“The European war, which brought inconceivable suffering to so many millions of human beings, presented itself to Wall Street as a financial opportunity, infinitely beyond its wildest dreams of former days.” — National City Bank of New York (Citibank) President Frank Vanderlip (1864 – 1937), speaking to an audience of fellow bankers in Chicago on Dec.16, 1916
One of the hidden gems of 20th century history is “Shall It Be Again?” (1922) written by investigative journalist and author John Kenneth Turner (1879-1948), who was over target on the role of the warmongering plutocrats looking to profit from the Great War (World War I).
A century later, what’s much needed are the continuity pedigrees of the Crime Syndicate crooks who were involved in the rackets described by Turner.
Two faced President Woodrow Wilson was fully involved in World War I (WWI) rackets, as revealed in his inverted obfuscation, which is quoted in Turner’s book:
“Patriotism leaves profits out of the question. In these days … when we are sending hundreds of thousands of our young men across the seas … no true patriot will permit himself to take toll of their heroism in money or seek to grow rich by the shedding of their blood.” — U.S. President Woodrow Wilson, “Appeal to the Business Interests” (July 11, 1917)
Even the figures of the U.S. Treasury Department (given to the public Apr. 18, 1920) show, in spite of all concealments and evasions, that the war created 21,000 new American millionaires, and that, during the war period, 69,000 men made more than three billion dollars over and above their normal income.
Financial Interests in the War Boom Leading Up to America’s Entry into WWI
- August 1914, war erupts in Europe, and U.S. bankster and industrial interests immediately jump on board, supplying the Entente (primarily France and Britain)
- November 1916, with public anti-war sentiment strong, bankster agent Woodrow Wilson is reelected president on a bogus “Vote for Wilson, He Kept You Out of the War” campaign
- Feb. 4, 1917, diplomatic relations with Germany are broken
- April 6, 1917, war was declared
Turner writes up to that point:
Never in the history of America, probably never in the history of any country, had there been such open and direct control of governmental activities by the very rich. So long as a handful of men in Wall Street control the credit and industrial processes of the country, they will continue to control the press, the government, and, by deception, the people. They will not only compel the public to work for them in peace, but to fight for them in war.
The year 1916 had been by far the most prosperous in the history of American industry and finance. This prosperity was directly due to the European war. Between August, 1914, and February, 1917, more than 10,500,000,000 dollars’ worth of goods were shipped out of America, an excess over imports of five and one-half billion dollars. In exchange for food, munitions, and other supplies, sold to the Entente countries (France, Britain and Russia), American capitalists had increased their stocks of gold by nearly a billion dollars, had bought back two billion dollars’ worth of securities in American railways and other corporations owned in Europe, and had loaned something like two billion dollars to the Entente governments besides.
The demand for supplies abroad made it possible to run up domestic prices to unprecedented levels. With all the inflation of foreign trade, for every dollar’s worth of food and other supplies sold abroad, twenty-five dollars’ worth was sold at home. The increase in domestic prices was only partially offset by increases in returns to the farmer and in wages. The American public in peace was paying greater war profits to Wall Street than were the warring nations themselves. It was frequently stated that the young J.P. Morgan made more money in two years than the senior Morgan had made in all the days of his life.
A Hiccup Emerges in the Operation of the War Racketeers
When the German government first began making peace overtures, before the end of 1915, American munitions shares fell from 5 to 40 per cent. This was simply an expression of a fear that peace would put an end to the boom. Later, the periodical German overtures depressed the stock market in each case in proportion to the probability that such overtures would bring results. As late as December, 1916, the peace parleys sent American stocks down 15 to 20 per cent.
The beginning of 1917 found Wall Street facing a crisis.
That crisis was due to the approaching exhaustion of Entente credit in America. The war trade was based on gold imports, security purchases, and credits. As the supply of gold and securities was drawn upon, the war trade came to depend more and more upon credit. Some of the vast loans which Wall Street made to the Entente, to keep up the war trade, were secured, in part, by collateral which might not be greatly affected by the outcome of the war, such as American securities.
But a fraction of the collateral, such as British securities, depended for its value upon the future stability of the British Empire. Some of the loans, indeed, were wholly unsecured, and the repayment rested solely upon the continued solvency of the Entente governments. Of this class were the original loan of $500,000,000, known as the Anglo-French loan, and the loans to French municipalities.
That future war orders depended, not upon enlarged Entente facilities but upon further extensions of credit. This was admitted by Mr. Davison in a published interview, November 3, 1916: “For a time Europe was forced to place their orders in America, but now, unless they make favorable terms, France and England will make their own munitions.” “Favorable terms” meant nothing more nor less than inadequately secured credits, which Mr. Davison and Mr. Morgan were finding more and more trouble in placing among their associates in America.
