing government bonds. The House of Cooke met its well-deserved
fate by going bankrupt in the Panic of 1874, a failure helped
along by its great rival, the then Philadelphia-based Drexel,
Morgan & Co.


1873, Drexel, Morgan and its dominant figure J.P. Morgan became
by far the leading investment firm in the U.S. If Cooke had
been a “Republican” bank, Morgan, while prudently
well connected in both parties, was chiefly influential among
the Democrats. The other great financial interest powerful in
the Democratic Party was the mighty European investment-banking
house of the Rothschilds, whose agent, August Belmont, was treasurer
of the national Democratic party for many years.

enormous influence of the Morgans on the Democratic administrations
of Grover Cleveland (1884–88, 1892–96) may be seen
by simply glancing at their leading personnel. Grover Cleveland
himself spent virtually all his life in the Morgan ambit. He
grew up in Buffalo as a railroad lawyer, one of his major clients
being the Morgan-dominated New York Central Railroad. In between
administrations, he became a partner of the powerful New York
City law firm of Bangs, Stetson, Tracey, and MacVeagh. This
firm, by the late 1880s, had become the chief legal firm of
the House of Morgan, largely because senior partner Charles
B. Tracey was J.P. Morgan’s brother-in-law. After Tracey died
in 1887, Francis Lynde Stetson, an old and close friend of Cleveland’s,
became the firm’s dominant partner, as well as the personal
attorney for J.P. Morgan. (This is now the Wall St. firm of
Davis, Polk, and Wardwell.)

Cleveland’s cabinets were honeycombed with Morgan men, with
an occasional bow to other bankers. Considering those officials
most concerned with foreign policy, his first Secretary of State,
Thomas F. Bayard, was a close ally and disciple of August Belmont;
indeed, Belmont’s son, Perry, had lived with and worked for
Bayard in Congress as his top aide. The dominant Secretary of
State in the second Cleveland Administration was the powerful
Richard Olney, a leading lawyer for Boston financial interests,
who have always been tied in with the Morgans, and in particular
was on the Board of the Morgan-run Boston and Maine Railroad,
and would later help Morgan organize the General Electric Company.

War and Navy departments under Cleveland were equally banker-dominated.
Boston Brahmin Secretary of War William C. Endicott had married
into the wealthy Peabody family. Endicott’s wife’s uncle, George
Peabody, had established a banking firm which included J.P.
Morgan’s father as a senior partner; and a Peabody had been
best man at J.P.’s wedding. Secretary of the Navy was leading
New York City financier William C. Whitney, a close friend and
top political advisor of Cleveland’s. Whitney was closely allied
with the Morgans in running the New York Central Railroad.

of War in the second Cleveland Administration was an old friend
and aide of Cleveland’s, Daniel S. Lamont, previously an employee
and protégé of William C. Whitney. Finally, the
second Secretary of the Navy was an Alabama Congressman, Hilary
A. Herbert, an attorney for and very close friend of Mayer Lehman,
a founding partner of the New York mercantile firm of Lehman
Brothers, soon to move heavily into investment banking. Indeed,
Mayer’s son, Herbert, later to be Governor of New York during
the New Deal, was named after Hilary Herbert.

great turning point of American foreign policy came in the early
1890s, during the second Cleveland Administration. It was then
that the U.S. turned sharply and permanently from a foreign
policy of peace and non-intervention to an aggressive program
of economic and political expansion abroad. At the heart of
the new policy were America’s leading bankers, eager to use
the country’s growing economic strength to subsidize and force-feed
export markets and investment outlets that they would finance,
as well as to guarantee Third World government bonds. The major
focus of aggressive expansion in the 1890s was Latin America,
and the principal Enemy to be dislodged was Great Britain, which
had dominated foreign investments in that vast region.

a notable series of articles in 1894, Bankers’ Magazine set
the agenda for the remainder of the decade. Its conclusion:
if “we could wrest the South American markets from Germany and
England and permanently hold them, this would be indeed a conquest
worth perhaps a heavy sacrifice.”

Morgan associate Richard Olney heeded the call, as Secretary
of State from 1895 to 1897, setting the U.S. on the road to
Empire. After leaving the State Department, he publicly summarized
the policy he had pursued. The old isolationism heralded by
George Washington’s Farewell Address is over, he thundered.
The time has now arrived, Olney declared, when “it behooves
us to accept the commanding position… among the Power of the
earth.” And, “the present crying need of our commercial interests,”
he added, “is more markets and larger markets” for American
products, especially in Latin America.

as their word, Cleveland and Olney proceeded belligerently to
use U.S. might to push Great Britain out of its markets and
footholds in Latin America. In 1894, the United States Navy
illegally used force to break the blockade of Rio de Janeiro
by a British-backed rebellion aiming to restore the Brazilian
monarchy. To insure that the rebellion was broken, the U.S.
Navy stationed war-ships in Rio harbor for several months.

the same period, the U.S. government faced a complicated situation
in Nicaragua, where it was planning to guarantee the bonds of
the American Maritime Canal Company, to build a canal across
the country. The new regime of General Zelaya was threatening
to revoke this canal concession; at the same time, an independent
reservation, of Mosquito Indians, protected for decades by Great
Britain, sat athwart the eastern end of the proposed canal.
In a series of deft maneuvers, using the Navy and landing the
Marines, the U.S. managed to bring Zelaya to heel and to oust
the British and take over the Mosquito territory.

Santo Domingo (now the Dominican Republic) France was the recipient
of the American big stick. In the Santo Domingo Improvement
Company, in 1893, a consortium of New York bankers purchased
the entire debt of Santo Domingo from a Dutch company, receiving
the right to collect all Dominican customs revenues in payment
of the debt. The French became edgy the following year when
a French citizen was murdered in that country, and the French
government threatened to use force to obtain reparations. Its
target for reparations was the Dominican customs revenue, at
which point the U.S. sent a warship to the area to intimidate
the French.

the most alarming crisis of this period took place in 1895–96,
when the U.S. was at a hair’s breadth from actual war with
Great Britain over a territorial dispute between Venezuela and
British Guiana. This boundary dispute had been raging for forty
years, but Venezuela shrewdly attracted American interest by
granting concessions to Americans in gold fields in the disputed

Cleveland had had enough of the “British threat,”
and he moved quickly toward war. His close friend Don Dickinson,
head of the Michigan Democratic Party, delivered a bellicose
speech in May 1895 as a surrogate for the President. Wars are
inevitable, Dickinson declared, for they arise out of commercial
competition between nations. The United States faces the danger
of numerous conflicts, and clearly the enemy was Great Britain.
After reviewing the history of the alleged British threat, Dickinson
thundered that “we need and must have open markets throughout
the world to maintain and increase our prosperity.”

July, Secretary of State Olney sent the British an insulting
and tub-thumping note, declaring that “the United States is
practically sovereign on this continent, and its fiat is law
upon the subjects to which it confines its interposition.” President
Cleveland, angry at the British rejection of the note, delivered
a virtual war message to Congress in December, but Britain,
newly occupied in problems with the Boers in South Africa, decided
to yield and agree to a compromise boundary settlement. Insultingly,
the Venezuelans received not a single seat on the agreed-upon
arbitration commission.

effect, the British, occupied elsewhere, had ceded dominance
to the United States in Latin America. It was time for the U.S.
to find more enemies to challenge.

next, and greatest, Latin American intervention was of course
in Cuba, where a Republican Administration entered the war goaded
by its jingo wing closely allied to the Morgan interests, led
by young Assistant Secretary of the Navy Theodore Roosevelt
and by his powerful Boston Brahmin mentor, Senator Henry Cabot
Lodge. But American intervention in Cuba had begun in the Cleveland-Olney

February 1895, a rebellion for Cuban independence broke
out against Spain. The original U.S. response was to try to
end the threat of revolutionary war to American property interests
by siding with Spanish rule modified by autonomy to the Cubans
to pacify their desires for independence. Here was the harbinger
of U.S. foreign policy ever since: to try to maneuver in Third
World countries to sponsor “third force” or “moderate” interests
which do not really exist. The great proponent of this policy
was the millionaire sugar grower in Cuba, Edwin F. Atkins, a
close friend of fellow-Bostonian Richard Olney, and a partner
of J.P. Morgan and Company.

the fall of 1895, Olney concluded that Spain could not
win, and that, in view of the “large and important commerce
between the two countries” and the “large amounts of American
capital” in Cuba, the U.S. should execute a 180-degree shift
and back the rebels, even unto recognizing Cuban independence.
The fact that such recognition would certainly lead to war with
Spain did not seem worth noting. The road to war with Spain
had begun, a road that would reach its logical conclusion three
years later.

backing the pro-war course was Edwin F. Atkins, and August Belmont,
on behalf of the Rothschild banking interests. The House’ of
Rothschild, which had been long-time financiers to Spain, refused
to extend any further credit to Spain, and instead under-wrote
Cuban Revolutionary bond issues, and even assumed full obligation
for the unsubscribed balance.

the conquest of Cuba in the Spanish-American War, the United
States also took the occasion to expand its power greatly in
Asia, seizing first the port of Manila and then all of the Philippines,
after which it spent several years crushing the revolutionary
forces of the Philippine independence movement.

Aggressive Asian Policy

late 1890s also saw a new turn in the United States’ attitude
toward the Far East. Expanding rapidly into the Pacific in pursuit
of economic and financial gain, the U.S. government saw that
Russia, Germany, and France had been carving up increasing territorial
and economic concessions in the near corpse of the Chinese imperial
dynasty. Coming late in the imperial game of Asia, and not willing
to risk large-scale expenditure of troops, the U.S., led by
Olney and continued by the Republicans, decided to link up with
Great Britain. The two countries would then use the Japanese
to provide the shock troops that would roll back Russia and
Germany and parcel out imperial benefits to both of her faraway
allies, in a division of spoils known euphemistically as the
“Open Door.” With Britain leaving the field free to the U.S.
in Latin America, the U.S. could afford to link arms in friendly
fashion with Britain in the Far East.

major impetus toward a more aggressive policy in Asia was provided
by the lure of railroad concessions. Lobbying heavily for railroad
concessions was the American China Development Company, organized
in 1895, and consisting of a consortium of the top financial
interests in the U.S., including James Stillman of the then
Rockefeller-controlled National City Bank; Charles Coster, railroad
expert of J.P. Morgan and Co.; Jacob Schiff, head of the New
York investment bank of Kuhn, Loeb and Co.; and Edward H. Harriman,
railroad magnate. Olney and the State Department pressed China
hard for concessions to the ACDC for a Peking-Hankow Railway
and for a railway across Manchuria, but in both cases the American
syndicate was blocked. Russia pressured China successfully to
grant that country the right to build a Manchurian railway;
and a Belgian syndicate, backed by France and Russia, won the
Peking-Hankow concession from China.

was time for sterner measures. The attorney for the ACDC set
up the Committee on American Interests in China, which soon
transformed itself into the American Asiatic Association, dedicated
to a more aggressive American policy on behalf of economic interests
in China. After helping the European powers suppress the nationalist
Boxer Rebellion in China in 1900, the U.S. also helped push
Russian troops out of Manchuria. Finally, in 1904, President
Theodore Roosevelt egged Japan on to attack Russia, and Japan
succeeded in driving Russia out of Manchuria and ending Russia’s
economic concessions. Roosevelt readily acceded to Japan’s resulting
dominance in Korea and Manchuria, hoping that Japan would also
protect American economic interests in the area.

Roosevelt had been a Morgan man from the beginning of his career.
His father and uncle were both Wall Street bankers, both of
them closely associated with various Morgan-dominated railroads.
Roosevelt’s first cousin and major financial adviser, W. Emlen
Roosevelt, was on the board of several New York banks, including
the Astor National Bank, the president of which was George F.
Baker, close friend and ally of J.P. Morgan and head of Morgan’s
flagship commercial bank, the First National Bank of New York.’
At Harvard, furthermore, young Theodore married Alice Lee, daughter
of George Cabot Lee, and related to the top Boston Brahmin families.
Kinsman Henry Cabot Lodge soon became T.R.’s long-time political

the 19th century, the Republicans had been mainly a high-tariff,
inflationist party, while the Democrats had been the party of
free trade and hard money, i.e., the gold standard. In 1896,
however, the radical inflationist forces headed by William Jennings
Bryan captured the Democratic presidential nomination, and so
the Morgans, previously dominant in the Democratic Party, sent
a message to the Republican nominee, William McKinley, through
Henry Cabot Lodge. Lodge stated that the Morgan interests would
back McKinley provided that the Republicans would support the
gold standard. The deal was struck.

McKinley reflected the dominance of the Republican Party by
the Rockefeller/Standard Oil interests. Standard Oil was originally
headquartered at Rockefeller’s home in Cleveland, and the oil
magnate had long had a commanding influence in Ohio Republican
politics. In the early 1890s, Marcus Hanna, industrialist and
high school chum of John D. Rockefeller, banded together with
Rockefeller and other financiers to save McKinley from bankruptcy,
and Hanna became McKinley’s top political adviser and chairman
of the Republican National Committee. As a consolation prize
to the Morgan interests for McKinley’s capture of the Republican
nomination, Morgan man Garret A. Hobart, director of various
Morgan companies, including the Liberty National Bank of New
York City, became Vice-President.

death of Hobart in 1899 left a “Morgan vacancy” in the Vice-Presidential
spot, as McKinley walked into the nomination. McKinley and Hanna
were both hostile to Roosevelt, considering him “erratic” and
a “Madman,” but after several Morgan men turned down the nomination,
and after the intensive lobbying of Morgan partner George W.
Perkins, Teddy Roosevelt at last received the Vice-Presidential
nomination. It is not surprising that virtually Teddy’s first
act after the election of 1900 was to throw a lavish dinner
in honor of J.P. Morgan.

