A.N. FIELD
The Truth About the Slump

In the preceding chapters we have seen that the most important thing in determining the price level for commodities is the quantity of money: we have also seen that the dominating factor in the money situation is the United States Federal Reserve Board.  This Board is undoubtedly the most powerful human organisation in the world today.  As previously stated it was founded at the end of 1913 by President Woodrow Wilson.  Its real creator was Mr. Paul Warburg.  Mr. Carter Glass, who piloted the measure through the House of Representa­tives, claims to be its originator, but in two large volumes published last year, The Federal Reserve System : Its Origin and Growth, Mr. Warburg provides convincing evidence, amply supported from other sources, showing that he was the real originator of the board.  In noticing these volumes the American Review of Reviews in June last told the story of the Federal Board as follows:

“Paul Warburg came to the United States from Germany thirty years ago.  The story of his career might be more picturesque had he arrived via the steerage and the immigrant station at Ellis Island, but it happened that he took up his residence here as a young man of 34 who had already won a junior partnership in the powerful banking firm of Kuhn, Loeb and Company.

“He had been trained under the central banking systems of European countries, and to him American banking methods were archaic.  If we had waxed prosperous as a nation it was in spite of a horrible banking system.  With the rashness of youth he prepared a plan.  Having prepared it, what else could he do but show it ?  In particular he showed it to the head of the firm, and the great Mr. Schiff (Jacob H. Schiff) passed it on to the great Mr. Stillman (James the elder), president of the National City Bank of New York.  A few days later the young banker looked up from his desk to respond to Mr. Stillman’s friendly but sarcastic greeting:  ‘How is the international financier ?’  He was advised to leave things alone: America had nothing to learn from Europe.

“The panic of 1907 brought Mr. Stillman back to Mr. Warburg’s desk, and it brought to political as well as business leaders the need for financial reform.  Mr. Warburg likens our banking system at that time to a community where each householder possesses a pail of water as a protection against fire and jealously holds on to his own supply whenever a neighbour’s house is threatened.

“Looking back over the record of subsequent years one might wonder how Mr. Warburg kept his job with the banking house, so assiduously did he wage a campaign that was not ended with the passage of the Federal Reserve Act.  In January, 1907, before the financial panic of the same year, he wrote by invitation an article for the New York Times annual financial review under the title ‘Defects and Needs of our Banking System.’  Later in the midst of the panic he published a paper entitled ‘A Plan for a Modified Central Bank.’  He fought against the idea then prevalent of an elastic currency based exclusively on Government bonds.  He fought against the dominance of political officers in any new plan.  He argued for the inclusion of state banks and even trust companies at a time when others talked only of an association of national banks.  He desired the inclusion of commercial paper among the liquid assets of a bank against which notes could be issued.

“Five years after Mr. Stillman had poured cold water on his ideas Mr. Warburg was being consulted by Congressman Burton, and was enjoying one-way correspondence with Senator Aldrich, leader of the Old Guard and author of the Republican plan for reforming America’s banking system. ...”

The Federal Reserve Law was duly passed by Congress.  It differed very slightly from what was desired by Mr. Warburg, and that gentleman is reported to have said that this difference could be “corrected by administrative processes.”

Mr. Warburg was appointed a member of the board on its establishment, and has been described by the London Times, the late Sir Cecil Spring-Rice, British Ambassador at Washington during the war, and others, as the dominating force behind the Federal Reserve Board.

The Warburg family pedigree will be found in that monumental work, the Jewish Encyclopaedia.  Mr. Paul Warburg is a younger brother of Herr Max Warburg, head of the banking house of Warburg and Company of Hamburg, established 1798.  A list of the partners in this important banking house will be found in the Europa Year Book.  In addition to members of the Warburg family, the partners include Dr. Ernst Spiegel­berg and Dr. Carl Melchoir.  Dr. Melchoir, described by Lord D’Abernon, late British Ambassador to Germany, as one of Germany’s greatest financiers, was one of the six members of the German delegation in chief to the Peace Conference at Versailles in 1919.  He is now chairman of the Financial Committee of the League of Nations, having succeeded Sir.  Otto Ernst Niemeyer, and he has been a chief promoter of the Bank of Inter­national Settlements, planned to be the central bank for gold control of the world, and staunchly supported by Sir Otto Ernst Niemeyer, and a large number of other Anglicised German-Jew financiers in London.

The memoirs of Prince Max of Baden show that during the Armistice crisis in Germany in 1918 Herr Max Warburg, was constantly consulted by him.  Herr Warburg, with three others, actually drafted the speech delivered by Prince Max on taking over the Chancellor­ship.  When the late Lord Lansdowne wrote his defeatist letter in 1917 urging peace, Herr Warburg was sent to the Hague on Germany’s behalf to see what could he effected in the may of disposing of England.  Prince Max of Baden refers to Herr Warburg as Germany’s greatest authority on American affairs, and the Prince’s memoirs show that Herr Max Warburg occupied a position of very great influence indeed in Germany.  As we shall see later he has been described as the financial dictator of Germany.

Herr Max Warburg was born in 1867.  His brother, Mr. Paul Warburg, was born on August 10, 1868.  From Who’s Who in America, it appears that Paul Warburg married Miss Loeb, daughter of Mr. Solomon Loeb of the firm of Kuhn, Loeb and Company, in 1894.  He thus became a brother-in-law of the late Mr. Jacob H. Schiff, who had also married a Miss Loeb, and who had succeeded as head of the firm.