So, at the beginning of 1917, Wall Street was faced with two contingencies : first, the end of the war boom—due to the exhaustion of Allied credit; second, the possible loss of a large part of $2,000,000,000 in loans, principal and interest—due to the inability of the Entente to score a decisive victory.
At the beginning of 1917, American war entry on the side of the Entente was the one thing that would solve all problems. First, it would insure another long period of war orders. Second, it would insure Allied credit – which was not only insured; it was guaranteed. Allied trade, which, in the words of a financial circular, had come to be looked upon as a “pinchbeck,” again became “the genuine article.” The boom was prolonged. Third, it might be so manipulated as to serve in the attainment of certain other advantages of a permanent nature, toward which Wall Street had been hungrily looking [plutocratic capture of government operations].
Considering any of these three advantages, American participation in the war against Germany would constitute the most tremendous and profitable coup in the history of American finance.
Wall Street Banksters Become War Promoters and Cheerleaders
Not a single recognized spokesman of our greatest financial and industrial interests, anywhere in public life, expressed opposition to war during the critical weeks of February and March, 1917. On the contrary, our leading financiers themselves, who up to that period had seldom been quoted on political questions, personally endorsed the proposition of belligerency.
While Wilson was running for President on fraudulent peace pledges, the National Security League and the Navy League, which carried on the intensive preparedness agitation throughout 1916, enjoyed the financial support of the richest millionaires.
The staging of the great preparedness parades, also in 1916, involved the expenditure of huge sums of money. Aside from any consideration of mere expenses, however, those parades would have been impossible without the hearty cooperation of the largest employers of labor and the most outstanding business leaders.
In February, 1917, Representative Calloway, on the floor of Congress, charged the Morgan interests with having, in March, 1915, organized and financed a huge propaganda machine embracing twelve influential publishers and 179 selected newspapers, for the purpose of manufacturing sentiment favorable to American participation in the war.
These charges were renewed in May, 1921, by Representative Michelson of Illinois. The latter called attention to the fact that, in his history of the war, Gabriel Hanotaux tells of a conference with the late Robert Bacon, then a member of the Morgan firm, in 1914, in which he and Bacon drew up plans and specifications for a great scare campaign in this country. Hanotaux also suggests that France was ready to make peace in 1914, but was dissuaded by Bacon and other American politicians, who gave assurances that they could ultimately bring America into the war on the side of France.
Any one who has read the Pujo Committee report on the Money Trust, showing the concentration of credit in the hands of three great banks, and the control of small banks by the big ones — and any one who appreciates the dependence of the more powerful organs of the press upon the dominant business interests of the communities which they serve, and especially upon the banks — will understand that the propaganda storm of the months preceding our entrance into the war would have been impossible without the approval and instigation of Wall Street. As Wall Street wanted war before it came, so, after it came, Wall Street promoted the war.
While the Conscription Bill was pending after war was declared, great industrial corporations, milling firms, and banks, spent huge sums of their own money in the campaign for recruits. Merchant princes offered their stores for recruiting depots, and their employees for any capacity in which the government might wish to use them. Financiers went about the country making speeches on democracy. [Nothing has changed.]
In opposing the Conscription Bill in Congress, Representative Huddleston offered a formidable list of multimillionaires who favored conscription. Among them was John D. Rockefeller, Jr., who came out for conscription as the one means of “substituting real democracy for existing class distinctions” in America.
There emerged an “Atlanticist” foreign policy establishment — a group of influential Americans drawn primarily from upper-class lawyers, bankers, academics and politicians of the Northeast — committed to a strand of Anglophile internationalism.
Immediately after the breaking of diplomatic relations in February, the International Mercantile Marine Company—a British-controlled corporation, in which, however, America’s most powerful financiers are interested—began holding its ships in port. At the same time the railroads, which are under the control of the same American financiers who are interested in the International Mercantile Marine Company, began to refuse shipments because of alleged congestion due to the ships’ being held in port. This tying up of American domestic commerce “by Germany” was played upon with great effect by the press.
The tying up of American shipping by big business in February and March cannot be explained in any other way except as a conspiracy to promote war sentiment.
The Wall Street correspondent of the Philadelphia Public Ledger diagnosed financial sentiment (Mar. 22) as follows :
Briefly stated, Wall Street believes that war is just one move ahead. And Wall Street is glad that it is so. The financial district here is unqualifiedly for war as soon as it can be declared. ‘It is a good thing for the country,’ one trust president declared. … This is the way Wall Street feels about the prospects of war. Only a few of the men thus interviewed were willing to have their names mentioned; their enthusiasm for war, however, was too real to be misunderstood.