Roosevelt and the “Lone Nut”

sudden appearance of one of the “lone nuts” so common in American
political history led to the assassination of McKinley, and
suddenly Morgan man Theodore Roosevelt was President. John Hay,
expansionist Secretary of State whom Roosevelt inherited from
McKinley, had the good fortune of having his daughter marry
the son of William C. Whitney of the great Morgan-connected
family. TR’s next Secretary of State and former Secretary of
War was his old friend Elihu Root, personal attorney for J.P.
Morgan. Root appointed as his Assistant Secretary a close friend
of TR’s, Robert Bacon, a Morgan partner, and in due course Bacon
became TR’s Secretary of State. TR’s first appointed Secretary
of the Navy was Paul Morton, vice-president of the Morgan-controlled
Atchison, Topeka and Santa Fe Railroad, and his Assistant Secretary
was Herbert L. Satterlee, who had the distinction of being J.P.
Morgan’s son-in-law.

Roosevelt’s greatest direct boost to the Morgan interests is
little known. It is well known that Roosevelt engineered a phony
revolution in Columbia in 1903, creating the new state of Panama
and handing the Canal Zone to the United States. What has not
been fully disclosed is who benefited from the $40 million that
the U.S. government paid, as part of the Panama settlement,
to the owners of the old bankrupt Panama Canal Company, a French
company which had previously been granted a Colombian concession
to dig a Panama canal.

Panama Canal Company’s lobbyist, Morgan-connected New York attorney
William Nelson Cromwell, literally sat in the White House directing
the “revolution” and organizing the final settlement. We now
know that, in 1900, the shares of the old French Panama Canal
Company were purchased by an American financial syndicate, headed
by J.P. Morgan & Co., and put together by Morgan’s top attorney,
Francis Lynde Stetson. The syndicate also included members of
the Rockefeller, Seligman, and Kuhn, Loeb financial groups,
as well as Perkins and Saterlee.

syndicate did well from the Panama revolution, purchasing the
shares at two-thirds of par and selling them, after the revolution,
for double the price. One member of the syndicate was especially
fortunate: Teddy Roosevelt’s brother-in-law, Douglas E. Robinson,
a director of Morgan’s Astor National Bank. For William Cromwell
was named the fiscal agent of the new Republic of Panama, and
Cromwell promptly put $6 million of the $10 million payoff the
U.S. made to the Panamanian revolutionaries into New York City
mortgages via the real estate firm of the same Douglas E. Robinson.

the turn of the century, a savage economic and political war
developed between the Morgan interests on the one hand, and
the allied Harriman-Kuhn, Loeb-Rockefeller interests on the
other. Harriman and Kuhn, Loeb grabbed control of the Union
Pacific Railroad and the two titanic forces battled to a draw
for control of the Northern Pacific. Also, at about the same
time, a long-lasting and world-wide financial and political
“oil war” broke out between Standard Oil, previously a monopolist
in both the crude and export markets outside of the U.S., and
the burgeoning British Royal Dutch Shell–Rothschild combine.

since the Morgans and Rothschilds were longtime allies, it is
certainly sensible to conclude – though there are no hard
facts to prove it – that Teddy Roosevelt launched his savage
anti-trust assault to break Standard Oil as a Morgan contribution
to the worldwide struggle. Furthermore, Mellon-owned Gulf Oil
was allied to the Shell combine, and this might well explain
the fact that former Morgan-and-Mellon lawyer Philander Knox,
TR’s Attorney-General, was happy to file the suit against Standard

successor, William Howard Taft, being an Ohio Republican, was
allied to the Rockefeller camp, and so he proceeded to take
vengeance on the Morgans by filing anti-trust suits to break
up the two leading Morgan trusts, International Harvester and
United States Steel. It was now all-out war, and so the Morgans
in 1912 deliberately created a new party, the Progressive Party,
headed by former Morgan partner, George W. Perkins. The successful
aim of the Progressive Party was to bring Theodore Roosevelt
out of retirement to run for President, in order to break Taft,
and to elect, for the first time in a generation, a Democratic
President. The new party was liquidated soon after.

of Roosevelt were studded with financiers in the Morgan ambit,
including Judge Elbert Gary, chairman of the board of U.S. Steel;
Medill McCormick of the International Harvester family, and
Willard Straight, Morgan’s partner. In the same year, Straight
and his heiress wife, Dorothy Whitney, founded the weekly magazine
of opinion, The New Republic, symbolizing the growing
alliance for war and statism between the Morgans and various
of the more moderate (i.e., non-Marxist) progressive and socialist

Wilson and War

Morgan-Progressive Party ploy deliberately insured the election
of Woodrow Wilson as a Democratic President. Wilson himself,
until almost the time of running for President, was for several
years on the board of the Morgan-controlled Mutual Life Insurance
Company. He was also surrounded by Morgan men. His son-in-law,
William Gibbs McAdoo, who became Wilson’s Secretary of the Treasury,
was a failing businessman in New York City when he was bailed
out and befriended by J.P. Morgan and his associates. The Morgans
then set McAdoo up as president of New York’s Hudson and Manhattan
Railroad until his appointment in the Wilson Administration.
McAdoo was to spend the rest of his financial and political
life securely in the Morgan ambit.

main sponsor of Wilson’s run for the Presidency was George W.
Harvey, head of Morgan-controlled Harper & Brothers publishers;
other major backers included Wall Street financier and Morgan
associate Thomas Fortune Ryan, and Wilson’s college classmate
and Morgan ally, Cyrus H. McCormick, head of International Harvester.

close friend and leading political adviser of Wilson was New
York City banker George Foster Peabody, son of the Boston Brahmin
and a Morgan banker. A particularly fascinating figure in Wilson’s
fateful foreign policy was “Colonel” Edward Mandell House, of
the wealthy House family of Texas, which was deeply involved
in landowning, trade, banking, and railroads. House himself
was head for several years of the Trinity and Brazos Valley
Railway, financed by the House family in collaboration with
Morgan-associated Boston financial interests, particularly of
the Old Colony Trust Company. The mysterious House, though never
graced with an official government post, is generally acknowledged
to have been Wilson’s all-powerful foreign policy adviser and
aide for virtually his entire two terms.

1914, the Morgan empire was in increasingly shaky financial
shape. The Morgans had long been committed to railroads, and
after the turn of the century the highly subsidized and regulated
railroads entered their permanent decline. The Morgans had also
not been active enough in the new capital market for industrial
securities, which had begun in the 1890s, allowing Kuhn-Loeb
to beat them in the race for industrial finance. To make matters
worse, the $400 million Morgan-run New Haven Railroad went bankrupt
in 1914.

the moment of great financial danger for the Morgans, the advent
of World War I came as a godsend. Long connected to British,
including Rothschild, financial interests, the Morgans leaped
into the fray, quickly securing the appointment, for J.P. Morgan
& Co., of fiscal agent for the warring British and French
governments, and monopoly underwriter for their war bonds in
the United States. J.P. Morgan also became the fiscal agent
for the Bank of England, the powerful English central bank.
Not only that: the Morgans were heavily involved in financing
American munitions and other firms exporting war material to
Britain and France. J.P. Morgan & Co., moreover, became
the central authority organizing and channeling war purchases
for the two Allied nations.

United States had been in a sharp recession during 1913 and
1914; unemployment was high, and many factories were operating
at only 60% of capacity. In November 1914, Andrew Carnegie,
closely allied with the Morgans ever since his Carnegie Steel
Corporation had merged into the formation of United States Steel,
wrote to President Wilson lamenting business conditions but
happily expecting a great change for the better from Allied
purchases of U.S. exports.

enough, war material exports zoomed. Iron and steel exports
quintupled from 1914 to 1917, and the average profit rate of
iron and steel firms rose from 7.4% to 28.7% from 1915 until
1917. Explosives exports to the Allies rose over ten-fold during
1915 alone. Overall, from 1915 to 1917, the export department
of J.P. Morgan and Co. negotiated more than $3 billion of contracts
to Britain and France. By early 1915, Secretary McAdoo was writing
to Wilson hailing the “great prosperity” being brought by war
exports to the Allies, and a prominent business writer wrote
the following year that “War, for Europe, is meaning devastation
and death; for America a bumper crop of new millionaires and
a hectic hastening of prosperity revival.”

in Allied bonds and export of munitions, the Morgans were doing
extraordinarily well; and their great rivals, Kuhn-Loeb, being
pro-German, were necessarily left out of the Allied wartime
bonanza. But there was one hitch: it became imperative that
the Allies win the war. It is not surprising, therefore, that
from the beginning of the great conflict, J.P. Morgan and his
associates did everything they possibly could to push the supposedly
neutral United States into the war on the side of England and
France. As Morgan himself put it: “We agreed that we should
do all that was lawfully in our power to help the Allies win
the war as soon as possible.”

Henry P. Davison, Morgan partner, set up the Aerial Coast Patrol
in 1915, to get the public in the mood to search the
skies for German planes. Bernard M. Baruch, long-time associate
of the extremely wealthy copper magnates, the Guggenheim family,
financed the Businessmen’s Training Camp, at Plattsburgh, New
York, designed to push for universal military training and preparations
for war. Also participating in financing the camp were Morgan
partner Willard Straight, and former Morgan partner Robert Bacon.
In addition to J.P. Morgan himself, a raft of Morgan-affiliated
political leaders whooped it up for immediate entry of the U.S.
into the war on the side of the Allies: including Henry Cabot
Lodge, Elihu Root, and Theodore Roosevelt.

addition, the National Security League was founded in December,
1914, to call for American entry into the war against Germany.
The NSL issued warnings against a German invasion of the U.S.,
once England was defeated, and it called all advocates of peace
and non-intervention, “pro-German,” “dangerous aliens,” “traitors,”
and “spies.”

NSL also advocated universal military training, conscription,
and the U.S. buildup of the largest navy in the world. Prominent
in the organization of the National Security League were Frederic
R. Coudert, Wall Street attorney for the British, French, and
Russian governments; Simon and Daniel Guggenheim; T. Coleman
DuPont, of the munitions, family; and a host of prominent Morgan-oriented
financiers; including former Morgan partner Robert Bacon; Henry
Clay Prick of Carnegie Steel; Judge Gary of U.S. Steel; George
W. Perkins, Morgan partner, who has been termed “the secretary
of state” for the Morgan interests; former President Theodore
Roosevelt; and J.P. Morgan himself.

particularly interesting founding associate of NSL was a man
who has dominated American foreign policy during the 20th century:
Henry L. Stimson, Secretary of War under William H. Taft and
Franklin D. Roosevelt, and Secretary of State under Herbert
Hoover. Stimson, a Wall Street lawyer in the Morgan ambit, was
a protégé of Morgan’s personal attorney Elihu
Root, and two of his cousins were partners in the Morgan-dominated
Wall Street utility stock market and banking firm of Bonbright
& Co.

the Morgans and other financial interests were beating the drums
for war, even more influential in pushing the only partially
reluctant Wilson into the war were his foreign policy Svengali,
Colonel House, and House’s protégé, Walter Hines
Page, who was appointed Ambassador to Great Britain. Page’s
salary in this prestigious influential post was handsomely subsidized
through Colonel House by copper magnate Cleveland H. Dodge,
a prominent adviser to Wilson, who benefited greatly from munitions
sales to the Allies.