Another brother, Mr. Felix Warburg, born in 1870, had gone to the United States in 1894, marrying a daughter of Mr. Schiff a year later, and becoming a naturalised American citizen in 1900.  He also became a member of the firm of Kuhn, Loeb and Company, which his brother Paul joined on arrival from Hamburg in 1902, becoming naturalised as an American citizen a year or two before the war.

Another partner in the firm of Kuhn, Loeb and Company since 1897 is Mr. Otto H. Kahn.  Mr. Kahn was born at Mannheim in Germany in 1867.  He became a naturalised American citizen and later on a naturalised British subject.  Mr. Kahn gave his London residence, St. Dunstan’s Lodge, as a hospital for Blinded British soldiers during the war.  Mr. Kahn published a book of memoirs in 1921, “Reflections of a Financier” (Hodder & Stoughton) and the foreword to it is written by the Rt. Hon. T.H. Thomas, now Secretary of State for the Dominions.  Mr. Thomas wrote of Mr. Kahn in highly eulogistic vein, his concluding words being, “Otto Kahn’s face is towards the light.”  When we come to examine the world-wide ramification, of the firm of Kuhn, Loeb and Company, and the nature of its activities, this intimacy of a British Labour leader with one of its partners will appear a little singular.

Some interesting reference to the early history of the firm of Kuhn, Loeb and Company appears in “All in a Lifetime” (Heinemann, 1923), the autobiography of Mr. Henry Morgeuthau, formerly United States Ambassador to Turkey, Mr. Morgenthau writes (p. 77):

“Another group in the financial oligarchy (of New York) was Kuhn, Loeb and Company, originally clothing manufacturers in Cincinnatti, then note brokers, and finally bankers.  Their great feat was taking over from the United States Government Receiver the Union Pacific Railroad and re-organising it.  They then made their famous alliance with E.H. Harriman, and established themselves in the first rank of American financiers through the success of this joint financing of the Union Pacific Railroad, one of the most profitable of all feats of financial legerdemain ever accomplished.

“The trust companies entered the ranks of the financial oligarchs by virtue of a peculiar provision of the banking laws which permitted them to accept deposits and grant the checking privilege against them which was enjoyed by the banks, without being required to main­ tain the cash reserves against deposits, which was exacted of the banks.  By paying interest on daily balances they attracted the best—the non-borrowing—accounts.”

In mentioning a transaction of his with the Knicker­bocker Real Estate Trust Company of New York, in 1899, Mr. Morgenthau states that “among its members were Solomon Loeb, of Kuhn Loeb, Henry O. Haver­meyer, John D. Cummins and John E. Parsons.”  It was the failure of the Knickerbocker Trust that precipitated the great New York financial panic of 1907, which panic has been widely denounced in the United States Congress and elsewhere as having deliberately been created by financiers at a time when the country was in a state of prosperity.  A run occurred on the Knickerbocker Trust and other institutions which were left unsupported, the persons making the run being, it is alleged, of the millionaire class.  The panic was used to direct attention to the need for reform of the banking laws and led to the success of the campaign of Mr. Paul Warburg, partner in the firm of Kuhn, Loeb, for the establishment in the United States of central banking on more or less German lines.

For many years, until his death in 1920, the head of the firm of Kuhn, Loeb and Company was Mr. Jacob Henry Schiff.  Mr. Morgenthau in his memoirs refers to Mr. Schiff as “Mr. Schiff, the great financier and much beloved leader of the Jews, and recognised as one of the most eminent citizens of America.”  The Schiff pedigree appears in full in the Jewish Encyclopaedia.  In this work it is stated that the Schiff family is the oldest contemporary Jewish family of which there is any record, its earliest known member having been born about 1370.  This fact, in conjunction with Mr. Morgenthau’s reference to Mr. Schiff as the “leader of the Jews”—Mr. Morgenthau himself being one of the leading members of the Jewish race domiciled in America—lends an especial significance to the far-reaching operations of the late Mr. Schiff and his partners, operations which now encircle the entire globe and affect the trade and industry of all nations.

The following biographical sketch of Mr. Schiff’s career, up to the date of its publication in 1906, appears in the Jewish Encyclopaedia:

“Jacob Henry Schiff, American financier and philanthropist, born January 10, 1847, at Frankfort-on-Main, adopted the vocation of his father, one of the brokers of the Rothschilds in that city.  In 1865 he emigrated to the United States, and was employed for a time by Frank and Gans, brokers, New York.  In 1867 he formed the brokers firm of Budge, Schiff and Company, which was dissolved in 1873.  He then went to Europe and made connections with some of the chief German banking houses.  Returning to the United States he became on January 1, 1875, a member of the banking firm of Kuhn, Loeb and Company, New York, of which he was soon practically the head.

“Owing to his connection with the German money market Schiff was able to attract much German capital to American enterprise, more particularly in the field of railway enterprise.  His firm, under his direction, became the principal reconstructors of the Union Pacific Railroad about 1897; and in 1901 it engaged in a struggle with the Great Northern Pacific Railway.  This resulted in a panic on the New York Stock Exchange (May 9, 1901), in which the firm of Kuhn, Loeb and Company held the situation at its mercy.  Schiff’s moderation and wise action on this occasion prevented disaster and caused his firm to become one of the leading influences in the railway financial world, controlling more than 22.000 miles of railway and 1,321,000,000 dollars (£264,200,000) stock.  To him was largely due the establishment of community of interests among the chief railway combinations to replace ruinous competition, which principle led also to the formation of the Northern Securities Company.  Schiff’s firm was chosen to float the large stock issues, not only of the Union Pacific Railroad, but also of the Pennsylvania Railroad, the Baltimore and Ohio, the Norfolk and Western, and the Missouri Pacific railway companies, the Western Union Telegraph Company, and many others.