March 26, at the solicitation of the Chamber of Commerce of the United States, J.P. Morgan & Co. loaned the government $1,000,000 without interest and without security, for the purchase of supplies immediately desired in anticipation of war.
At the same time, Wall Street was giving the President the fullest assurances that it was ready to cooperate also in the matter of loans. March 23, we find Thomas W. Lamont delivering a patriotic address entitled “America Financially Prepared,” in which he promised : “If the Treasurer should decide to issue a government obligation to-morrow for a billion dollars, the whole sum would be waiting for it.”
From the declaration of war until the Germans quit, not one of the great vehicles of publicity breathed a suggestion that our war was a mistake, or that the official war propaganda was unsound, or that the government should attempt to arrange its differences with the enemy by agreement. In the demand for victory and a dictated peace, there was not a dissenting voice.
April 4, the New York Times said : “Not since Woodrow Wilson became President has any utterance of his met with such instant and hearty approval by leaders in the financial district as his war address to Congress.”
This conclusion was backed by a column of quotations. “It [the war message] was … exactly right,” said Judge Gary, head of the U.S. Steel Corporation. “It was 100 per cent. American,” said Frank Vanderlip, moving genius of the American International Corporation and head of the National City Bank. “The President’s address was magnificent,” said James Wallace, head of the Guaranty Trust Company. “It was well worth waiting for,” said A. Barton Hepburn, another of our leading bankers. “The speech breathes the true spirit of the American people,” said Martin Carey, of the Standard Oil Company. These opinions of the President’s address, said the Times, “were echoed in one form or another by bankers, brokers, and executives in large number.”
Unlimited news space was devoted to the official propaganda. Millions of dollars’ worth of advertising space was donated outright. It is almost literally true to say that, as a whole, the American press gave as loyal service as if it had been founded for the sole purpose of war promotion. Anything like this would have been unthinkable, without an almost absolute unanimity for the war on the part of big business.
The Bond Issue Windfall of April 1917
The Bond Issue Bill, rushed from the White House to the Capitol, authorized the Secretary of the Treasury to purchase from the Entente governments three billion dollars’ worth of paper promises to pay. It was brought out in the Congressional debates that this alone meant an item of $60,000,000 in commissions to one banking firm [JP Morgan]—owing to a contract under which the Entente governments agreed to pay, as a commission, two per cent of all loans floated in America, whether negotiated through that firm or not.
While acting as England’s financial and munitions representative in America, J.P. Morgan also sat upon the advisory council of our Federal Reserve banking system. At the same time he was playing a third role of private business man, banker, munitions maker, railroad director, coal baron, etc. etc.
Mr. Harding, governor of the Federal Reserve Board, predicted, in an address, May 7, 1917 that the European war would be won by American bankers.
Liberty Loans would coincide with a list of America’s most prominent financiers. Just to get the first loan well started, aside from the far larger subscriptions made by their corporations, about fifty of America’s richest men were reported as making personal subscriptions of from one to twenty million dollars each.
Said Samuel G. Blythe in the Saturday Evening Post (Jan. 12, 1918) :
It is the mere truth to say that we could not fight this war a minute, if the men with money in the United States refused to loan that money to the government. We never could have begun it, to say nothing of continuing it as far as we have continued it. … No system of taxation that could be devised would have secured enough money for the war, or a tenth of enough money for the war. No system of levy that could have been put in operation, save confiscation, could do this.
Still another source of Wall Street satisfaction in the Bond Issue Law was the tax exemption feature. Said the New York Times financial editor :
The war-financing bill to authorize a total issue of $5,000,000,000 of bonds and $2,000,000,000 of Treasury certificates met with instant approval throughout the financial district. … Lawyers familiar with such matters were of the opinion that the conditions of issue and redemption were not such as to attract men of small means. They were termed rich men’s bonds, because the bonds would be exempt from the income tax and the amount invested in them need not be reported. (Apr. 12)
Daniel Guggenheim confessed : “For millionaires they [Liberty Bonds] are an exceptional opportunity.” (New York Times, Jan. 7, 1918.)
Second, a condition of the loan was that the government of the United States should purchase the Allied paper, not at its market value, but at par. This was several per cent more than Wall Street had ever paid for the best secured Allied paper. On all outstanding obligations, it was a direct gift to the holders of Allied credit paper—meaning our great banking and munitions firms.