House liked to pose as an abject instrument of President Wilson’s
wishes. But before and after U.S. entry into the war, House
shamelessly manipulated Wilson, in secret and traitorous collaboration
with the British, to push the President first into entering
the war and then into following British wishes instead of setting
an independent American course.

in 1916, House wrote to his friend Frank L. Polk, Counselor
to the State Department and later counselor to J.P. Morgan,
that “the President must be guided” not to be independent of
British desires. Advising British Prime Minister Arthur Balfour
on how best to handle Wilson, House counselled Balfour to exaggerate
British difficulties in order to get more American aid, and
warned him never to mention a negotiated peace. Furthermore,
Balfour leaked to Colonel House the details of various secret
Allied treaties that they both knew the nave Wilson would not
accept, and they both agreed to keep the treaties from the President.

soon after the U.S. entered the war, the British sent to the
U.S. as personal liaison between the Prime Minister and the
White House the young chief of British military intelligence,
Sir William Wiseman. House and Wiseman quickly entered a close
collaboration, with House coaching the Englishman on the best
way of dealing with the President, such as “tell him only what
he wants to hear,” never argue with him, and discover and exploit
his weaknesses.

turn, Britain’s top intelligence agent manipulated House, constantly
showering him with flattery, and established a close friendship
with the Colonel, getting an apartment in the same building
in New York City, and travelling together abroad. Collaborating
with House in his plan to manipulate Wilson into pro-British
policies was William Phillips, an Assistant Secretary of State
who had married into the Astor family.

with House in supplying Wiseman with illegal information and
working with the British agent against Wilson were two important
American officials. One was Walter Lippman, a young socialist
who had been named by Morgan partner Willard Straight as one
of the three editors of his New Republic, a magazine
which, needless to say, led ‘the parade of progressive and socialist
intellectuals in favor of entering the war on the side of the

soon vaulted into important roles in the war effort: assistant
to the Secretary of War; then secretary of the secret group
of historians called The Inquiry, established under Colonel
House in late 1917 to plan the peace settlement at the end of
the war. Lippmann later left The Inquiry
to go overseas for American military intelligence.

important collaborator with Wiseman was businessman and scholar
George Louis Beer, who was in charge of African and Asian colonial
matters for The Inquiry. Wiseman secretly showed British documents
on African colonies to Beer, who in turn leaked Inquiry reports
to British intelligence.

plans of Colonel House and his biased young historians of The
Inquiry were put into effect at the peace settlement at Versailles.
Germany, Austria-Hungary, and Russia were cruelly dismembered,
thus insuring that Germany and Russia, once recovered from the
devastation of the war, would bend their energies toward getting
their territories back. In that way, conditions were virtually
set for World War II.

only that: the Allies at Versailles took advantage of the temporary
power vacuum in Eastern Europe to create new independent states
that would function as client states of Britain and France,
be part of the Morgan-Rothschild financial network, and help
keep Germany and Russia down permanently. It was an impossible
task for these new small nations, a task made more difficult
by the fact that the young historians managed to rewrite the
map of Europe at Versailles to make the Poles, the Czechs, and
the Serbs dominant over all the other minority nationalities
forcibly incorporated into the new countries. These subjugated
peoples – the Germans, Ukrainians, Slovaks, Croats, Slovenes,
etc – thus became built-in allies for the revanchist dreams
of Germany and Russia.

entry into World War I in April 1917 prevented negotiated peace
between the warring powers, and drove the Allies forward into
a peace of unconditional surrender and dismemberment, a peace
which, as we have seen, set the stage for World War II. American
entry thus cost countless lives on both sides, chaos and disruption
throughout central and eastern Europe at war’s end, and the
consequent rise of Bolshevism, fascism, and Nazism to power
in Europe. In this way, Woodrow Wilson’s decision to enter the
war may have been the single most fateful action of the 20th
century, causing untold and unending misery and destruction.
But Morgan profits were expanded and assured.

Fortuitous Fed

massive U.S. loans to the Allies, and the subsequent American
entry into the war, could not have been financed by the relatively
hard-money, gold standard system that existed before 1914. Fortuitously,
an institution was established at the end of 1913 that made
the loans and war finance possible: the Federal Reserve System.
By centralizing reserves, by providing a government-privileged
lender of last resort to the banks, the Fed enabled the banking
system to inflate money and credit, finance loans to the Allies,
and float massive deficits once the U.S. entered the war. In
addition, the seemingly odd Fed policy of creating an acceptance
market out of thin air by standing ready to purchase acceptance
at a subsidized rate, enabled the Fed to rediscount acceptance
on munitions exports.

Federal Reserve was the outgrowth of five years of planning,
amending, and compromising among various politicians and concerned
financial groups, led by the major financial interests, including
the Morgans, the Rockefellers, and the Kuhn, Loebs, along with
their assorted economists and technicians.

notable among the Rockefeller interests were Senator Nelson
W. Aldrich (R.-R.I.), father-in-law of John D. Rockefeller,
Jr., and Frank A. Vanderlip, vice president of Rockefeller’s
National City Bank of New York. From the Kuhn, Loebs came the
prominent Paul Moritz Warburg, of the German investment-banking
firm of M.M. Warburg and Company. Warburg emigrated to the United
States in 1902 to become a senior partner at Kuhn, Loeb &
Co., after which he spent most of his time agitating for a central
bank in the United States.

igniting the drive for a Federal Reserve System was Jacob H.
Schiff, powerful head of Kuhn, Loeb to whom Warburg was related
by marriage. Seconding and sponsoring Warburg in academia was
the prominent Columbia University economist Edwin R.A. Seligman,
of the investment-banking family of J. & W. Seligman and
Company; Seligman was the brother of Warburg’s brother-in-law.

Morgans were prominently represented in the planning and agitation
for a Central Bank by Henry P. Davison, Morgan partner; Charles
D. Norton, president of Morgan’s First National Bank of New
York; A. Barton Hepburn, head of Morgan’s Chase National Bank;
and Victor Morawetz, attorney and banker in the Morgan ranks
and chairman of the executive committee of the Morgan-controlled
Atchison, Topeka, and Santa Fe Railroad.

the establishment of the Federal Reserve System in late 1913
was the result of a coalition of Morgan, Rockefeller, and Kuhn,
Loeb interests, there is no question which financial group controlled
the personnel and the policies of the Fed once it was established.
(While influential in framing policies of the Fed, Federal Reserve
Board member Warburg was disqualified from leadership because
of his pro-German views.) The first Federal Reserve Board, appointed
by President Wilson in 1914, included Warburg; one Rockefeller
man, Frederic A. Delano, uncle of Franklin D. Roosevelt, and
president of the Rockefeller-controlled Wabash Railway; and
an Alabama banker, who had both Morgan and Rockefeller connections.

these three were three definite Morgan men, and a university
economist, Professor Adolph C. Miller of Berkeley, whose wife’s
family had Morgan connections. The three definite Morgan men
were Secretary of the Treasury McAdoo; Comptroller of the Currency
John Skelton Williams, a Virginia banker and long-time McAdoo
aide on Morgan railroads; and Assistant Secretary of the Treasury
Charles S. Hamlin, a Boston attorney who had married into a
wealthy Albany family long connected with the Morgan-dominated
New York Central Railroad.

more important than the composition of the Federal Reserve Board
was the man who became the first Governor of the New York Federal
Reserve Bank and who single-handedly dominated Fed policy from
its inception until his death in 1928. This man was Benjamin
Strong, who had spent virtually his entire business and personal
life in the circle of top associates of J.P. Morgan. A secretary
of several trust companies (banks doing trust business) in New
York City, Strong became neighbor and close friend of three
top Morgan partners, Henry P. Davison, Dwight Morrow, and Thomas
W. Lamont. Davison, in particular, became his mentor, and brought
him into Morgan’s Bankers Trust company, where he soon succeeded
Lamont as vice-president, and then finally became president.
When Strong was offered the post of Governor of the New York
Fed, it was Davison who persuaded him to take the job.

was an enthusiast for American entry into the war, and it was
his mentor Davison who had engineered the coup of getting Morgan
named as sole underwriter and purchasing agent for Britain and
France. Strong worked quickly to formalize collaboration with
the Bank of England, collaboration which would continue in force
throughout the 1920s. The Federal Reserve Bank of New York became
foreign agent for the Bank of England, and vice versa.

main collaboration throughout the 1920s, much of it kept secret
from the Federal Reserve Board in Washington, was between Strong
and the man who soon became Governor of the Bank of England,
Montagu Collet Norman. Norman and Strong were not only fast
friends, but had important investment-banking ties, Norman’s
uncle having been a partner of the great English banking firm
of Baring Brothers, and his grandfather a partner in the international
banking house of Brown Shipley & Co., the London branch
of the Wall Street banking firm of Brown Brothers. Before coming
to the Bank of England, Norman himself had worked at the Wall
Street office of Brown Brothers, and then returned to London
to become a partner of Brown Shipley.

major fruit of the Norman-Strong collaboration was Strong’s
being pressured to inflate money and credit in the U.S. throughout
the 1920s, in order to keep England from losing gold to the
U.S. from its inflationary policies. Britain’s predicament came
from its insistence on going back to the gold standard after
the war at the highly overvalued pre-war par for the pound,
and then insisting on inflating rather than deflating to make
its exports competitively priced in the world market. Hence,
Britain needed to induce other countries, particularly the U.S.,
to inflate along with it. The Strong-Norman-Morgan connection
did the job, setting the stage for the great financial collapse
of 1929–1931.

World War I drew to a close, influential Britons and Americans
decided that intimate post-war collaboration between the two
countries required more than just close cooperation between
the central banks. Also needed were permanent organizations
to promote joint Anglo-American policies to dominate the postwar

Round Table

England, Cecil Rhodes had launched a secret society in 1891
with the aim of maintaining and expanding the British Empire
to re-incorporate the United States. After the turn of the 20th
century, the direction, organization, and expansion of the society
fell to Rhodes’s friend and executor, Alfred Lord Milner. The
Milner Group dominated domestic planning in Britain during World
War I, and particularly the planning for post-war foreign and
colonial policy. The Milner Group staffed the British delegation
of experts to Versailles. To promote the intellectual agitation
for such a policy, the Milners had also set up the Round Table
Groups in England and abroad in 1910.

first American to be asked to join the Round Table was George
Louis Beer, who came to its attention when his books attacked
the American Revolution and praised the British Empire of the
18th century. Such loyalty could not go unrewarded, and so Beer
became a member of the Group about 1912 and became the American
correspondent of Round Table magazine. We have seen Beer’s
pro-British role as colonial expert for The Inquiry. He was
also the chief U.S. expert on colonial affairs at Versailles,
and afterward the Milner Group made Beer head of the Mandate
Department of the League of Nations.

the war, Beer, Anglophile Yale historian George Burton Adams,
and powerful Columbia University historian James T. Shotwell,
an important leader of The Inquiry and head of the National
Board for Historical Services, which emitted deceptive propaganda
for the war effort, formed a secret society to promote Anglo-American
collaboration. Finally, led by Beer for the United States and
the head of the Round Table group in England, Lionel Curtis,
the British and U.S. historical staffs at Versailles took the
occasion to found a permanent organization to agitate for an
informally, if not formally, reconstituted Anglo-American Empire.

new group, the Institute of International Affairs, was formed
at a meeting at the Majestic Hotel in Paris on May 3O, 1919.
A six-man organizing committee was formed, three Milnerites
from Britain, and three Americans: Shotwell; Harvard historian
Archibald C. Coolidge, head of the Eastern European desk of
the Inquiry, and member of the Morgan-oriented Boston financial
family; and James Brown Scott, Morgan lawyer who was to write
a biography of Robert Bacon. The British branch, the Royal Institute
of International Affairs, set up a committee to supervise writing
a multi-volume history of the Versailles Peace Conference; the
committee was financed by a gift from Thomas W. Lamont, Morgan


American branch of the new group took a while to get going.
Finally, the still inactive American Institute of International
Affairs merged with a defunct outfit, begun in 1918, of New
York businessmen concerned with the postwar world, and organized
as a dinner club to listen to foreign visitors. This organization,
the Council on Foreign Relations, had as its honorary chairman
Morgan lawyer Elihu Root, while Alexander Hemphill, chairman
of Morgan’s Guaranty Trust Company, was chairman of its finance
committee. In August 1921, the two organizations merged into
the new Council on Foreign Relations, Inc., a high-powered organization
embracing bankers, lawyers, and intellectuals.

varied financial interests were represented in the new organization,
the CFR was Morgan-dominated, from top to bottom. Honorary president
was Elihu Root. President was John W. Davis, Wilson’s Solicitor-General,
and now chief counsel for J.P. Morgan & Co. Davis was to
become Democratic Presidential candidate in 1924. Secretary-Treasurer
of the new CFR was Harvard economic historian Edwin F. Gay,
director of planning and statistics for the Shipping Board during
the war, and now editor of the New York Evening Post, owned
by his mentor, Morgan partner, Thomas W. Lamont.

was Gay who had the idea of founding Foreign Affairs, the
CFR’s quarterly journal, and who suggested both his Harvard
colleague Archibald Coolidge as the first editor, and the New
York Post reporter Hamilton Fish Armstrong as assistant
editor and executive director of the CFR. Other prominent officials
in the new CFR were: Frank L. Polk, former Under-Secretary of
State and now lawyer for J.P. Morgan & Co; Paul M. Warburg
of Kuhn, Loeb; Otto H. Kahn of Kuhn, Loeb; former Under-Secretary
of State under Wilson, Norman H. Davis, a banking associate
of the Morgans; and as vice-president, Paul D. Cravath, senior
partner of the Rockefeller-oriented Wall Street law firm of
Cravath, Swaine, and Moore.

World War II, the Council on Foreign Relations became dominated
by the Rockefeller rather than by the Morgan interests, a shift
of power reflecting a general alteration in financial power
in the world at large. After World War II, the rise of oil to
prominence brought the Morgans and Rockefellers – once
intense rivals – into an Eastern Establishment of which
the Rockefellers were the senior, and the Morgans the junior,

Morgan, and War

the 1930s, the Rockefellers pushed hard for war against Japan,
which they saw as competing with them vigorously for oil and
rubber resources in Southeast Asia and as endangering the Rockefellers’
cherished dreams of a mass “China market” for petroleum products.
On the other hand, the Rockefellers took a non-interventionist
position in Europe, where they had close financial ties with
German firms such as I.G. Farben and Co., and very few close
relations with Britain and France. The Morgans, in contrast,
as usual deeply committed to their financial ties with Britain
and France, once again plumped early for war with Germany, while
their interest in the Far East had become minimal. Indeed, U.S.
Ambassador to Japan, Joseph C. Grew, former Morgan partner,
was one of the few officials in the Roosevelt Administration
genuinely interested in peace with Japan.

War II might therefore be considered, from one point of view,
as a coalition war: the Morgans got their war in Europe,
the Rockefellers theirs in Asia. Such disgruntled Morgan
men as Lewis W. Douglas and Dean G. Acheson (a protégé
of Henry Stimson), who had left the early Roosevelt Administration
in disgust at its soft money policies and economic nationalism,
came happily roaring back into government service with the advent
of World War II. Nelson A. Rockefeller, for his part, became
head of Latin American activities during World War II, and thereby
acquired his taste for government service.