“It subscribed for and floated the large Japanese war loans in 1904 and 1905, in recognition of which the Mikado conferred on Schiff the Second Order of the Sacred Treasure of Japan.  He was also received in private audience in 1904 by King Edward VII of England.

“Schiff is connected with industrial and commercial activities.  He is a director of the Union Pacific, Baltimore and Ohio, and the Chicago, Burlington and Quincy railway companies; of the Western Union Telegraph Company; of the Equitable Life Assurance; of the National Bank of Commerce and the National City Bank, the Morton Trust Company, the Columbia Bank, the Fifth Avenue Trust Company, and of various other trust companies in New York as well as Philadelphia.

“Schiff has especially devoted himself to philanthropy.

“All municipal reform movements in New York likewise have been supported by Schiff. ....”

Mr. Schiff died in New York on September 25, 1920.  The amount of his fortune was not disclosed.  The London Times in a lengthy obituary notice of him which appeared in its columns two days later, stated that he left Frankfort at the age of 18 as one of a small band who set out to seek their fortunes abroad.  In addition to the companies mentioned above the Times recorded that Mr. Schiff was a director of the Central Trust Company, the Wells, Fargo Express Company, the Title Guarantee and Trust Company, the Bond and Mortgage Guarantee Company, and many others.

From the foregoing it will be seen that Mr. Schiff, as head of the firm of Kuhn, Loeb and Company, played an active and important part in effecting those huge amalgamations of railway and other capital which were fought by President Roosevelt in his anti-trust campaigns.  The Northern Securities Company formed by Mr. Schiff was so glaring a violation of the 5herman Anti-trust Law that it was sued by the Attorney-General of the United States and declared illegal by the Courts.  Apart from this case the Sherman Law up to that date had accomplished practically nothing.  Mr. Roosevelt, fighting for the people against these giant trusts, had a long and bitter contest with Mr. Harriman, a railway magnate very closely associated with the firm of Kuhn, Loeb, if not virtually a department manager of that concern.  The suit against the Northern Securities Company, which company created a huge trust of the railways to the Northern Pacific Coast, was brought by President Roosevelt following a request by the Governors of six States concerned for action to protect their people.

We have already seen how the financial crisis of 1893 was made to the orders of the American Banking Association, according to documentary evidence quoted in Congress.  One of the results of that panic, created by the financiers, was that the Union Pacific Railroad went into the United States Government Receiver’s hands, being unable to meet its liabilities.  Mr. Morgenthau tells us that Messrs. Kuhn, Loeb next got hold of it and reorganised it by “one of the most profitable of all feats of financial legerdemain ever performed.”  Webster’s International Dictionary defines the word “legerdemain” as follows: “Sleight of hand; a trick of sleight of hand; hence, any artful deception or trick.”

Much information about the watering of stock and the over-capitalisation of the American railway com­panies will be found in the “New Encyclopaedia of Social Reform,” published by Messrs. Funk and Wagnalls, New York, in 1908.  For instance, the Union Pacific Railroad was immensely over-capitalised and this was common to most systems.  The Encyclopaedia says:

“In its final report, 1902, the United States Industrial Commission states that out of 45% million dollars increase in railroad capitalisation in 1900, only 120 million dollars could be explained by new construction, the other 337 million dollars, or nearly four-fifths of the whole, being due almost entirely to sudden expansions in securities, in cases of reorganisation and consolidation. ...

“Inflation of capital is regarded by many as a species of robbery.  It is one of the most seductive methods of getting something for nothing which has yet beer, invented.  The corporations and monopolies of America are greater sinners in this line than are to be found in any other country. ....”

In its article headed “Corruption” the same publication quotes the following excerpt from the New York Independent of May, 1907, as to the Chicago and Alton Railroad.  The Mr. Mortimer L. Schiff mentioned is the eldest son of the late Mr. J.H. Schiff :

“A syndicate composed of Mr. Harriman, Mortimer L. Schiff, James Stillman, and George J. Gould, bought nearly all the stock of the company.  Within six years, under their management, the capital stock was increased from -10,000,000 dollars to 122,800,000 dollars, although only 22,000,000 was spent for improvements.  Large quantities of bonds issued by the syndicate were virtually sold to the syndicate at sixty-five and then marketed at ninety to ninety-six, a considerable part being taken by the great life insurance companies.  The controlling owners also declared and paid to themselves a dividend of 30 per cent.  The profits of these transactions appear to have exceeded 24,000,000 dollars.  In due time 103,000 shares of the Alton stock were sold to the Union Pacific.  The testimony showed that heavy commissions, amount­ing to several millions had been paid to the affiliated banking-house for its services in handling securities.”

In its article on “Railways and Railway Problems,” the “Encyclopaedia of Social Reform” makes reference to a transaction in which Mr. J.H. Schiff was concerned.  Under the heading “Stock Gambling,” it says:

“Railway stocks constitute the backbone of specula­tion in Wall Street and corresponding centres of speculation in other cities.  Panic after panic has been precipitated in Wall Street by the struggles of rival buyers to control the stock of some railroad.  In 1901, for example, the stock of the Northern Pacific was forced up to 1,000 dollars a share, and one of the worst panics of recent years was the result.  Those in control of railroads can easily make large sums by manipulating stocks so as to affect their values.”

