Dmitry Karasev. Moneychangers 7

Moneychangers 7
History of banking. The Great Depression

Dmitry Karasev

Publication date: December 3, 2001

The previous issue is here .

Soon after the First World War, the political course of the money changers began to become clearer. Since they now controlled the economies of individual countries, the next step would naturally be the final form of consolidation - world government.

The proposal for a new world government became the main issue on the agenda of the Peace Conference convened in Paris after the end of the First World War. It was called the League of Nations. However, to the displeasure of Paul Warburg and Bernard Baruch, who came to the conference as President Wilson's escort, the world was not yet ready to give up national boundaries. Nationalism has still remained a serious factor hindering globalization.

For example, Lord Curzon, the British international secretary, called the League of Nations nothing less than a "glorious joke." With all this, support for the new organization was in line with the foreign policy of the British government. To the humiliation of President Wilson, the US Congress also did not ratify US entry into the League of Nations. Despite the fact that many states joined the League of Nations, without monetary support from the American Treasury, this organization was doomed.

After the World War, the American public began to tire of the internationalist ambitions of Democrat Woodrow Wilson. Therefore, in the 1920 elections, Republican Warren Harding won a landslide victory, gaining more than 60% of the vote. Harding was a fierce opponent of both Bolshevism and the League of Nations. His election ushered in a 20-year era of Republican rule in the White House known as the Roaring Twenties.

Despite the fact that World War I left America with a debt 10 times greater than the debt incurred as a result of the Civil War, the American economy was booming. During the World War, foreign gold poured into the country in a wide stream. This trend continued later. In the early 1920s, the governor of the Federal Reserve Bank of New York, Benjamin Strong, often met with the secretive and eccentric governor of the Bank of England, Montague Norman. Norman sought to return to England the gold given to the United States during the war. And thus return the Bank of England to its former dominant position in the financial world. In addition, with a large gold reserve, America and its economy could once again spiral out of control, as it did after the Civil War.

Over the next 8 years, under the Harding and Coolidge administrations, the enormous federal government debt created during the war was reduced by 38% to $16 billion. A record debt reduction in US history! During the 1920 election, Harding and Coolidge presented a united front against James Cox, the governor of Ohio, and the then little-known Franklin Roosevelt, who had previously served as President Wilson's naval aide.

After his inauguration, Harding took steps to officially bury the League of Nations. He then rushed to lower taxes through unprecedented tariff increases. It would seem that this is precisely the kind of policy that the founding fathers of the United States dreamed of. In his second year in office, Harding took a train trip to the west of the country and died suddenly. Although no autopsy was performed, the determined cause of death was pneumonia or food poisoning.

When President Coolidge took the reins of government, he continued Harding's domestic policies of high import tariffs while cutting income taxes. As a result, the economy began to grow at such a rate that net national income continued to increase. And from the point of view of certain circles, this was absolutely unacceptable. Therefore, as before, the money changers decided that it was time to throw a crisis into the American economy. The Federal Reserve began pumping money into the country. The money supply was increased by 62%.

Before his death in 1910, former President Theodore Roosevelt warned Americans about what was happening. As the New York Times reported on March 27, 1922, Roosevelt said:

"International bankers and Rockefeller and Standard Oil lobbyists control most of the newspapers in order to induce obedience or force out of public service those people who refuse to obey the powerful corrupt cabal that is our invisible government."

Just a day before this publication, New York Mayor John Hylan quoted the words of Roosevelt and denounced those who, in his opinion, are seizing control of America, the country's political process and the press:

“Theodore Roosevelt’s warning now seems extremely timely, since the real scourge of our republican system is the invisible government, which, like a giant octopus, extends its slimy tentacles over the cities, the state and the whole country... It grips with its powerful suction cups our executive and legislative bodies, schools, courts, newspapers and any government body created for the protection of the public good... In order to avoid groundless generalizations, it is enough to say that at the head of this octopus are powerful banking houses, usually referred to as international bankers... These international bankers and persons pursuing the interests of the Rockefellers and Standard Oil, control most of the newspapers and magazines in this country" (New York Times, March 26, 1922).