World War II, the united Rockefeller-MorganKuhn, Loeb Eastern
Establishment was not allowed to enjoy its financial and political
supremacy unchallenged for long. “Cowboy” Sun Belt firms, maverick
oil men and construction men from Texas, Florida, and southern
California, began to challenge the Eastern Establishment “Yankees”
for political power. While both groups favor the Cold War, the
Cowboys are more nationalistic, more hawkish, and less inclined
to worry about what our European allies are thinking. They are
also much less inclined to bail out the now Rockefeller-controlled
Chase Manhattan Bank and other Wall Street banks that loaned
recklessly to Third World and Communist countries and expect
the U.S. taxpayer – through outright taxes or the printing
of U.S. dollars – to pick up the tab.

should be clear that the name of the political party in power
is far less important than the particular regime’s financial
and banking connections. The foreign policy power for so long
of Nelson Rockefeller’s personal foreign affairs adviser, Henry
A. Kissinger, a discovery of the extraordinarily powerful Rockefeller–Chase
Manhattan Bank elder statesman John J. McCloy, is testimony
to the importance of financial power. As is the successful lobbying
by Kissinger and Chase Manhattan’s head, David Rockefeller,
to induce Jimmy Carter to allow the ailing Shah of Iran into
the U.S. – thus precipitating the humiliating hostage crisis.

differences in nuance, it is clear that Ronald Reagan’s originally
proclaimed challenge to Rockefeller-Morgan power in the Council
of Foreign Relations and to the Rockefeller-created Trilateral
Commission has fizzled, and that the “permanent government”
continues to rule regardless of the party nominally in power.
As a result, the much-heralded “bipartisan foreign policy” consensus
imposed by the Establishment since World War II seems to remain
safely in place.

Rockefeller, chairman of the board of his family’s Chase Manhattan
Bank from 1970 until recently, established the Trilateral Commission
in 1973 with the financial backing of the CFR and the Rockefeller
Foundation. Joseph Kraft, syndicated Washington columnist who
himself has the distinction of being both a CFR member and a
Trilateralist, has accurately described the CFR as a “school
for statesmen,” which “comes close to being an organ of what
C. Wright Mills has called the Power Elite – a group of
men, similar in interest and outlook, shaping events from invulnerable
positions behind the scenes.” The idea of the Trilateral Commission
was to internationalize policy formation, the commission consisting
of a small group of multinational corporate leaders, politicians,
and foreign policy experts from the U.S., Western Europe, and
Japan, who meet to coordinate economic and foreign policy among
their respective nations.

the most powerful single figure in foreign policy since World
War II, a beloved adviser to all Presidents, is the octogenarian
John J. McCloy. During World War II, McCloy virtually ran the
War Department as Assistant to aging Secretary Stimson; it was
McCloy who presided over the decision to round up all Japanese-Americans
and place them in concentration camps in World War II, and he
is virtually the only American left who still justifies that

and during the war, McCloy, a disciple of Morgan lawyer Stimson,
moved in the Morgan orbit; his brother-in-law, John S. Zinsser,
was on the board of directors of J.P. Morgan & Co. during
the 1940s. But, reflecting the postwar power shift from Morgan
to Rockefeller, McCloy moved quickly into the Rockefeller ambit.
He became a partner of the Wall Street corporate law firm of
Milbank, Tweed, Hope, Hadley & McCloy, which had long served
the Rockefeller family and the Chase Bank as legal counsel.

there he moved to become Chairman of the Board of the Chase
Manhattan Bank, a director of the Rockefeller Foundation, and
of Rockefeller Center, Inc., and finally, from 1953 until 1970,
chairman of the board of the Council on Foreign Relations. During
the Truman Administration, McCloy served as President of the
World Bank and then U.S. High Commissioner for Germany. He was
also a special adviser to President John F. Kennedy on Disarmament,
and chairman of Kennedy’s Coordinating Committee on the Cuban
Crisis. It was McCloy who “discovered” Professor Henry A. Kissinger
for the Rockefeller forces. It is no wonder that John K. Galbraith
and Richard Rovere have dubbed McCloy “Mr. Establishment.”

glance at foreign policy leaders since World War II will reveal
the domination of the banker elite. Truman’s first Secretary
of Defense was James V. Forrestal, former president of the investment-banking
firm of Dillon, Read & Co., closely allied to the Rockefeller
financial group. Forrestal had also been a board member of the
Chase Securities Corporation, an affiliate of the Chase National

Truman Defense Secretary was Robert A. Lovett, a partner of
the powerful New York investment-banking house of Brown Brothers
Harriman. At the same time that he was Secretary of Defense,
Lovett continued to be a trustee of the Rockefeller Foundation.
Secretary of the Air Force Thomas K. Finletter was a top Wall
Street corporate lawyer and member of the board of the CFR while
serving in the cabinet. Ambassador to Soviet Russia, Ambassador
to Great Britain, and Secretary of Commerce in the Truman Administration
was the powerful multi-millionaire W. Averell Harriman, an often
underrated but dominant force within the Democratic Party since
the days of FDR. Harriman was a partner of Brown Brothers Harriman.

Ambassador to Great Britain under Truman was Lewis W. Douglas,
brother-in-law of John J. McCloy, a trustee of the Rockefeller
Foundation, and a board member of the Council on Foreign Relations.
Following Douglas as Ambassador to the Court of St. James was
Walter S. Gifford, chairman of the board of AT&T, and member
of the board of trustees of the Rockefeller Foundation for almost
two decades. Ambassador to NATO under Truman was William H.
Draper, Jr., vice-president of Dillon, Read &Co.

influential in helping the Truman Administration organize the
Cold War was director of the policy planning staff of the State
Department, Paul H. Nitze. Nitze, whose wife was a member of
the Pratt family, associated with the Rockefeller family since
the origins of Standard Oil, had been vice-president of Dillon,
Read & Co.

Truman entered the Korean War, he created an Office of Defense
Mobilization to run the domestic economy during the war. The
first director was Charles E. (“Electric Charlie”) Wilson, president
of the Morgan-controlled General Electric Company, who also
served as board member of the Morgans’ Guaranty Trust Company.
His two most influential assistants were Sidney J. Weinberg,
ubiquitous senior partner in the Wall Street investment-banking
firm of Goldman Sachs & Co., and former General Lucius D.
Clay, chairman of the board of Continental Can Co., and a director
of the Lehman Corporation.

McCloy as President of the World Bank, and continuing in that
post throughout the two terms of Dwight Eisenhower, was Eugene
Black. Black had served for fourteen years as vice-president
of the Chase National Bank, and was persuaded to take the World
Bank post by the bank’s chairman of the board, Winthrop W. Aldrich,
brother-in-law of John D. Rockefeller, Jr.

Eisenhower Administration proved to be a field day for the Rockefeller
interests. While president of Columbia University, Eisenhower
was invited to high-level dinners where he met and was groomed
for President by top leaders from the Rockefeller and Morgan
ambits, including the chairman of the board of Rockefeller’s
Standard Oil of New Jersey, the presidents of six other big
oil companies, including Standard of California and Socony-Vacuum,
and the executive vice-president of J.P. Morgan & Co.

dinner was hosted by Clarence Dillon, the multi-millionaire
retired founder of Dillon, Read & Co., where the guests
included Russell B. Leffingwell, chairman of the board of both
J.P. Morgan & Co. and the CFR (before McCloy); John M. Schiff,
a senior partner of the investment-banking house of Kuhn, Loeb
& Co.; the financier Jeremiah Milbank, a director of the
Chase Manhattan Bank; and John D. Rockefeller, Jr.

earlier, during 1949, Eisenhower had been introduced through
a special study group to key figures in the CFR. The study group
devised a plan to create a new organization called the American
Assembly – in essence an expanded CFR study group –
whose main function was reputedly to build up Eisenhower’s prospects
for the Presidency. A leader of the “Citizens for Eisenhower”
committee, who later became Ike’s Ambassador to Great Britain,
was the multi-millionaire John Hay Whitney, scion of several
wealthy families, whose granduncle, Oliver H. Payne, had been
one of the associates of John D. Rockefeller, Sr. in founding
the Standard Oil Company. Whitney was head of his own investment
concern, J.H. Whitney & Co., and later became publisher
of the New York Herald Tribune.

foreign policy during the Eisenhower Administration was the
Dulles family, led by Secretary of State John Foster Dulles,
who had also concluded the U.S. peace treaty with Japan under
Harry Truman. Dulles had for three decades been a senior partner
of the top Wall Street corporate law firm of Sullivan &
Cromwell, whose most important client was Rockefeller’s Standard
Oil Company of New Jersey. Dulles had been for fifteen years
a member of the board of the Rockefeller Foundation, and before
assuming the post of Secretary of State was chairman of the
board of that institution. Most important is the little-known
fact that Dulles’s wife was Janet Pomeroy Avery, a first cousin
of John D. Rockefeller, Jr.

the super-secret Central Intelligence Agency during the Eisenhower
years was Dulles’s brother, Allen Welsh Dulles, also a partner
in Sullivan & Cromwell. Allen Dulles had long been a trustee
of the CFR and had served as its president from 1947 to 1951.
Their sister, Eleanor Lansing Dulles, was head of the Berlin
desk of the State Department during that decade.

of State, and the man who succeeded John Foster Dulles in the
spring 1959, was former Massachusetts Governor Christian A.
Herter. Herter’s wife, like Nitze’s, was a member of the Pratt
family. Indeed, his wife’s uncle, Herbert L. Pratt, had been
for many years president or chairman of the board of Standard
Oil Company of New York. One of Mrs. Herter’s cousins, Richardson
Pratt, had served as assistant treasurer of Standard Oil of
New Jersey up to 1945. Furthermore, one of Herter’s own uncles,
a physician, had been for many years treasurer of the Rockefeller
Institute for Medical Research.

was succeeded as Under-Secretary of State by Eisenhower’s Ambassador
to France, C. Douglas Dillon, son of Clarence, and himself Chairman
of the Board of Dillon, Read & Co. Dillon was soon to become
a trustee of the Rockefeller Foundation.

to provide some balance for his banker-business coalition, Eisenhower
appointed as Secretary of Defense three men in the Morgan rather
than the Rockefeller ambit. Charles B. (“Engine Charlie”) Wilson
was president of General Motors, member of the board of J.P.
Morgan & Co. Wilson’s successor, Neil H. McElroy, was president
of Proctor & Gamble Co. His board chairman, R.R. Deupree,
was also a director of J.P. Morgan & Co. The third Secretary
of Defense, who had been Under-Secretary and Secretary of the
Navy under Eisenhower, was Thomas S. Gates, Jr., who had been
a partner of the Morgan-connected Philadelphia investment-banking
firm of Drexel & Co. When Gates stepped down as Defense
Secretary, he became president of the newly formed flagship
commercial bank for the Morgan interests, the Morgan Guaranty
Trust Co.

as Secretary of the Navy and then Deputy Secretary of Defense
(and later Secretary of the Treasury) under Eisenhower was Texas
businessman Robert B. Anderson. After leaving the Defense Department,
Anderson became a board member of the Rockefeller-controlled
American Overseas Investing Co., and, before becoming Secretary
of the Treasury, he borrowed $84,000 from Nelson A. Rockefeller
to buy stock in Nelson’s International Basic Economy Corporation.

of the important Atomic Energy Commission during the Eisenhower
years was Lewis L. Strauss. For two decades, Strauss had been
a partner in the investment-banking firm of Kuhn, Loeb &
Co. In 1950, Strauss had become financial adviser to the Rockefeller
family, soon also becoming a board member of Rockefeller Center,

powerful force in deciding foreign policy was the National Security
Council, which included on it the Duller brothers, Strauss,
and Wilson. Particularly important is the post of national security
adviser to the President. Eisenhower’s first national security
adviser was Robert Cutler, president of the Old Colony Trust
Co., the largest trust operation outside New York City. The
Old Colony was a trust affiliate of the First National Bank
of Boston.

two years in the top national security post, Cutler returned
to Boston to become chairman of the board of Old Colony Trust,
returning after a while to the national security slot for two
more years. In between, Eisenhower had two successive national
security advisers. The first was Dillon Anderson, a Houston
corporate attorney, who did work for several oil companies.
Particularly significant was Anderson’s position as chairman
of the board of a small but fascinating Connecticut firm called
Electro-Mechanical Research, Inc. Electro-Mechanical was closely
associated with certain Rockefeller financiers; thus, one of
its directors was Godfrey Rockefeller, a limited partner in
the investment-banking firm of Clark, Dodge & Co.

more than a year, Anderson resigned from his national security
post and was replaced by William H. Jackson, a partner of the
investment firm of J. H. Whitney & Co. Before assuming his
powerful position, Dillon Anderson had been one of several men
serving as special hush-hush consultants to the National Security
Council. Another special adviser was Eugene Holman, president
of Rockefeller’s Standard Oil Company of New Jersey.

may mention two important foreign policy actions of the Eisenhower
Administration which seem to reflect the striking influence
of personnel directly tied to bankers and financial interests.
In 1951, the regime of Mohammed Mossadegh in Iran decided to
nationalize the British-owned oil holdings of the Anglo-Iranian
Oil company. It took no time for the newly established Eisenhower
Administration to intervene heavily in this situation. CIA director
and former Standard Oil lawyer Allen W. Dulles flew to Switzerland
to organize the covert overthrow of the Mossadegh regime, the
throwing of Mossadegh into prison, and the restoration of the
Shah to the throne of Iran.

lengthy behind-the-scenes negotiations, the oil industry was
put back into action as purchasers and refiners of Iranian oil.
But this time the picture was significantly different. Instead
of the British getting all of the oil pie, their share was reduced
to 40 percent of the new oil consortium, with five top U.S.
oil companies (Standard Oil of New Jersey, Socony-Vacuum –
formerly Standard Oil of N.Y. and now Mobil – Standard
Oil of California, Gulf, and Texaco) getting another 40 percent.

was later disclosed that Secretary of State Dulles placed a
sharp upper limit on any participation in the consortium by
smaller independent oil companies in the United States. In addition
to the rewards to the Rockefeller interests, the CIA’s man-on-the-spot
directing the operation, Kermit Roosevelt, received his due
by quickly becoming a vice-president of Mellon’s Gulf Oil Corp.