Under the heading “Railway Politics” this same American reference book says:

“From Maine to California for many years our railways have done their best to control the government of our States and cities so far as they come in contact with transportation interests, and for the most part they have succeeded.  Now and then a wave of popular sentiment has overcome their influence in legislative bodies, as during the Granger movement in the 70s, and the Roosevelt movement of 1905-07, but in the long run the railroads have been able to control in large measure the nomination of members of legislatures and of the national Congress.”

“ ‘The railroads will buy up a legislature just as they buy a car-load of mules,’ said the governor of a great state. ....

“Where it is necessary the railroads do not hesitate to use money to buy the votes of legislators, either to secure the passage of measures favourable to the roads, or prevent the passage of measures likely to do them injury.”

Reference is made by the Encyclopaedia to another concern associated with the Kuhn-Loeb interests:

“Senator Platt testified that an insurance company like the Equitable usually gave 10,000 dollars a year to his machine as its ordinary political assessment, and more if it expected unusual favours.”

The “New Encyclopaedia of Social Reform” quotes from articles on municipal corruption by Mr. Lincoln Steffens which appeared in McClure’s Magazine and were later published in book form under the title “The Shame of the Cities” (1904).  In this is given an account of the colossal corruption in St. Louis, and among the corporations prominent in expending money corruptly were mentioned the Western Union Telegraph Company and Missouri Pacific Railroad, with both of which Kuhn, Loeb and Company are mentioned above as having been associated.

Under the heading of “Fostering Monopoly,” the Encyclopaedia says:

“Our railways foster monopoly directly and indirectly.  By consolidation and combination they are building up numerous monopolies in the railroad field, and by concessions to favoured trusts and combines like the Standard Oil, the Beef Trust, the Sugar Trust, etc., they help to build up vast monopolies in manufactures and commerce.  The Standard Oil monopoly was directly created by railroad rebate.  The Beef Trust is another excellent illustration of a giant monopoly that owes its creation to the fostering care of railroad discrimination.

“A distinguished railway officer writing in the Outlook says:

“ ‘It is estimated that 50 million dollars have been converted into the treasuries of various trusts since 1887 by means of rebates and other forms of favouritism, and that “present conditions promise not an abatement but an expansion of the methods by which this diversion may continue.”

“ ‘The formation of the vast industrial trusts began in 1872 when the anthracite coal combination was formed by an alliance of producers and carriers and when the interests which compose the Standard Oil Trust first began to work in harmony with each other and use the power of their railroad allies to clear the field of competitors.  Today there are 450 to 500 trusts, with an aggregate capitalisation, including the railroad and other franchise trusts, of something like 20,000 million dollars.  And still more trusts are forming and the limits of existing trusts are being extended and their interlocking interests increased and intensified.  They are reaching out after the land, and the control of market, labour and raw materials.  They are establishing international relationships aiming to monopolise the globe in their lines of business.  And they are joining hands with each other.

“ ‘On the whole the situation seems to be this: The railways and other big franchise monopolies are co-ordinating with the great commercial combines into a gigantic machine controlled by a few financiers and created to manufacture or capture profit for them.  Events are moving towards a consolidation of interests that will give a handful of capitalists practically imperial power through the vastness of their industrial dominions.  There may be breaks in the movement, probably will be, but the integration of industry seems likely to continue in spite of strenuous efforts to prevent it by statutes and decisions. ....

“ ‘And the railways are generally regarded as forming the basis of the structure, or a large part of it.  I have met with this opinion all over the United States and in some other countries.’ ”

In the article on “Corporations,” the Encyclopaedia prints the following:

“With corporate capitalisations running up into the billions of dollars and controlling entire industries, it is necessary to keep the control in close touch with large financial and banking interests.  Thus the gigantic railroad, industrial, and public utility corporations of the United States are all managed from what is commonly known as ‘the Wall Street end.’  That is, the control of the companies, as represented in the boards of directors and officers, is all in the hands of the banking interests of the country, who supply the necessary capital, combine the plants, form underwriting syndicates, float the securities, devise the plans of capitalisation and stand at the forefront of the financial organisations.  The boards of directors are usually chosen by the banking interests, and of course all matters of policy are either approved or devised by these same banking interests.  Naturally the banking interests advocate policies which will serve to strengthen their control of the particular industries and conserve whatever special privileges the enterprises may have.”

This view is very similar to that expressed by Mr. Louis D. Brandeis, now a justice of the United States Supreme Court, and the first Jew to be appointed a member of this highest American Court and the guardian of the Constitution.  In his book, Other People’s Money, published fifteen or sixteen years ago, Mr. Brandeis said:

“The dominant element in our financial oligarchy is the investment banker.  Associated banks, trust companies, and life insurance companies are his tools.  Controlled railroads, public service and industrial corporations are his subjects.  Though properly but middlemen these bankers bestride as masters America’s business world, so that practically no large enterprise can be undertaken without their participation and approval.”

Before we trace the steps by which the American money power has blossomed out under this direction to control the whole commence of the world, it is advisable first to take a glance at the system whereunder the financial ring has the people of Germany in leading strings.

If you will turn to the article on banking in the 1929 edition of the Encyclopaedia Britannica you will find that this authoritative work of reference states that the modern German banking system was established after the revolution of 1848.  If you turn to that equally reputable English periodical, the London Spectator, you will find in its issue of October 16, 1920, a leading article in which it points out that the revolutions which occurred in Europe in the year 1848 were led by Jews, just as the Bolshevik revolution in Russia in 1917 was led by Jews.  Thus we get the position that a banking system which (as we shall see) has made Jewish bankers supreme in Germany was established following on a re­volution led by Jews.  This may be a coincidence, or it may not.