So why didn't people heed such serious warnings and why didn't Congress at the time oppose the Federal Reserve Act of 1913? Because, as you remember, these were the 20s. Steady expansion of bank lending contributed to market growth. In times of prosperity, no one wants to think about economic problems. However, there was a downside to this prosperity. The expansion and strengthening of enterprises took place exclusively with credit funds. Speculation flourished in the ballooning stock market.

Just as conditions were ripe, in April 1929, Federal Reserve godfather Paul Warberg sent out a secret circular to his friends warning of a coming crisis and depression throughout the country. In August 1929, the Federal Reserve began reducing the amount of money in circulation.

It is therefore no coincidence that the biographies of all the Wall Street tycoons of that time - John Rockefeller, GP Morgan, Joseph Kennedy, Bernard Baruch and others like them - contain mention of the fact that they managed to close their positions in securities transactions before the market collapse and invested all assets and cash in gold.

On October 24, 1929, major New York bankers began issuing demand-only loans to brokers with repayment within 24 hours. This meant that both stock brokers and their clients had to dump their shares on the market at any price in order to repay the loans. As a result, the market collapsed. This day went down in American history as Black Thursday.

According to John Kenneth Gailbraith, a researcher of the Great Depression, at the height of the rampant market sales, Bernard Baruch brought Winston Churchill to the visitors' gallery of the New York Stock Exchange. The purpose of this step was to show Churchill the stock market panic and to boast of his power over the wild events that were playing out on the trading floor. At the same time, Congressman Louis McFadden knew who the culprit was. He blamed the Federal Reserve and international bankers for orchestrating the crisis: "This is not an accident, but a carefully planned event... The international bankers sought to create an environment of such desperation that they would become overlords of us all." But McFadden took his actions much further. He openly accused the money changers of orchestrating the crisis in order to steal America's gold. In February 1931, at the height of the Depression, he said: “I think no one will argue that the statesmen and financiers of Europe are ready to go to any lengths to quickly return the gold given to America during the First World War.”

In a matter of weeks, the market lost $3 billion. Over the year, the market shrank by $40 billion. But was this money really lost? Or are they concentrated in the hands of a separate group of people? As an example, Joseph Kennedy's fortune grew from $4 million in 1929 to $100 million in 1935.

It is curious what the Federal Reserve did at this time - instead of saving the economy by quickly lowering the discount rate, it continued to stubbornly reduce the money supply, further exacerbating the depression. As a result, between 1929 and 1933 the volume of money in circulation decreased by 33%.

Although most Americans have never heard that the Great Depression was caused by the Federal Reserve, it is well known among mainstream economists. For example, Eliphron Friedman, a Nobel laureate from Stanford University, said the following in an interview with NPR in January 1996:

"The Federal Reserve definitely caused the Great Depression by reducing the amount of money in circulation by one third between 1929 and 1933."

Despite all this, American money also went abroad. While President Hoover heroically tried to save banks and vital businesses, while millions of Americans became increasingly hungry as the Depression deepened, millions of American dollars were spent rebuilding Germany, which had suffered during the First World War.

Eight years before Hitler occupied Poland, Representative Louis McFadden warned Congress that taxpayers were paying to keep Hitler in power:

"International bankers subsidize the modern German government. They helped Adolf Hitler obtain a dollar loan, every cent of which was spent on the campaign to promote Hitler to power and create a threat to the Bruening government... The managers of the Federal Reserve pumped so many billions of dollars into Germany that they are embarrassed to name the total amount."

In the last year of his presidency, Hoover desperately tried to implement a plan to improve the banking system. However, the plan failed because in order to make a decision in Congress it was necessary to secure the support of a democratic majority.

As a result of the 1932 presidential election, Franklin Delano Roosevelt became the owner of the White House. As soon as he took office, emergency measures were urgently taken to bring the banking system out of the crisis. However, they led to nothing more than strengthening the Federal Reserve's control over the circulation of money. Only after this did the Federal Reserve begin to “loose the purse strings” and feed the starving American people with new money.