Guatemalan Coup

from its CIA triumph in Iran, the Eisenhower Administration
next turned its attention to Guatemala, where the left-liberal
regime of Jacob Arbenz Guzman had nationalized 234,000 acres
of uncultivated land owned by the nation’s largest landholder,
the American-owned United Fruit Company, which imported about
60 percent of all bananas coming into the United States.

also announced his intention of seizing another 173,000 acres
of idle United Fruit land along the Caribbean coast. In late
1953, Eisenhower gave the CIA the assignment of organizing a
counter-revolution in Guatemala. With the actual operation directed
by former Wall Street corporate lawyer Frank Wisner of the CIA,
the agency launched a successful invasion of Guatemala, led
by exiled Army Colonel Castilo Armas, which soon overthrew the
Arbenz regime and replaced it with a military junta. The Arbenz
land program was abolished, and most of its expropriated property
was returned to the United Fruit Company.

W. Dulles had financial connections with United Fruit and with
various sugar companies which had also suffered land expropriation
from the Arbenz regime. For several years, while a partner at
Sullivan & Cromwell, he had been a board member of the Rockefeller-controlled
J. Henry Schroder Banking Corporation. Members of the board
of Schroder during 1953 included Delano Andrews, Sullivan &
Cromwell partner who had taken Dulles’s seat on the board; George
A. Braga, president of the Manati Sugar Company; Charles W.
Gibson, vice-president of the Rockefeller-affiliated Air Reduction
Company; and Avery Rockefeller, president of the closely linked
banking house of Schroder, Rockefeller, & Co. Members of
the board of Manati Sugar, in the meanwhile, included Alfred
Jaretski, Jr., another Sullivan & Cromwell partner; Gerald
F. Beal, president of J. Henry Schroder and chairman of the
board of the International Railways of Central America; and
Henry E. Worcester, a recently retired of executive of United

Fruit, furthermore, was a controlling shareholder in International
Railways, while, as in the case of Beal, the board chairmanship
of the railway had long been held by a high official of Schroder.
The close ties between United Fruit, Schroder, and International
Railways may also be seen by the fact that, in 1959, the board
chairman of the railway became James McGovern, general counsel
for United Fruit. International Railway, in fact, carried most
of United Fruit’s produce from the interior to the port in Guatemala.
In addition, Dulles’s close associate and fellow trustee of
the Council of Foreign Relations in this period, and former
treasurer of the CFR, was Whitney H. Shepardson, formerly vice-president
of International Railways.

only that: Robert Cutler, national security adviser to the President
at the time of the coup against Arbenz, had himself very
close ties to United Fruit. Cutler’s boss at Old Colony Trust,
chairman of the board T. Jefferson Coolidge, was also, and more
importantly, board chairman at United Fruit. Indeed, many members
of the board of United Fruit, a Boston-based company, were also
on the board of Old Colony or its mother company, the First
National Bank of Boston.

during the period of planning the Guatemalan coup, and up till
a few months before its success in 1954, the Assistant Secretary
of State for Inter-American Affairs was John Moors Cabot, a
well-known anti-Arbenz hawk. Cabot’s brother Thomas D., was
an executive of United Fruit and a member of the board of the
First National Bank of Boston.

Council on Foreign Relations played an important role in the
Guatemalan invasion. It began in the fall of 1952, when Spruille
Braden, a former Assistant Secretary of State for Inter-American
Affairs and then consultant for United Fruit, led a CFR study
group on Political Unrest in Latin America. Discussion leader
at the first meeting of the CFR-Braden group was John McClintock,
an executive of United Fruit. Former leading New Dealer and
Assistant Secretary of State Adolf A. Berle, Jr., a participant
in the study group, recorded in his diary that the U.S. should
welcome an overthrow of the Arbenz government, and noted that,
“I am arranging to see Nelson Rockefeller (himself Assistant
Secretary of State for Inter-American Affairs during World War
II) who knows the situation and can work a little with General

the actual Guatemalan operation, President Eisenhower himself
was a CFR member, as were Allen Dulles, John M. Cabot and Frank
Wisner, the man in charge of the coup and the CIA’s deputy director
for plans. Of the twelve people in the U.S. government identified
as being involved at the top level in the Guatemalan affair,
eight were CFR members or would be within a few years. These
included, in addition to the above, Henry F. Holland, who succeeded
Cabot in the assistant secretary of state slot in 1954; Under-Secretary
of State Walter Bedell Smith, a former director of the CIA;
and Ambassador to the UN Henry Cabot Lodge.

the way for the coup was a public report, issued in December
1953 by the Committee on International Policy of the National
Planning Association on the Guatemalan situation. Head of the
Committee was Frank Altschul, secretary and vice-president of
the CFR and a partner of the international banking house of
Lazard Freres, as well as a director of the Chase National Bank
and president of the General American Investor Corp., a firm
largely controlled by Lehman Brothers. The Altschul report,
signed by twenty-two committee members of whom fifteen were
CFR members, warned that “Communist infiltration in Guatemala”
was a threat to the security of the Western Hemisphere and hinted
that drastic action would probably be necessary to deal with
this menace.

those involved in the drastic action, Secretary of State John
Foster Dulles, while at Sullivan & Cromwell, had once represented
United Fruit in negotiating a contract with Guatemala. Under-Secretary
of State Walter Bedell Smith, after leaving the government,
became director of United Fruit, as did Robert D. Hill, who
participated in the Guatemala operation as Ambassador to Costa
Rica. Furthermore, future president of Guatemala, Miguel Ydigoras
Fuentes, noted that his own cooperation in the coup against
Arbenz was obtained by Walter Turnbull, a former executive at
United Fruit, who came to him along with two CIA agents.

and the Establishment

John F. Kennedy assumed the office of President, the first person
he turned to for foreign policy advice was Robert A. Lovett,
partner of Brown Brothers, Harriman, even though Lovett had
backed Richard Nixon. Kennedy asked Lovett to take his pick
of any of three top jobs in the Cabinet – State, Defense,
and Treasury – but the ill and aging Lovett demurred. It
was at Lovett’s urging, however, that Kennedy chose as Secretary
of State Dean Rusk, president of the Rockefeller Foundation,
a post he had acquired because of the strong backing of John
Foster Dulles. Under-Secretary of State was Chester Bowles,
a trustee of the Rockefeller Foundation; Bowles was soon replaced
by corporate lawyer George Bail, who was later to become a senior
managing partner at Lehman Brothers.

Secretary of Defense Kennedy chose Robert S. McNamara, President
of Ford Motor Company. One influential force in the McNamara
appointment was the backing of Sidney J. Weinberg, partner of
the investment-banking firm of Goldman, Sachs, & Co., and
powerful fund-raiser for the Democratic Party. Weinberg was
a member of the board of Ford Motor Company. Perhaps even more
important was the intimate Ford connection with the investment-banking
house of Lehman Brothers, which had long carried great weight
in the party; at that time, five high-ranking Ford executives
sat on the board of the One William Street Fund, a mutual fund
recently established by Lehman Brothers.

of the Air Force was Eugene Zuckert, chairman of the board of
the small Pittsburgh firm, the Nuclear Science and Engineering
Corp., controlled by the powerful Lehman Brothers. Before going
to this firm, Zuckert had been a member of the Atomic Energy
Commission; former ABC Commissioner Gordon Dean, who had preceded
Zuckert as chairman of the board of Nuclear Science and Engineering,
was also a partner of Lehman Brothers.

counsel of the Defense Department, and soon to become Secretary
of the Army, was Wall Street corporate lawyer Cyrus Vance, later
to become Secretary of State under Carter. Vance’s law firm
– Simpson, Thacher & Bartlett – represented Lehman
Brothers and Manufacturers Hanover Trust Co. Moreover, Vance
had married into New York’s wealthy W & J Sloane family;
his father-in-law, John Sloane, had served as a director of
the United States Trust Co.

of the Treasury in the Kennedy Cabinet was C. Douglas Dillon,
of Dillon, Read and the Rockefeller Foundation. Dillon saw no
problem in serving for eight years as Ambassador to France and
as a State Department official during the Eisenhower Era, and
then segueing to the Democratic Kennedy Cabinet. Like Lovett,
he too was chosen even though he had been a big contributor
to the Nixon effort of 1960.

the powerful post of National Security Adviser, Kennedy selected
Harvard Dean McGeorge Bundy, who had been part of a high-powered
foreign policy team advising Thomas B. Dewey in the 1948 campaign,
a virtually all-Rockefeller dominated team headed by John Foster
Dulles and including Dulles’s brother Allen, C. Douglas Dillon,
and Christian Herter. After that, Bundy worked for the Council
on Foreign Relations.

had been born into the wealthy Boston Brahmin Lowell family,
his mother having been a Lowell. His father Harvey H. Bundy,
was a partner in Boston’s top law firm of Choate, Hall &
Stewart, a high official of the Foreign Bondholders Protective
Council, and a director of the Merchants National Bank of Boston.
McGeorge’s brother, William, a high CIA official, was married
to the daughter of former Secretary of State Dean Acheson, and
his sister Katherine married into the socially prominent Auchinchloss
family, the family of Jacqueline Kennedy.

strong Rockefeller influence on Kennedy foreign policy is best
seen in the fact that the new President continued Allen W. Dulles
as head of the CIA. It was at the urging of Dulles that Kennedy
decided to go ahead with the CIA’s previously planned and disastrous
Bay of Pigs invasion of Cuba. Fidel Castro’s regime had recently
nationalized a large number of American-owned sugar companies
in Cuba. It might be noted that Dulles’s old law firm of Sullivan
& Cromwell served as general counsel for two of these large
sugar companies, the Francisco Sugar Co. and the Manati Sugar
Co., and that one of the board members of these firms was Gerald
F. Beal, president of the Rockefeller-oriented J. Henry Schroder
Bank, of which Dulles had once been a director.

only that. John L. Loeb of the Loeb, Rhoades investment bank,
whose wife was a member of the Lehman banking family, owned
a large block of stock in the nationalized Compania Azucarera
Atlantica del Golfo, a big sugar plantation in Cuba, while one
of the directors of the latter company was Harold F. Linder,
vice-chairman of the General American Investors Company, dominated
by Lehman Brothers and Lazard Freres investment bankers. Linder
was appointed head of the Export-Import Bank by President Kennedy.

the Bay of Pigs fiasco, Dulles was replaced as head of the CIA
by West Coast industrialist John A. McCone, who also had the
capacity to serve the administrations of either party with equal
ease. Under-Secretary of the Air Force under Truman and head
of the Atomic Energy Commission under Eisenhower, McCone was
president of the Bechtel-McCone Corporation, and represents
the first major incursion of the international Bechtel construction
interests into American politics. McCone was also a board member
of the California Bank of Los Angeles, and of the Rockefeller-dominated
Standard Oil Company of California.

CIA was also heavily involved about this time in the short-lived
Katanga secession movement in the old Belgian Congo. One of
the largest of the American companies in Katanga, and a major
backer of the secession movement, was the Anglo-American Corporation
of South Africa, one of whose partners was mining magnate Charles
W. Engelhard. Engelhard’s investment banker was Dillon, Read,
the family firm of Kennedy’s Secretary of the Treasury, C. Douglas

have seen that Mr. Establishment, the Rockefeller-oriented John
J. McCloy, served as Kennedy’s special adviser on disarmament.
When the U.S. Arms Control and Disarmament Agency was created
in the fall of 1961, its first head was William C. Foster, former
Under-Secretary of State and Defense under Truman. In between,
Foster had served as a high official of the Olin Mathieson Chemical
Corp., and then board chairman of the Rockefeller-dominated
United Nuclear Corp. Foster was also a director of the CFR.

continued Rockefeller’s Eugene Black as head of the powerful
World Bank. When Black reached retirement age in 1962, he was
replaced by George D. Woods, chairman of the board of the prominent
investment bank, First Boston Corporation. Woods had many connections
with the Rockefeller interests, including being a director of
the Chase International Investment Corp., of the Rockefeller
Foundation, and of other Rockefeller-dominated concerns.

important foreign policy actions of the Kennedy Administration
were the Cuban Missile Crisis and the escalation of the war
in Vietnam. Kennedy was advised during the Cuban missile crisis
by an ad hoc group called the Ex Comm, which included,
along with his official major foreign policy advisers, Robert
A. Lovett and John J. McCloy. In the Vietnam War, Kennedy brought
in as Ambassador to South Vietnam the Boston Brahmin and Morgan-oriented
Henry Cabot Lodge, who had been Eisenhower’s Ambassador to the
United Nations and who had run for Vice-President on the Nixon
ticket in 1960. Virtually the last foreign policy act of John
F. Kennedy was to give the green light to Lodge and the CIA
to oust, and murder, South Vietnamese President Ngo Dinh Diem.

and the Power Elite

Johnson’s foreign policy was dominated by his escalation of
the Vietnam conflict into a full-scale (if undeclared) war,
and of the increasing splits over the war among the financial
power elite. Johnson retained the hawkish Rusk, McNamara, McCone,
and Lodge in their posts. As newly minted Vietnam doves were
ousted from foreign policy positions, they were replaced by
hawks. Thus, William Bundy became Assistant Secretary of State
for Far Eastern Affairs, at the same time becoming a director
of the CFR. On the other hand, the increasingly critical W.
Averell Harriman was ousted from his post of Under-Secretary
of State.