In his book Freedom in Finance (Fisher Unwin, 1919), Sir Oswald Stoll says:

“The financial ring which girdles the earth is gathered from all nations.  Powerful elements in it are essentially American, but the dominating influence is Teutonic.”

Of the German banking system Sir Oswald Stoll said:

“Six great German banks control scores of thousands of millions of capital throughout the world, through direct and indirect associations and silent partnerships.  See Document No. 593 of the United States Senate issued at Washington by the National Monetary Commission.”

This American Government document is a bulky volume of 1042 pages and deals with “The German Great Banks and their Concentration in Connection with the Economic Development of Germany.”  It shows how the financial ring holds German industry in the hollow of its hand.

In 1916 the late Dr. E.J. Dillon, for many years one of the best informed writers on foreign affairs in the English monthly reviews, wrote a book, Ourselves and Germany (Chapman & Hall, 1916), in which he made reference to German banking methods, particularly in foreign countries.  Dr. Dillon, for instance, described how in Italy and Brazil the German financiers had founded banks with high-sounding navies indicating a local origin, with local directors, and with much money subscribed locally, but with all real control kept in German hands.  These banks, according to Dr. Dillon, were used in all sorts of ways for the exploitation of the local population for the advantage of the German financiers who had established them.

For example, if it was desired to obtain control of a local industry, it would be offered extraordinarily attractive banking terms and induced to give its account to the German hank.  Lavish advances would be made until the concern was judged to be too deep in to extricate itself.  At this stage the screw would be put on by some not too glaring means, the heavily indebted concern plunged into such difficulty that in the end the bank took it over for a fraction of its value.

Another device, according to Dr. Dillon, was for the bank to put pressure on those of its customers in its debt to give their foreign business to the German firms in which it was interested.  People who failed to follow the good advice given and did not buy and sell through the German channels so kindly suggested by the hank were said to find themselves up against all sorts of financial, and credit difficulties, springing up from no apparent cause on all sides of them.  Of course, it was war time when Dr. Dillon wrote his book, and he was probably less reserved in what he said about German methods than would have been the case had he written when we were at peace with Germany.

The backbone of German trade is the close alliance between the banks and the kartels.  A kartel is a “trust” or “syndicate” of trades or industries.  These trusts make binding agreements as to output, markets, profits, and prices.  Each kartel has a monopoly of a given district, and all the firms in the kartel work together as to output and prices.  Under the kartels the German retail dealer becomes a mere agent.  He may only buy and sell from his local kartel.  He may buy and sell only such goods as the kartel allows; and the buying and selling price and the quantity he may sell are all fixed by the kartel.  The kartels in their turn are controlled by the banks, which virtually own them.  Most British people have heard of the great German dye trust, built up on an English invention for the extraction of dyes from coal tar.  What is true of the dyes is also true with a rough parallelism of metallurgy, engineering, the electrical, industry, and so on.  In passing it may be noted that according to Lord D’Abernon’s memoirs of his ambassadorship in Germany, Herr Deutsch, head of the great German electrical combine, the Allegemeine Electricitats Gelleschaft, employing 60,000 men, is a near relative of Sir George Lewis, the famous London society lawyer who was said to know more family secrets than any other man in Britain, and Herr Deutsch’s wife is a sister of Mr. Otto Kahn, partner in the firm of Kuhn, Loeb and Company of New York.  This little fact enables one to realise how international in its connections is high finance.

The kartels of Germany were largely built up by Jewish bankers of that country, and later German Jewish bankers in the United States played a prominent part in building up the great trusts there by means of which they brought American industry under their own control.

Many writers have remarked on the curious fact that although the Jews have been worse treated in Germany than in Britain there appears to be a more sympathetic feeling among them for Germany than for Britain.  It is stated that the German or Ashkenazim Jews, who today constitute a great portion of the world’s Jewry, have no blood connection with the Jews of Palestine, but are the descendants of people who at the time of the Kajar Empire in South Russia, about A.D. 800 to 1000, emigrated to it from central and southern Europe and the Near East, attracted to the Kajar domains by the prestige of that empire, whose Emperor, incidentally, had became a convert to Judaism.  The immigrants became converts to the Jewish faith also, and intermarrying with each other and with the Mongoloid and Armenoid Asiatics they found there produced the type now commonly called Jewish.  When the Kajar (also spelled Khazar) Empire came to an end some of those people remained in Southern Russia and others gravitated hack to the lands from which they had originally come.

Mr. E.A. Skrine in his Expansion of Russia (Cambridge University Press, 1904, p. 275), wrote that “Russia, rather than Palestine, is the Jewry of the modern world;  for out of six and a half millions of the chosen people four-fifths are to be found within that Empire.”

The Sephardim, or Spanish, Jew is a different type altogether, and according to the Jewish Encyclopaedia, “the Sephardim never engaged in chaffering nor usury, and they did not mingle with the lower classes.”  On being expelled from Spain and Portugal they became widely scattered over Western Europe.  Disraeli, for example, belonged to the Sephardim.  Further the Jewish Encyclopaedia states that “although the Sephardim lived on peaceful terms with the other Jews they rarely intermarried with them.”

The Jews have been much persecuted in Germany, and the newspapers of late have recorded further out­bursts against them.  The persecution of the Jews is no doubt connected to a large extent with their addiction to usury.  As Mr. Arthur Kitson says in his book The Money Question:

“Originally denounced as immoral by the founders of the Christian Church, and legally prohibited for many centuries, it (usury) has become the very foundation upon which our so-called Christian civilisation has been built.  The practice of charging for the loan—formerly termed usury—was expressly forbidden among the Jews by the laws of Moses.  Permission to exact usury from the Gentiles was, however, granted—a permission of which the Jews were not slow to avail themselves, and to w hich is attributable more than to any other cause the terrible persecutions they underwent during the Middle Ages, as well as in later times.”