The banksters want to get the insider trading memos. They were stuffed to the gills with Entente credit bought at prices well below par during the sell offs of late 1916.
The War Profiteers Windfall
Another condition of the Allied loans was that the money should be expended in America. The three billion dollar fund itself—like the billions later appropriated for the same purpose—was not shipped to Europe, any part of it, but was deposited in installments in the Federal Reserve Bank to the credit of the Allied governments, red-tape being cut to get the first installments there in a hurry.
Allied agents then drew checks upon it, and turned the checks directly over to the corporations of Mr. Schwab, Mr. Ryan, Judge Gary, Mr. Davison, Mr. Stettinius, Mr. Farrell, Mr. Vanderlip, Mr. Morgan, and other multimillionaires who were so soon to figure as shining patriots, all of whom were interested in Allied trade and involved in Allied credit operations.
L.L. Winkleman & Co., specialists in Standard Oil, copper and steel stocks, and closely connected with some of the biggest mining and munitions firms, issued the following statement of ghoulish glee on the day war was declared:
“The Secretary of the Treasury, at the instigation of the President, has asked for an appropriation for the army and navy alone of $3,400,000,000, while simultaneously, members of the National Council of Defense, the Federal Reserve Banks, and Treasury officials, give assurance that $2,000,000,000 at an interest rate not to exceed three and one-half per cent will be almost immediately available. This and many multiples more of wealth will find its way continuously and unsparingly into all the units of the country’s many-sided industries.“
From pre-war values Bethlehem Steel stock mounted more than twelve hundred per cent in a little over a year.
The crisis [at the beginning of 1917] found our “big men” loaded heavily with stocks and profiting by the rise. Said the New York Sun’s financial column, April 9:
Sentiment among bankers is patriotic and it is bullish … To many persons, long on stocks, war apparently merely spells another long period of abnormal profits for our corporations … The big men hold stocks.
The declaration of war found the “big men” long on commodities, as well as stocks, and the profits of expectation include the returns from soaring prices of food and other articles. In May, wheat reached $3.25 a bushel. No farmer profited by this. The American farmer had long since parted with the last of his crop at around $1.30. In August, cotton touched its highest mark for 45 years. It meant nothing to the grower; the middleman had long since acquired his product. The same is true of other staples.
The average price for bituminous coal at the mine, for the entire United States, in 1915, was $1.13 a ton. Large deliveries were made in 1916 at $1.25 a ton. The American Federation of Labor reported that labor costs had increased but 13 cents a ton in three years. Yet in August, 1917, the President fixed prices from $2 upward at the mine. Under this arrangement, according to the Federal Trade Commission, margins of profit were much higher than in previous years. Nevertheless, before the end of 1917 the President granted the coal corporations another increase of 45 cents a ton. Under this arrangement, coal profits ran as high as 7,856 per cent. (Senate Document, No. 259.)
The prices, when fixed by the government, evoked numerous expressions of pleasure. The Iron & Steel Institute met at Pittsburgh. After expressing satisfaction with the price of steel, the assemblage sang “The Star Spangled Banner.” Judge Gary, chairman, made a speech :
We have no reason to complain of the action and attitude of the government. To win the war the government must have steel and more steel. There is no room for disloyalty in America. (New York Times, Oct. 27.)
The segregation of nearly a billion dollars’ worth of stocks and bonds, industrial plants, and other business holdings, owned by Germans, might be defended as a war measure. But the sale of such properties, privately, as a rule, and at prices far below their real value, is difficult to understand except as a means of bearing gifts to Wall Street.
Once war had been safely declared, we find Frank A. Vanderlip, president of the same great financial institution, in a patriotic speech, May 17, enthusiastically prophesying that, as a result of the war, “a million new springs of wealth will be developed.”
Finally, the Wilson administration served as protector and press agent for the plutocrats while they got away with the people’s money.
It was the policy of the President to prevent public investigations of profits, profiteering, and graft, by Congress, and, when the pressure for investigation was especially strong, to substitute secret inquiries by the executive departments. Such inquiries never passed beyond the control of the President. The evidence was never published; reports could be framed to suit the policy of the President, and publication even of reports was delayed at the will of the President. The President opposed all investigations of the sort begun by either House, declared that “nothing helpful” was likely to come out of them, charged them with causing “delay and confusion,” and in the end succeeded in suppressing all of them.
When the criminal nature of transactions was mentioned to the Attorney General, he placed his stamp of approval upon them, declaring them “matters of national policy rather than a legal question.” (Report of Chairman Graham, of the House Committee on War Department Expenditures, July 7, 1919.)