Vance continued as Johnson’s Secretary of the Army; when he
rose to Deputy Secretary of Defense, he was replaced by Vance’s
old friend and roommate at Yale, Stanley R. Resor. Resor was
a partner in the major Wall Street law firm of Debevoise, Plimpton,
Lyons, & Gates, and was the brother-in-law of economist
and banker Gabriel Hauge, president of the Manufacturers Hanover
Trust, and treasurer of the CFR.

had married into the Pillsbury flour family of Minneapolis,
which had long been connected with the holding company, the
Northwest BanCorporation. After Vance retired as Deputy Secretary
of Defense to return to law practice, he was replaced by Johnson’s
hard-line Secretary of the Navy Paul Nitze, former partner of
Dillon, Read, whose wife was a member of the Rockefeller-connected
Pratt family.

important meeting at which it was decided to escalate the Vietnam
War was held in July 1965. The meeting consisted of Johnson,
his designated foreign policy and military officials, and three
key unofficial advisers: Clark M. Clifford, the chairman of
the President’s Foreign Intelligence Advisory Board, and an
attorney for the duPonts and the Morgan-dominated General Electric
Co.; Arthur H. Dean, a partner in Rockefeller-oriented Sullivan
& Cromwell and a director of the CFR; and the ubiquitous
John J. McCloy.

after the meeting, a distinguished national committee of power
elite figures was formed to back President Johnson’s aggressive
policies in Vietnam. Chairman of the committee was Arthur H.
Dean; other members were Dean Acheson; Eugene Black, who, after
retiring as head of the World Bank, returned to be a director
of Chase Manhattan; Gabriel Hauge of Manufacturers’ Trust and
the CFR; David Rockefeller, president of the Chase Manhattan
Bank and a vice-president of the CFR; and two board members
of AT&T, William B. Murphy and James R. Killian, Jr. Indeed,
of the 46 members of this pro-Vietnam War committee, 19 were
prominent businessmen, bankers or corporate lawyers. Later,
when Johnson needed to raise taxes to supply more funds for
the war effort, he selected thirteen businessmen to head the
lobbying effort.

fascinating aspect of the Johnson Administration was the heavy
influence of men connected with the powerful Democratic investment-banking
house of Lehman Brothers. Johnson’s first Under-Secretary of
State, George Ball, who left because of increasing disillusionment
with the Vietnam War, would later become a key partner of Lehman
Brothers. Johnson’s most influential unofficial adviser was
long-time and personal legal and financial adviser, Edwin L.
Weisl, a New York attorney who was a senior law partner to Cyrus
Vance at Simpson, Thacher & Bartlett. Not only was this
law firm the general counsel to Lehman Brothers, but Weisl himself
was dubbed by Fortune magazine as “Lehman’s eighteenth
partner.” Weisl had great influence at Lehman and occasionally
sat in on partners’ meetings. He was also reputed to be the
closest friend of senior partner Robert Lehman, and sat on the
board of the Lehman-controlled One William Street Fund.

very close and influential Johnson adviser, and a consistent
hard-liner on Vietnam, was his old friend Abe Fortas, a Washington
lawyer and veteran New Dealer. During the Johnson years, Fortas
served as director, vice-president, and general counsel for
the Texas-based Greatamerica Corp., a giant holding company
controlling several insurance companies, Braniff Airways, and
two banks, including the First Western Bank and Trust Co. of

the same period, Fortas was also a director and vice-president
of the large Federated Department Stores. Both Federated and
Greatamerica had close ties with Lehman Brothers. Fred Lazarus,
Jr., a top official of Federated, sat on the board of the Lehman-controlled
One William Street Fund, along with Edwin Weisl. And the only
two non-Texans on the board of Greatamerica Corp. were William
H. Osborn, Jr., of Lehman Brothers, and Gustave L. Levy, a partner
in the closely allied Wall Street investment bank of Goldman,
Sachs & Co. Goldman, Sachs was the senior banking adviser
for the Murchison Texas oil interests, a group with whom Lyndon
Johnson was personally allied.

after Henry Cabot Lodge retired as the hawkish Ambassador to
South Vietnam in 1967, he was replaced by Ellsworth Bunker.
Bunker, who had been president of the National Sugar Refining
Company, served as ambassador to various countries in the Eisenhower
Administration, and then Ambassador to the Organization of American
States under Johnson. Bunker was connected to John L. Loeb,
the Lehman kinsman who headed the investment-banking firm of
Carl M. Loeb, Rhoades & Co. Loeb placed Bunker on the board
of Curtis Publishing Co., after he obtained control of that
firm for Loeb, Rhoades. Loeb also installed Bunker’s son, John,
as president of Curtis. Furthermore, Ellsworth Bunker’s younger
brother, Arthur, had served as director of the Lehman Corporation,
and of Lehman’s One William Street Fund until his death in 1964.

Bunker had served Johnson as Ambassador to the OAS, he continued
to sit on the board of the National Sugar Refining Company.
In late 1965, Bunker played a crucial role in Johnson’s massive
U.S. invasion of the Dominican Republic, an intervention into
a Dominican civil war to prevent a victory by left-wing forces
who would presumably pose a dire threat to American sugar companies
in the republic. As President Johnson’s emissary to the Dominican
Republic just after the invasion, Bunker played a decisive role
in installing the conservative Hector Garcia-Godoy as president.

however, the power elite became divided over the morass of the
Vietnam War. Under the blows of the Tet offensive in January
1968, Robert McNamara had become increasingly dovish and was
replaced as Secretary of Defense by hard-liner Clark Clifford,
with McNamara moving gracefully to take charge of the World
Bank. But, on investigating the situation, Clifford too became
critical of the war, and Johnson called a crucial two-day meeting
on March 22, 1968, of his highly influential Senior Informal
Advisory Group on Vietnam, known as the “Wise Men,” made up
of all his key advisors on foreign affairs.

was stunned to find that only Abe Fortas and General Maxwell
Taylor continued in the hard-line position. Arthur Dean, Cabot
Lodge, John J. McCloy, and former General Omar Bradley took
a confused middle-of-the-road position, while all the other
elite figures such as Dean Acheson, George Ball, McGeorge Bundy,
C. Douglas Dillon, and Cyrus Vance had swung around to a firm
opposition to the war.

David Halberstam put it in his The
Best and the Brightest
, these power elite leaders “let
him (Johnson) know that the Establishment – yes, Wall Street
– had turned on the war… It was hurting the economy,
dividing the country, turning the youth against the country’s
best traditions.” LBJ knew when he was licked. Only a few days
afterward, Johnson announced that he was not going to run for
re-election and he ordered what would be the beginnings of U.S.
disengagement from Vietnam.

foreign-policy aims of the Nixon Administration had a decided
Rockefeller stamp. Secretary of State William P. Rogers was
a Wall Street lawyer who had long been active in the liberal
Dewey-Rockefeller wing of the New York Republican Party. Indeed,
Thomas E. Dewey was the main backer of Rogers for the State
Department post.

entire political career was beholden to the Rockefeller interests,
as was dramatically shown one election year when, in an incident
that received unaccustomed publicity, Winthrop W. Aldrich, Rockefeller
kinsman who was president of the Chase National Bank, literally
ordered Governor Dewey into his Wall Street offices and commanded
him to run for re-election. The governor, who had previously
announced his retirement into private practice, meekly obeyed.
Furthermore, Roger’s law partner, John A. Wells, had long been
one of Nelson Rockefeller’s top political aides and had served
as Nelson’s campaign manager for President in 1964.

posts in the Nixon State Department went to financial elite
figures. Thus, the following men were successively Under Secretaries
of State (after 1972, Deputy Secretaries) in the Nixon White
House: Elliot L. Richardson, partner of a Boston Brahmin corporate
law firm and a director of the New England Trust Co., and a
man whose uncle, Henry L. Shattuck, had long been a director
of the New England Merchants National Bank and of the Mutual
Life Insurance Co. of New York.

N. Irwin II, partner of a Wall St. law firm (Patterson, Belknap
& Webb) long associated with the Rockefeller interests,
and whose wife was a sister of the Watson brothers family of

Rush, president of Union Carbide Corp., and a director of the
Bankers Trust Co. of New York. Robert S. Ingersoll, chairman
of the board of Borg-Warner Corp. and a director of the First
National Bank of Chicago.

the Deputy Under-Secretary of State for Economic Affairs under
Nixon was Nathaniel Samuels, a partner in the investment-banking
house of Kuhn, Loeb & Co., and a director of the Rockefeller-controlled
International Basic Economy Corp.

A. Kissinger

of course the dominant foreign policy figure in both the Nixon
and Ford Administrations was not William Rogers but Henry A.
Kissinger, who was named national security adviser and soon
became virtually the sole force in foreign policy, officially
replacing Rogers as Secretary of State in 1973.

was virtually “Mr. Rockefeller.” As a Harvard political scientist,
Kissinger had been discovered by John J. McCloy, and made director
of a CFR group to study the Soviet threat in the nuclear age.
He was soon made director of a special foreign policy studies
project of the Rockefeller Brothers Fund, and from there became
for more than a decade Nelson Rockefeller’s chief personal foreign
policy adviser.

three days before accepting the Nixon Administration post, Rockefeller
gave Kissinger $50,000 to ease the fiscal burdens of his official
post. Nixon and Kissinger re-escalated the Vietnam War by secretly
bombing and then invading Cambodia in 1969 and 1970; they could
be sure of compliance from Ellsworth Bunker, whom Nixon retained
as Ambassador to South Vietnam until the end of the war.

from the Vietnam War, the Nixon Administration’s major foreign
policy venture was the CIA-led overthrow of the Marxist Allende
regime in Chile. U.S. firms controlled about 80 percent of Chile’s
copper production, and copper was by far Chile’s major export.
In the 1970 election, the CIA funnelled $1 million into Chile
in an unsuccessful attempt to defeat Allende. The new Allende
regime then proceeded to nationalize large U.S.-owned firms,
including Anaconda and Kennecott Copper and the Chile Telephone
Co., a large utility which was a subsidiary of ITT (International
Telephone and Telegraph Co.).

the advice of Henry Kissinger and of ITT, the CIA funneled $8
million into Chile over the next three years, in an ultimately
successful effort to overthrow the Allende regime. Particularly
helpful in this effort was John A. McCone, the West Coast industrialist
whom Johnson had continued in charge of the CIA. Now a board
member of ITT, McCone continued in constant contact by being
named a consultant to the CIA on the Chilean question. President
Nixon continued Johnson holdover Richard Helms as head of the
CIA, and Helm’s outlook may have been influenced by the fact
that his grandfather, Gates W. McGarrah, had been the head of
the Mechanics and Metals National Bank of New York, director
of Bankers Trust, and chairman of the board of the powerful
Federal Reserve Bank of New York.

the $8 million poured into Chile by the CIA, over $1.5 million
was allocated to Chile’s largest opposition newspaper, El
Mercurio, published by wealthy businessman Augustin Edwards.
Edwards was also, not coincidentally, vice president of Pepsico,
a company headed by President Nixon’s close friend Donald M.
Kendall. The transaction was arranged at a quiet breakfast meeting
in Washington, set up by Kendall, and including Edwards and
Henry Kissinger. After the successful overthrow of Allende by
a military junta in September 1973, the man who became the first
Minister of Economy, Development, and Reconstruction was Fernando
Leniz, a high official of El Mercurio who also served
on the board of the Chilean subsidiary of the Rockefeller-controlled
International Basic Economy Corporation.

Nixon also established, for the first time, diplomatic relations
with Communist China. Nixon was urged to take this step by a
committee of prominent businessmen and financiers interested
in promoting trade with and investments in China. The group
included Kendall; Gabriel Hauge, chairman of Manufacturers Hanover
Trust Co.; Donald Burnham, head of Westinghouse; and David Rockefeller,
chairman of the Chase Manhattan Bank.

first envoy to China was the veteran elite figure and diplomat,
David K.E. Bruce, who had married a Mellon, and who had served
in high diplomatic posts in every Administration since that
of Harry Truman. After Bruce became Ambassador to NATO, he was
replaced by George H.W. Bush, a Texas oil man who had served
briefly as Ambassador to the United Nations. More important
than Bush’s Texas oil connections was the fact that his father,
Connecticut Senator Prescott
Bush, was a partner at Brown Brothers, Harriman.