In a war-time book, Degenerate Germany (T. Werner Laurie, Ltd., 1915), Henry de Halsalle wrote as follows of the position of the Jews in Germany:

“In the Teuton’s wonderful capacity for hate the Jew occupied the first place until August last.  Of modern Germans the hysterical Treitschke it was who first arrainged the Hebrew.  In a series of articles in the Preussische Jahrbucher (November 15, 1879, et seq.) he screamed a warning to Germany of the growing power of the Jews;  he pointed out their solidarity as a separate caste (and race);  he called attention to their power and arrogance in the press, to their resentment of German (Christian ?) criticism of themselves and their ways, while they arrogated their own right to criticise whereso­ever and they arrogated they thought fit.  In this attitude of the Jews Treitschke affected to find the cause of the then Anti-Semite agitation raging in Germany.  So widespread is the loathing of the Jew by the German that it has brought into being a complete Anti-Semite literature ... Jews are still sternly boycotted in the ‘best’ society: they are not admitted as active officers in the army, although they are suffered in the reserve.

“To a man the Germans not only hate but fear the Jew.  Only too well do they know that he dominates the Press.  The great international news agencies, Reuter and Wolff are controlled by him.  He commands the money and the produce markets.  He directs the theatres, supplies the capital, most of the performers (not to mention critics), and furnishes a remunerative audience.  All the professions in Germany (save the army and navy) are crowded with Jews.  The law abounds with them and there are not a few on the judicial bench.  A Jew founded Germany’s mercantile marine.  The best and largest houses in Berlin, in the Tiergarten and the Bellevuestrasse, are almost all the property of jews.  Nay, if the German Press possessed the power of the British Press;  if entry to the Reichstag could be assured by wealth, and if the German Army were to admit to officership all the Jews who go up for examination.  Germany would soon become the Jewish Empire.  And pagan Germany knows it, and has feared it for many years past. ... It is the Jew who is primarily accountable for Germany’s late commercial prosperity : the Germans know it, but are too envious and conceited to say so. ... Whatever town of importance you visit in Germany you will find that the principal doctors there, the men of science, art, and literature are of the Jewish faith. ... Amazing it is that this wonderful, ancient race, scientific, artistic, far more clever in every way than the upstart Germans, should take the German ill-treatment of them ‘lying down’ and still persist in vainly seeking an entry into Berlin ‘society.’  Who knows, however, what will happen in 19—.  Will the Jews then inherit the kingdom of Prussia. ...?  Will the German Empire become the Jewish Empire ?”

Mr. de Halsalle is not animated by any feeling of hostility towards the Jews of Germany.  On the contrary, he remarks:  “I must say it is not without admiration I regard the Teutonic Israelite.”  In stating that the Jews dominated many departments of activity he was merely recording facts, and his general line of argument was that the German was a person inferior in every way to the Jew he despised, but who dominated his country, or promised soon to do so.

In the National Review for March, 1925, Mr. Arthur Kitson made some reference to German finance and banking methods in the course of an article entitled “The International Bankers’ Game.”  In this article appeared a lengthy extract from an article originally pub­lished in the November, 1924, issue of Mr. Henry Ford’s paper, the Dearborn Independent.  As we will see in a subsequent chapter, Mr. Ford in 1927 made a general retraction of his criticisms of the Jews published in the Dearborn Independent, and his son, Mr. Edsel Ford, now president of the Ford Motor Company, in 1929 became a fellow director in a colossal international chemical combine with Mr. Paul Warburg, whose activities were described in this article in the Dearborn Independent.  So far as the writer knows no specific retraction of this article was made by Mr. Ford or by the National Review, which reprinted it.  Moreover, Mr. Kitson in a previous issue of the National Review (November, 1924) had published a general outline of the same facts, apparently obtained from independent sources.  It would thus not appear that any injustice will be done by reprinting excerpts from Mr. Kitson’s article of March, 1925.  In his opening paragraphs Mr. Kitson said:

“In the November issue of the National Review I outlined the plot conceived by certain German-American-­Jewish financiers for dominating the world under the currency system known as the ‘gold standard,’ which is being carried to a successful issue with the aid of certain of our London bankers at an astonishing rate of speed.  [Note.—Britain returned to the gold standard in the month following the publication of Mr. Kitson’s article.]

“The progress of this conspiracy was traced from its incipiency down to the introduction of the Dawes Scheme—starting with the passage of the American Federal Reserve banking system, which was established under President Wilson, with Mr. Paul Warburg, a German-Jewish banker of Hamburg (who became a United States citizen only three years prior to the War) as its controller.”

In the second portion of his article Mr. Kitson wrote as follows:

“Whilst our financiers and treasury officials (whose chief significantly bears the name of Sir Otto Ernst Niemeyer) have been assisting in welding the golden chain which is to control the British public, the instigators of the whole policy have been busy in other directions.  Mr. Henry Ford has recently thrown a flood of light on the recent movements of Mr. Paul Warburg and his associates in New York and Germany.”

In a footnote Mr. Kitson said:

“It is worth noting how unanimous our Anglicised German financiers are in desiring the re-establishment of gold in this country—Sir Felix Schuster, Baron Schroeder, Mr. Otto Kahn.  Fruhling Goschen, Klein­worth & Co., etc.”  The name of Professor Theodor Emanuel Gugenheim Gregory might appropriately have been added to this list.