Postmaster Burleson laid down, as a condition for the enjoyment of second-class mailing privileges, that “Papers must not say that the government is controlled by Wall Street.” (Oct. 9, 1917.) At the same time, the Attorney General was pleading for more repressive legislation, hinting that it was not sufficiently easy to imprison persons for calling attention to the peculiar relations between big business and the government.
[To hide their plutocratic war profits:] In its report on profiteering, and in other reports, the Federal Trade Commission exposed many tricks of bookkeeping resorted to by the great corporations to conceal the extent of their gains from war contracts. Costs were fictitiously enhanced by account juggling. Officers’ salaries were increased. The item of depreciation was padded. Interest on investment was included in cost. Fictitious valuation of raw material was resorted to. Inventories were manipulated.
Between May 1 and June 20, 1917, the resources of the fifty National Banks in New York City increased $98,341,499. Between February 28 and June 20, of the same year, the resources of the trust companies of New York State increased more than three billion dollars. The earnings of the National Banks of the country for the fiscal year were reported as $667,406,000, the greatest in their history, and 13½ per cent. greater than in the previous year.
Total Kleptocratic Capture of the American Wartime Economy
The function of these gentlemen was to divide up the government’s business—among themselves; to recommend, practically to fix, a price to be paid by the government—to themselves.
As the months went by, this scheme underwent various alterations, usually with a view to concentrating vast decisions into fewer hands. On the whole, the alterations did not lessen the directing power of Wall Street, but only vested such power in the hands of fewer and more conspicuous personages.
The War Industries Board, at the beginning, was headed by a manufacturer of munitions, Frank A. Scott, who was also chairman of the General Munitions Board. The Central Purchasing Commission consisted of four millionaire business men : Mr. Baruch, of Wall Street; Judge Lovett, the railroad magnate; Robert S. Brookings, and Herbert Hoover. Later Daniel Willard, the railroad president, served as chairman of the War Industries Board, to be succeeded a little later by Mr. Baruch.
The Council of National Defense, with its numerous subsidiary committees, emerged as the general clearing house of war activities, not only of those activities having to do with the “education” and repression of the public, but of those concerned with industry. The Council of National Defense, proper, is composed of six members of the President’s cabinet.
The real working body of the Council turned out to be the Advisory Commission. The Advisory Commission, as originally appointed by the President, consisted of seven members, four of them conspicuous business men. The chairman was Daniel Willard, president of a great railroad. The other three business members were Bernard M. Baruch, a noted Wall Street speculator; Julius Rosenwald, president of America’s greatest mail-order house and closely identified with large industrial corporations; and Howard E. Coffin, vice-president of the Hudson Motor Corporation. It was these seven men who, secretly and illegally, according to Representative Graham, chairman of the Select Committee on Expenditures in the War Department (Report of July 7, 1919) worked out the details of the President’s war programme months before the declaration of war.
A month before the declaration of war, the functionless nature of the Council proper was made more clear by the appointment of a director, to whom was turned over the details of such work as the Council proper was supposed to do. This director was another official of a great corporation, W.S. Gifford, of the American Telephone & Telegraph Company.
To head the government’s Grain Corporation the President selected a well-known speculator from the Chicago wheat pit.
When the government formally took over the railroads, the details of administration were dictated and carried out by a group of railroad presidents headed by A.H. Smith, president of the New York Central, and Judge Lovett, head of the Harriman lines.
Charles M. Schwab, the greatest steel maker in the world—and incidentally, at the same time, the greatest shipbuilder—became director general of the Emergency Fleet Corporation. The position of general manager of the Fleet Corporation was abolished in order to give Schwab “complete supervision and direction of the work of shipbuilding”—including that going on in his own yards.
Edward R. Stettinius, one of the twelve Morgan partners, became director of purchases and supplies for the War Department, superseding the War Industries Board in the purchase of billions of dollars’ worth of merchandise. Mr. Stettinius also became a member of the War Council, and when this body was abolished, he was named an Assistant Secretary of War, with the same functions as before.
Meanwhile, in Paris, Paul Cravath, chief counsel of Schwab’s private steel company, was sitting upon the Interallied War Council, representative of the American democracy. A little later we find Thomas W. Lamont, one of the Morgan partners, acting as official representative of the Treasury Department in the peace conferences.
When the British Foreign Mission arrived in America in April, 1917, Mr. Balfour, its leader, received President Wilson, held a conference with J.P. Morgan, and dined with Mr. Stettinius, all in the same day. The incident is symbolic of the merging of Wall Street and the government for war purposes.