Trilateral Commission

July 1973 a development occurred which was to have a critical
impact on U.S. foreign – and domestic – policy. David
Rockefeller formed the Trilateral Commission, as a more elite
and exclusive organization than the CFR, and containing statesmen,
businessmen, and intellectuals from Western Europe and Japan.

Trilateral Commission not only studied and formulated policy,
but began to place its people in top governmental posts. North
American secretary and coordinator for the Trilaterals was George
S. Franklin, Jr., who had been for many years executive director
of the CFR. Franklin had been David Rockefeller’s roommate in
college and had married Helena Edgell, a cousin of Rockefeller.
Henry Kissinger was of course a key member of the Trilaterals,
and its staff director was Columbia University political scientist
Zbigniew Brzezinski, who was also a recently selected director
of the CFR.

Ford continued Kissinger as his Secretary of State and top foreign
policy director. Kissinger’s leading aide during the Ford years
was Robert S. Ingersoll, Trilateralist from Borg-Warner Corp.
and the First National Bank of Chicago. In 1974, Ingersoll was
replaced as Deputy Secretary of State by Charles W. Robinson,
a businessman and Trilateralist.

to Great Britain – and then moved to several other posts
– was Elliot Richardson, now a Trilateralist and a director
of the CFR. George Bush, Trilateralist, was retained as Ambassador
to China, and then became director of the CIA. He was replaced
as Ambassador by Thomas S. Gates, Jr., head of the Morgans’
flagship bank, Morgan Guaranty Trust Co. Meanwhile, Robert McNamara
continued to head the World Bank. Becoming head of the Export-Import
Bank in 1975 was Stephen M. DuBrul, Jr., who had had the distinction
of being a partner of both Lehman Brothers and Lazard Freres.

Earl Carter and his administration were virtually complete creatures
of the Trilateral Commission. In the early 1970s, the financial
elite was looking for a likely liberal Southern governor who
might be installed in the White House. They were considering
Reubin Askew and Terry Sanford, but they settled on the obscure
Georgia governor, Jimmy Carter. They were aided in their decision
by the fact that Jimmy came highly recommended.

the first place, it must be realized that “Atlanta”
has for decades meant Coca-Cola, the great multi-billion dollar
corporation which has long stood at the center of Atlanta’s
politico-economic power elite. Jimmy Carter’s long-time attorney,
close personal friend, and political mentor was Charles Kirbo,
senior partner at Atlanta’s top corporate law firm of King &

& Spalding had long been the general counsel to Coca-Cola,
and also to the mighty financial firm, the Trust Co. of Georgia,
long known in Atlanta as “the Coca-Cola bank.” The
long-time head and major owner of Coca-Cola was the octogenarian
Robert W. Woodruff, who had long been highly influential in
Georgia politics. With Kirbo at his elbow, Jimmy Carter soon
gained the whole-hearted political backing of the Coca-Cola

contributors to Carter’s race in the 1971 Democratic primary
for governor were: John Paul Austin, powerful chairman of the
board of Coca-Cola; and three vice-presidents of Coke, including
Joseph W. Jones, the personal assistant to Robert Woodruff.
If Pepsi was a Republican firm, Coke had long been prominent
in the Democratic Party; thus, James A. Farley, long-time head
of the Democratic National Committee, was for thirty-five years
head of the Coca-Cola Export Company.

1971, Carter was introduced to David Rockefeller by the latter’s
friend J. Paul Austin, who was to become a founding member of
the Trilateral Commission. Austin was long connected with the
Morgan interests, and served as a director of the Morgan Guaranty
Trust Co., and of Morgan’s General Electric Co. Other early
political backers of Jimmy Carter were the Gambrell brothers,
David and E. Smyth, of a family which was a major stockholder
in Rockefeller-controlled Eastern Air Lines. The Gambrell law
firm, indeed, served as the general counsel for Eastern. They,
too, aided in forming the Carter-Rockefeller connection.

the same period, Carter was also introduced to the powerful
Hedley Donovan, editor-in-chief of Time magazine, who
was also to be a founding Trilateral. Rockefeller and Donovan
liked what they saw, and Carter was also recommended to the
Trilaterals by the Atlanta Committee of the Council on Foreign

Carter was invited to become a member of the Trilateral Commission
shortly after it was formed, and he agreed enthusiastically.
Why did the Trilaterals appoint an obscure Georgia governor
with admittedly no knowledge of foreign affairs? Ostensibly
because they wanted to hear the views of a Southern governor.
Far more likely, they were grooming him for the Presidency and
wanted to instruct him in trilateralism. Carter took instruction
well, and he wrote later of the many happy hours he spent sitting
at the feet of Trilateral executive director and international
relations expert Zbigniew Brzezinski.

the unknown Carter needed more than even money for his 1975–1976
campaign for President was extensive and favorable media exposure.
He received it from the Trilateral-influenced Establishment
media, led by Time’s Hedley Donovan and Trilateral syndicated
columnists Joseph Kraft and Carl Rowan.

New York Carter backers, who served on the Wall Street Committee
for Carter or hosted gatherings on his behalf, included Roger
C. Altman, partner of Lehman Brothers, the chairman of which,
Peter G. Peterson, was a Trilateral member; banker John Bowles;
C. Douglas Dillon, of Dillon, Read, who also served as a member
of the international advisory board of the Chase Manhattan Bank;
and Cyrus Vance, a Trilateral founder and vice-chairman of the

of the six national finance directors of Jimmy Carter’s costly
pre-convention race for the Presidential nomination, three were
high officials at Lehman Brothers, one was a vice-president
of Paine, Webber, another was a vice-president of Kidder, Peabody,
and a sixth was the venerable John L. Loeb, senior partner of
Loeb, Rhodes, & Co., and a Lehman by marriage. Other prominent
business fund-raisers for Carter’s election campaign included
Walter Rothschild, who had married a member of the Warburg family
of Kuhn, Loeb & Co., and Felix Rohatyn, a partner of Lazard

Carter Administration proved to be Trilateral through and through,
especially in foreign affairs. Trilateral members holding high
posts in the Carter Administration included:

  • President,
    James Earl Carter;
  • Vice-President
    Walter, (“Fritz”) Mondale;
  • National
    Security Adviser, Zbigniew Brzezinski;
  • Secretary
    of State Cyrus Vance, who was now chairman of the board
    of the Rockefeller Foundation. Vance’s law firm of Simpson,
    Thacher & Bartlett had long served as general counsel
    for Lehman Brothers and Manufacturers Hanover Trust Co.
    Vance himself served up to 1977 as a director of IBM, the
    New York Times Co., and Lehman’s One William Street Fund.
    It perhaps also helped Vance’s cause that Simpson, Thacher
    & Bartlett was the New York general counsel for Coca-Cola
  • Deputy
    Secretary of State, Warren Christopher. This Los Angeles
    corporate lawyer had no diplomatic experience whatever for
    this high post, but his law firm of O’Melveny and Myers
    was a prominent one, and he acted as the Los Angeles attorney
    for IBM. More important was the fact that Christopher was
    the only Trilateral Commission member from the Western half
    of the United States.
  • Under-Secretary
    of State for Economic Affairs, Richard Cooper. This Yale
    professor was also on the board of the Rockefeller-controlled
    J. Henry Schroder Banking Corporation.
  • Under-Secretary
    of State for Security Assistance, Science, and Technology,
    Lucy Wilson Benson. Mrs. Benson had been a longtime president
    of the League of Women Votes and highly active in Common
    Cause; she was also a board member of the Lehman-oriented
    Federated Department Stores.
  • Assistant
    Secretary of State for East Asian and Pacific Affairs, Richard
  • Ambassador
    at Large, Henry D. Owen, of the Brookings institution and
    the CFR.
  • Ambassador
    at Large for the Law of the Sea Treaty, Elliot Richardson.
  • Ambassador
    at Large for Non-Proliferation Matters (nuclear weapons
    negotiations), Gerald C. Smith, head of the U.S. delegation
    at the SALT talks under Nixon, Washington attorney
    at Wilmer, Cutler & Pickering, and North American Chairman
    of the Trilateral Commission.
  • Ambassador
    to the United Nations Andrew Young.
  • Chief
    Disarmament Negotiator, Paul C. Warnke, senior partner of
    Clark Clifford’s influential Washington law firm.
  • Assistant
    Secretary of the Treasury for International Affairs, C.
    Fred Bergsten, of the Brookings Institution, consultant
    to the Rockefeller Foundation, and a member of the editorial
    board of the CFR’s prestigious quarterly journal, Foreign
  • Ambassador
    to Communist China, Leonard Woodcock, formerly head of the
    United Automobile Workers. It is interesting to note that
    it was under the Carter-Woodcock aegis that, one week after
    the first establishment of formal ambassadorial relations
    with Communist China, China signed an agreement with Coca-Cola
    giving it exclusive cola sales in that country.
  • Secretary
    of Defense, Harold Brown. This physicist was president of
    the California Institute of Technology – the only Trilateral
    college president – and also served on the board of
    IBM and of Schroders, Ltd., the Rockefeller-controlled British
    parent company of J. Henry Schroder Bank of New York.
  • Deputy
    to the Director of the CIA, Harvard Professor Robert R.
  • Secretary
    of the Treasury, W. Michael Blumenthal, head of Bendix Corp.,
    a director of the CFR, and a trustee of the Rockefeller
  • Chairman
    of the Federal Reserve Board, Paul A. Volcker. Volcker was
    named chairman by President Carter at the suggestion of
    David Rockefeller. Small wonder, since Volcker had been
    an executive at the Chase Manhattan Bank, and was a director
    of the CFR and a trustee of the Rockefeller Foundation.
  • And
    finally, White House Advisor on Domestic and Foreign Policy,
    Hedley Donovan, formerly editor-in-chief of Time magazine.

of the first important Carter foreign policy actions was the
negotiation of the Panama Canal treaty, giving the Canal to
Panama, and settling the controversy in such a way that U.S.
taxpayers paid millions of dollars to the Panama government
so they could repay their very heavy loans to a number of Wall
Street banks.

co-negotiator of the treaty was Ellsworth Bunker, who bad been
engaged in fruitless negotiations since 1974. The treaty was
not concluded until Carter added as co-negotiator the Trilateralist
Sol Linowitz, a senior Washington partner of the Wall Street
corporate law firm of Coudert Brothers, and a board member of
Pan-Am Airways, the Marine Midland Bank of New York, and Time,

Marine Midland Bank itself held part of two bank consortium
loans to Panama. Furthermore, no fewer than 32 Trilaterals were
on the boards of the 31 banks participating in a $115 million
10-year Eurodollar Panama loan issued in 1972; and 15 Trilaterals
were on the boards of fourteen banks participating in the $20
million Panama promissory note issued in the same year.

crucial foreign policy action of the Carter regime was the President’s
reluctant decision to admit the Shah of Iran into the U.S.,
a decision that led directly to the Iran hostage crisis and
the freezing of Iranian assets in the U.S. Carter was pressured
into this move by the persistent lobbying
of David Rockefeller and Henry Kissinger, who might well have
realized that a hostage crisis would ensue. As a result, Iran
was prevented from pursuing its threat of taking its massive
deposits out of Chase Manhattan Bank, which would have caused
Chase a great deal of financial difficulty. In politics, one
hand washes the other.

by the way, was scarcely put back in the shadows when he left
government office in 1977. He quickly became a director of the
CFR, a member of the executive committee of the Trilateral Commission,
and chairman of the International Advisory Board of the Chase
Manhattan Bank.

Ronald Reagan’s early campaigning included attacks on the Trilateral
Commission, the Trilateralists have by now been assured that
the Reagan Administration is in safe hands.

signal was Reagan’s choice of Trilateralist George Bush, who
had also become a director of the First International Bank of
London and Houston, as Vice-President of the United States,
and of Reagan’s post-convention reconciliation visit to Washington
and to the home of David Rockefeller.

most influential White House aides, like James A. Baker, had
been top campaigners for Bush for President in 1980. The most
influential corporate firm in the Reagan Administration is the
California-based Bechtel Corporation. Bechtel vice-president
and general counsel Caspar Weinberger, a Trilateralist, is Secretary
of Defense, and fellow top Bechtel executive George Shultz,
former board member of Borg-Warner Corp, General American Transportation
Corp., and Stein, Roe & Farnham Balanced Fund, is Secretary
of State.

Arthur F. Burns, former Chairman of the Fed, is ambassador to
West Germany, Paul Volcker has been reappointed as head of the
Fed, and Henry Kissinger is at least partially back as head
of a Presidential Commission to study the question of Central

is hard to see how the Trilateralists can lose in the 1984 elections.
On the Republican ticket they have George Bush, the heir apparent
to Ronald Reagan; and in the Democratic race the two front-runners,
Walter Mondale and John Glenn, are both Trilateralists, as is
Alan Cranston of California. And, as a long shot, John Anderson
of the “National Unity Party” is also a Trilateral member. To
paraphrase a famous statement by White House aide Jack Valenti
about Lyndon Johnson, the Trilateralists and the
financial power elite can sleep well at night regardless of
who wins in 1984.