Mr. Kitson continued as follows:

“It should be remembered that a conspicuous member of the Warburg group, Mr. Otto Kahn—an Americanised German—has recently adopted England as his home, and has been expressing his great admiration for the gallant British public who are bravely shouldering their debts and setting to the world an example of national honesty !  How he must chuckle to himself when he reads his opinion quoted seriously in a Sunday newspaper which has made the cause of the moneylenders its own!  In a burst of enthusiasm this journal recently exclaimed, ‘What a fortunate people we are!’—referring to the recent speeches of the Presidents of the five great banks which, together with the Bank of England, constitute one of the most gigantic monopolies in the world: a monopoly that is today the ‘dead hand’ paralysing our trade and commerce.

“In the November number of Mr. Ford’s paper, the Dearborn Independent, the financial conspiracy out­lined by me in last November’s National Review is fully confirmed in the following paragraph which appears as an introduction to the series of articles written by the American journalist, Mr. Hamilton York.  He says: ‘This is the first of a series of articles in which will be set forth the elements of a scheme which is intended to place in the hands of a small group of international financiers, not only the arbitratment of the fate of Europe, but control of the destinies of all nations.  In this article the activities of Paul Warburg, of New York, a German­Jewish financier, naturalized in America, are fully explained.’  The writer then proceeds as follows:

“‘The adoption of the Dawes Report establishes : mechanism whereby the world’s gold is placed in control of the general board of the Schacht Gold Bank of Berlin, organised at the suggestion of the Warburgs in antici­pation of the Dawes Report as a cover for the international group of financiers—of which Mr. Paul Warburg is a member—and the existence of which Mr. Otto Kahn denies.

“‘It would not be possible to make this statement so confidently were it not for another event, namely, that Congress passed an amendment to the Federal Reserve Act in March, 1923, which authorised the Federal Reserve Bank to discount credit paper, including foreign acceptances.  The Federal Reserve Board waited until March, 1924, before taking advantage of that authority.  The resolution of the Board, which now permits discounting of foreign acceptances was promulgated in April, 1934, almost simultaneously with the issuance of the Dawes Report.

“‘The full significance of the last event does not appear until it is digested in terms which appeal to the German- Jewish hanker, which may be stated thus:

“ ‘By re-discounting German trade acceptances, participating American banks and their depositors are financing the revival of German trade and secondarily Russian trade.

“ ‘It indicates further that the German-Jewish banking system by means of which Germany is now controlled has been imposed upon the United States from without, where it could not be made to grow from within.

“ ‘If the American people are to gain a clear under­standing of the system of financial control which is about to be imposed upon international commerce through credit operations, and which has been gradually develop­ing in the United States since the passage of the Federal Reserve Act in 1914, the best way is to observe the system as it exists in Germany, its home is in that country where it has been moulded into a perfect machine by a small group of men, practically all Jews.

“ ‘It is not a question of the adequacy of the wage which the system allows for service as opposed to what service would bring in a free and open labour market, but it is a question of the possibilities o£ exploiting everybody through artificially induced variations in the value of money.  Should even the most powerful fail to become a cog in the system, he is economically broken, and he is a lucky man if he can gain a livelihood for himself and his family thereafter.  As will be shown, this system of punishment has already been introduced into the United States.

“ ‘It is perfectly correct to call this a Jewish system, for that mind has developed it through long year of ambitious training and experience.  At least, as far back as the time of Frederick the Great, Jewish bankers dominated German finance, Itzig, Ephraim & Co. of Berlin furnished the money for the prosecution of the Seven Years’ War, and to build Sans Souci and the larger palace at Potsdam.  Itzig was also a notable leader of the Berlin Kahilla.

“‘Moses Mendelssohn, the earliest of the Jew Nationalists in a modern sense, was a close associate of Itzig’s son-in-law, Friedlander.  Already the influence of the house of Rothschild was beginning to be felt through­out Europe.  Within ten years after the opening of the nineteenth century, the private banking house of Bleichroder was established in Berlin, and for many, many years the Bleichroders managed the personal finances of the Hohenzollerns.

“ ‘The Bleichroders and the Mendelssohns represented a school of private bankers which has been pushed aside by an invasion of more aggressive Jewish types from the north-east, and which apparently had stronger admixture of Tartar blood in their veins.  They were not satisfied to be private bankers, but started in to gain economic control and also to own the State.  We must credit the Warburgs, the Wolfs, the Rathenaus and their close associates for building up the present Jewish financial system in Germany.  Real control began in the late ‘seventies as the result of financing State ownership of the railway.  This is a romance all by itself, and well worth the study of anyone.

“ ‘Extensions of credit—teaching people to become dependent on credit—were necessary to the development of the modern speculative financial system.  Co-ordinate with these was the growth of that external trade necessary for the maintenance of a growing population.  As the business of Germany grew and the liquid capital increased, the control became more and more centralised in Jewish hands, until in the last half of the last Kaiser’s reign the banking cabal controlled the State.  It was the State.

“ ‘Germany could not have started the aggressive war of 1914 without the encouragement and assent of this group.  It was this group that staged an opera bouffe revolution to fool the world with the loss of only a few lives.  In establishing the so-called republic it fixed the laws in such a manner that its own position was made more secure, and finally through the active participation of Walter Rathenau, it arranged the relations of big business to the State so that the political organization of the German Reich today is simply a front for this small group of German financiers.  These men can do as they please, and have done as they please with the German people.