By Justin Raimondo

Rothbard’s 1984 analysis of modern American history as a
great power struggle between economic elites, between the
House of Morgan and the Rockefeller interests, culminates
in the following conclusion: “the financial power elite
can sleep well at night regardless of who wins in 1984.”
By the time you get there, the conclusion seems understated
indeed, for what we have here is a sweeping and compressed
history of 20th century politics from a power
elite point of view. It represents a small and highly specialized
sample of Rothbard’s vast historical knowledge coming together
with a lifetime devoted to methodological individualism
in the social sciences. It appeared first in 1984, in the
thick of the Reagan years, in a small financial publication
called World Market Perspective. It was printed for
a larger audience by the Center for Libertarian Studies
in 1995, and appears in 2005 online for the first time.

Left and Right are constantly referring to abstract “forces”
when they examine and attempt to explain historical patterns.
Applying the principle of methodological individualism –
which attributes all human action to individual actors
– and the economic principles of the Austrian School,
Rothbard formulated a trenchant overview of the American
elite and the history of the modern era.

analysis flows, first, from the basic principles of Austrian
economics, particularly the Misesian analysis of banking
and the origin of the business cycle. This issue is also
discussed and elaborated on in one of his last books, The
Case Against the Fed
(Mises Institute, 1995).
Here, the author relates the history of how the Federal
Reserve System came to be foisted on the unsuspecting American
people by a high-powered alliance of banking interests.
Rothbard’s economic analysis is clear, concise, and wide-ranging,
covering the nature of money, the genesis of government
paper money, the inherent instability (and essential fraudulence)
of fractional reserve banking, and the true causes of the
business cycle.

Rothbard explains in his economic writings, the key is in
understanding that money is a commodity, like any other,
and thus subject to the laws of the market. A government-granted
monopoly in this, the very lifeblood of the economic system,
is a recipe for inflation, a debased currency – and
the creation of a permanent plutocracy whose power is virtually

the present essay, as in The Case Against the Fed, it
is in the section on the history of the movement to establish
the Federal Reserve System that the Rothbardian power elite
analysis comes into full and fascinating play. What is striking
about this piece is the plethora of details. Rothbard’s
argument is so jam-packed with facts detailing the social,
economic, and familial connections of the burgeoning Money
Power, that we need to step back and look at it in the light
of Rothbardian theory, specifically Rothbard’s theory of
class analysis.

eagerly reclaimed the concept of class analysis from the
Marxists, who expropriated it from the French theorists
of laissez-faire. Marx authored a plagiarized, distorted,
and vulgarized version of the theory based on the Ricardian
labor theory of value. Given this premise, he came up with
a class analysis pitting workers against owners.

of Rothbard’s many great contributions to the cause of liberty
was to restore the original theory, which pitted the people
against the State. In the Rothbardian theory of class struggle,
the government, including its clients and enforcers, exploits
and enslaves the productive classes through taxation, regulation,
and perpetual war. Government is an incubus, a parasite,
incapable of producing anything in its own right, and instead
feeds off the vital energies and productive ability of the

is the first step of a fully-developed libertarian class
analysis. Unfortunately, this is where the thought processes
of all too many alleged libertarians come to a grinding
halt. It is enough, for them, to know the State is the Enemy,
as if it were an irreducible primary.

William Pitt put it in 1770, “There is something behind
the throne greater than the king himself.” Blind to the
real forces at work on account of their methodological error,
Left-libertarians are content to live in a world of science
fiction and utopian schemes, in which they are no threat
to the powers that be, and are thus tolerated and at times
even encouraged.

Left-libertarian failure to take the analytical process
one step further is, in many cases, a failure of nerve.
For it is clear, given libertarian theory and the economic
insights of the Austrian School, where the next step leads.
No empirical evidence is necessary, at this point (although
that will come later, and in spades); the truth can be deduced
from pure theory, specifically the Austrian theory of the
nature of money and banking, and the Misesian analysis of
the origin of the business cycle.

deduction was brilliantly and colorfully made in the first
issue of The Journal of Libertarian Studies (Winter
1977), by two students of Rothbard, Walter E. Grinder and
John Hagel III, in “Toward
a Theory of State Capitalism: Ultimate Decision-Making and
Class Structure

a pure free market would necessarily prevent the development
of a banking monopoly, “however, the market system does
concentrate entrepreneurial activity and decision-making
within the capital market because of the considerable benefits
which are rendered by a certain degree of specialization.”

“specialized capital market, by the very nature of its integrative
role within the market system, will emerge as a strategic
locus of ultimate decision-making.” Given that some individuals
will choose the political means over the economic, some
of these great fortunes will utilize their tremendous resources
to cartelize the market and insulate themselves against
risk. The temptation for bankers in particular to wield
the power of the State to their benefit is very great because
it permits banks to inflate their asset base systematically.
The creation of assets made possible by these measures to
a great extent frees the banking institutions from the constraints
imposed by the passive form of ultimate decision-making
exercised by their depositors. It thereby considerably strengthens
the ultimate decision-making authority held by banks vis–vis
their depositors. The inflationary trends resulting from
the creation of assets tend to increase the ratio of external
financing to internal financing in large corporations and,
as a consequence, the ultimate decision-making power of
banking institutions increase over the activities of industrial

Austrian insight focuses on the key role played by the central
banks in generating the distortion of market signals that
leads to periodic booms and busts, the dreaded business
cycle which is always blamed on the inherent contradictions
of unfettered capitalism.

in fact this capitalism is anything but unfettered. (Try
starting your own private bank.) The last thing American
bankers want is an unfettered banking system. Rothbard not
only traces the original market distortion that gives rise
to the business cycle, but also identifies the source (and
chief beneficiaries) of this distortion. It was Mises who
pointed out that government intervention in the economy
invariably leads to yet more intervention in order to “fix”
the havoc wreaked – and there is a certain logic in
the fact that it was the original culprits who decided to
“fix” the distortions and disruptions caused by their policies
with further assaults on the market mechanism. As Grinder
and Hagel put it:

the U.S., this intervention initially involved sporadic
measures, both at the federal and state level, which generated
inflationary distortion in the monetary supply and cyclical
disruptions of economic activity. The disruptions which
accompanied the business cycle were a major factor in the
transformation of the dominant ideology in the U.S. from
a general adherence to laissez-faire doctrines to an ideology
of political capitalism which viewed the state as a necessary
instrument for the rationalization and stabilization of
an inherently unstable economic order.

as Enemies of Capitalism

explains the strange historical fact, recounted at length
and in detail by Rothbard, that the biggest capitalists
have been the deadliest enemies of true capitalism. For
virtually all of the alleged social “reforms” of the past
fifty years were pushed not only by “idealistic” Leftists,
but by the very corporate combines caricatured as the top-hatted,
pot-bellied “economic royalists” of Wall Street.

neoconservative Right depicts the battle against Big Government
as a two-sided Manichean struggle between the forces of
light (that is, of capitalism) and the remnants of largely
discredited Leftist elites. But Rothbard’s historical analysis
reveals a much richer, more complex pattern: instead of
being two-sided, the struggle for liberty pits at least
three sides, each against the other. For the capitalists,
as John T. Flynn, Albert Jay Nock, and Frank Chodorov all
pointed out, were never for capitalism. As Nock put it:

is one of the few amusing things in our rather stodgy world
that those who today are behaving most tremendously about
collectivism and the Red menace are the very ones who have
cajoled, bribed, flattered and bedeviled the State into
taking each and every one of the successive steps that lead
straight to collectivism. [“Impostor Terms,” Atlantic
Monthly, February 1936.]

New Deal economic policy was, as Rothbard demonstrated,
prefigured by Herbert Hoover, champion of big business,
and foreshadowed in the reforms of the Progressive era.
As the revisionist economic historians, such as Gabriel
Kolko, have shown, those who regulated the great industries
in the name of progressive “reform” were recruited from
the very cartels and trusts they were created to tame.

of course the monopolists didn’t mind being tamed, so long
as their competitors were tamed (if not eliminated). Every
giant leap forward of economic planning and centralization
– central banking, the welfare state, “civil rights,”
and affirmative action – was supported if not initiated
by the biggest and most politically powerful business interests
in the country. The House of Morgan, the Rockefellers, and
the Kuhn-Loebs must take their place alongside the First,
Second, and Third Internationals as the historic enemies
of liberty.

multinational corporations, and their economic satellites,
in alliance with governments and the big banks, are in the
process of extending their influence on a global scale:
they dream of a world central bank, global planning, and
an international welfare state, with American troops policing
the world to guarantee their profit margins.

the long battle to create a central bank in the U.S., the
high priests of high finance finally seized and consolidated
control of domestic economic policy. It only remained for
them to extend their dominance internationally, and for
this purpose they created the Council on Foreign Relations,
and, later, the Trilateral Commission.

two groups have been seized upon by the new populist Right
as the virtual embodiments of the Power Elite, and rightly
so. It is only by reading Rothbard, however, that this insight
is placed in its proper historical perspective. For the
fact of the matter is that, as Rothbard shows, the CFR/
Trilateralist network is merely the latest incarnation of
a trend deeply rooted in modern American history. Long before
the founding of the CFR or the Trilateral Commission, there
was a power elite in this country; that elite will likely
endure long after those organizations are gone or transmuted
into something else. Rothbard’s unmasking of the historical
and economic roots of this trend is vital in understanding
that this is not a “conspiracy” centered in the CFR and
the Trilateralist groups, as such, but an ideological trend
traditionally centered in the Northeast, among the upper
classes, and deeply rooted in American history.

put the word “conspiracy” in quotes because it has become
the favorite swearword of the Respectable Right and the
“extremist”-baiting Left. If it is conspiracy-mongering
to believe that human beings engage in purposeful activity
to achieve their economic, political, and personal goals,
then rational men and women must necessarily plead guilty.
The alternative is to assert that human action is purposeless,
random, and inexplicable. History, in this view, is a series
of discontinuous accidents.

it would be inaccurate to call the Rothbardian world view
a “conspiracy theory.” To say that the House of Morgan was
engaged in a “conspiracy” to drag the U.S. into World War
I, when indeed it openly used every stratagem, every
lever both economic and political, to push us into “the
war to end all wars,” seems woefully inadequate. This was
not some secret cabal meeting in a soundproof corporate
boardroom, but a “conspiracy” of ideas openly and vociferously
expressed. (On this point, please note and underscore Rothbard’s
analysis of the founding of The New Republic as the
literary flagship of “the growing alliance for war and statism”
between the Morgan interests and liberal intellectuals –
and isn’t it funny how some things never change?)

conspiracy theory attributes virtually all social problems
to a single monolithic agency. Radical feminism, which attributes
all the evil in the world to the existence of men, is a
classic conspiracy theory; the paranoid views of the ex-Communists
in the conservative movement, who were obsessed with destroying
their ex-comrades, was another.

the complexity and subtlety of the Rothbardian analysis,
backed up by the sheer mass of rich historical detail, sets
Rothbard on an altogether different and higher plane. Here
there is no single agency, no omnipotent central committee
that issues directives, but a multiplicity of interest groups
and factions whose goals are generally congruent.

this milieu, there are familial, social, and economic connections,
as well as ideological complicity, and none is better than
Rothbard at ferreting out and unraveling these biographical
details. Taken together, the author’s small and studied
brushstrokes paint a portrait of a ruling class whose ruthlessness
is surpassed only by its brazen disloyalty to the nation.

is a portrait that remains unchanged, in its essentials,
to this day. Wall
Street, Banks, and American Foreign Policy
was written
and published in 1984, during the Reagan years.

started out by denouncing the power elite and specifically
the CFR and the Trilateralists, but wound up with that epitome
of the Establishment, Skull-&-Bonesman George Bush as
his vice president and successor.

is a longtime CFR director, and Trilateralist; most of his
major cabinet officers, including his chairman of the joint
chiefs, Colin Powell, were CFR members. The Clinton administration
is similarly afflicted, from the President (CFR/Trilateral)
on down through Donna Shalala (CFRJ Trilateral) and George
Stephanopoulos (CFR), with the CFR honeycombed (as usual)
throughout the State Department. In addition to Secretary
of State Warren Christopher, other CFR members in the Clinton
cabinet include Laura Tyson, chairman of the Council of
Economic advisors, Treasury Secretary Robert Rubin; Interior
Secretary Bruce Babbitt, HUD honcho Henry Cisneros; and
Alice Rivlin, 0MB director.

other side of the aisle is equally co-opted at the leadership
level, as vividly dramatized by Gingrich’s retreat before
the power and majesty of Henry Kissinger. One naturally
expects cowardice from politicians, but the indictment also
includes what passes for the intellectual leaders of the
Republican free-market “revolution.”

is a certain mentality that, no matter how convincing the
evidence, would never even consider the argument put forward
in Wall Street, Banks, and American Foreign Policy. This
attitude stems from a particular kind of cowardice. It is
a fear, first of all, of not being listened to, a dread
of consigning oneself to the role of Cassandra, the ancient
Greek prophetess who was granted the power of foresight
by the gods, with but a single limitation: that none would
ever heed her warnings. It is far easier, and so much more
lucrative, to play the role of court historian.

is a role the author of this scintillating pamphlet never
could have played, even if he had tried. For the truth (or,
at least, the search for it) is so much more interesting
than the official histories and the conventional wisdom
of the moment. The sheer pleasure Rothbard took in unearthing
the truth, in carrying out his vocation as a true scholar,
is evident not only on every page of the present work but
throughout his 28 books and thousands of articles and speeches.

was not afraid of sharing Cassandra’s fate because, in the
first place, truth is a value in its own right, and ought
to be upheld for its own sake. Second, the truth has a way
of eventually getting out, in spite of the most strenuous
efforts to suppress it.