“ ‘The key to this situation, the fact that allows the persistence of such a pernicious system, lies in the German law which permits banks to hold shares in other banks and in industrial corporations.  Until the passage of the Federal Reserve Act such privileges were not accorded banks in the United States for fear that there might develop a system of overlordship which has reached such perfection in Germany.  Eventual control of industry and the banking facilities of the country would necessarily drift into the hands of a few.  But the Jewish system of Germany has led and directed such a movement for concentration and apparently with a conscious objective.  The result is that the interlocking directors of the greatest German banks, about six in number, dominate the country.  The list would include: The Reichsbank of issue for the Government bankers’ central bank, the directors of which are responsible for the depreciation of the German mark and the suffering which it entailed;  the Disconto Gesellschaft;  Max Warburg & Co., of Hamburg, to which was allocated the shipping of Germany, and which controlled the North German-Lloyd and Hamburg-American lines;  the Deutsche Bank, mainly concerned in the development of the metal industries;  and the Bank fur Handel und Industrie (Darmstadter Bank).  It is quite possible to contend that others should be included.  It is difficult to draw a line.  In any event with the Reichsbank as a key bank the list is substantially correct.

“‘The outstanding fact is that by a system of inter­owning stocks, interlocking directorates, assignment of spheres of interest, and by a mutual arrangement of interests, the banking system is one whole, presenting different fronts in different corporate names.  The control lies, perhaps, in the hands of a hundred men who cluster in the directorates of the banks named, and whose names appear in the directorates of the largest corporations, and of whom 95 per cent. are Jews.  As is usual in associ­ations of this character, there are a few who lead.  While the figure of Max Warburg, of Hamburg, may not loom large three thousand miles away as the dominating figure of this aggregation, since the death of Walter Rathenau, the Warburg influence has been the directing force, has furnished the financial finesse which has enabled his group greatly to increase its power, and this has been mainly accomplished through the faithful co-operation of his two brothers, Paul and Felix, in New York.

“ ‘At the present time these bankers absolutely control and exploit for their own gain four-fifths of the internal commerce of Germany, whether industrial, agrarian, or what not.  The residual one-fifth represents small trans­actions between individuals in small communities in which the profit is nominal.

“‘The inquiring individual will wonder how it is possible to include within the above designation the word “agrarian.”  How are farm products controlled ?  The history of this phase of their undertaking is an interesting one, and its accomplishment furnished a most difficult task.  But it was eventually achieved.  The control of the markets, and the methods of transporta­tion, the organisation of land banks for the purpose of giving credit to the agrarians, who in turn had to be taught to accept credit, these banks being linked in with the general system, all comprised the machinery which enslaved the farmer.  The working man was captured and held through the imposition of social insurance laws, compulsory health insurance, for instance, as was fully described by Bismarck, who said in his autobiography that these laws were passed to throw “a golden chain about the necks of the workers.” ’ ”

That is the whole passage from the Dearborn Independent quoted by Mr. Kitson.  He adds the following comment :

“It will be remembered that similar insurance laws were enacted under the Asquith Liberal regime, having been introduced from Germany by Mr. Lloyd George.

“These Dearborn Independent articles are of enormous interest and importance to every person who wonders where Europe is drifting.  They prove conclusively that under the gold standard—the virtues of which our bankers and city editors are just now extolling—the world is being enmeshed in a net which will leave the wealth producers of all countries as help­less as the Russian peasants are under the system of Bolshevism instituted by Lenin and Trotsky.

“The one aim of these financiers is World Control by the creation of inextinguishable debts !  And since gold is a metal which neither laws nor inventions can increase, the supplies of which Nature has so far limited to a comparatively insignificant quantity, control has become a very simple achievement.  And the irony of the situation is in remembering that this instrument of slavery was the creation of a British Statesman on the advice of a British banker !

“It will be remembered that in my November article I stated how averse the American people have hitherto been to the establishment of a Central Banking System.  Past experience showed the danger to the State in allowing any group of individuals to control the money and credit of the people.

“Both President Wilson and Senator Owen, who stood sponsor for the new banking system, believed that the Federal Reserve Banking System prevented any possibility of a money or credit monopoly.  But Mr. Paul Warburg appears to have outwitted them, and this system, which is modelled on the German bank principle, is now the recognised source of the money supplies which the Warburg group are employing on behalf of Germany and Russia, the same group which financed Lenin and Trotsky! ...

“It may be enquired in what way can this group of German-American-Jewish bankers control British finances ?  The answer is simply by means of their control of America’s gold supplies.  It is with this group that our simple-minded Governor of the Bank of England will be compelled to deal.  The control of gold under the gold standard means the control of credit—which led the late Sir Edward Holden to admit in one of his illuminat­ing addresses to the Bankers’ Institute: ‘Gold therefore controls the trade of the world.’ ”

Readers who may be inclined to question the above view of the role played by the Warburgs in recent international events will find ample indications of it in the occasional references in the Memoirs of Price Max of Baden to the influential position occupied by Herr Max Warburg during the momentous period in German history when Price Max was Chancellor and the German republic was in process of establishment.  The fact that Dr. Carl Melchoir, the only non-Parliamentary member of the main German Peace Delegation at Versailles in 1919 was a partner in Warburg and Company, Hamburg, is equally significant of the great influence of this banking house in German affairs.  Still more significant is the leading part taken by Dr. Melchoir in the foundation of the Bank of International Settlements, and his chairmanship of the Financial.  Committee of the League of Nations.

Mention has been made by Mr. Kitson of Warburg connection with the transportation to Russia of Lenin and Trotsky, and their alleged financing of the Bolshevik revolution.  Before proceeding to trace out the steps by which the Federal Reserve System was established in the United States it is expedient to devote a chapter to Russian affairs.