"(...)By 1914, the Morgan empire was in increasingly shaky financial shape. The Morgans had long been committed to railroads, and after the turn of the century the highly subsidized and regulated railroads entered their permanent decline. The Morgans had also not been active enough in the new capital market for industrial securities, which had begun in the 1890s, allowing Kuhn-Loeb to beat them in the race for industrial finance. To make matters worse, the $400 million Morgan-run New Haven Railroad went bankrupt in 1914.
At the moment of great financial danger for the Morgans, the advent of World War I came as a godsend. Long connected to British, including Rothschild, financial interests, the Morgans leaped into the fray, quickly securing the appointment, for J.P. Morgan & Co., of fiscal agent for the warring British and French governments, and monopoly underwriter for their war bonds in the United States.
J.P. Morgan also became the fiscal agent for the Bank of England, the powerful English central bank. Not only that: the Morgans were heavily involved in financing American munitions and other firms exporting war material to Britain and France. J.P. Morgan & Co., moreover, became the central authority organizing and channeling war purchases for the two Allied nations.
The United States had been in a sharp recession during 1913 and 1914; unemployment was high, and many factories were operating at only 60% of capacity. In November 1914, Andrew Carnegie, closely allied with the Morgans ever since his Carnegie Steel Corporation had merged into the formation of United States Steel, wrote to President Wilson lamenting business conditions but happily expecting a great change for the better from Allied purchases of U.S. exports.
Sure enough, war material exports zoomed. Iron and steel exports quintupled from 1914 to 1917, and the average profit rate of iron and steel firms rose from 7.4% to 28.7% from 1915 until 1917. Explosives exports to the Allies rose over ten-fold during 1915 alone. Overall, from 1915 to 1917, the export department of J.P. Morgan and Co. negotiated more than $3 billion of contracts to Britain and France.
By early 1915, Secretary McAdoo was writing to Wilson hailing the "great prosperity" being brought by war exports to the Allies, and a prominent business writer wrote the following year that "War, for Europe, is meaning devastation and death; for America a bumper crop of new millionaires and a hectic hastening of prosperity revival."
Deep in Allied bonds and export of munitions, the Morgans were doing extraordinarily well; and their great rivals, Kuhn-Loeb, being pro-German, were necessarily left out of the Allied wartime bonanza. But there was one hitch: it became imperative that the Allies win the war. It is not surprising, therefore, that from the beginning of the great conflict, J.P. Morgan and his associates did everything they possibly could to push the supposedly neutral United States into the war on the side of England and France.
As Morgan himself put it: "We agreed that we should do all that was lawfully in our power to help the Allies win the war as soon as possible."(...)
In addition, the National Security League was founded in December, 1914, to call for American entry into the war against Germany. The NSL issued warnings against a German invasion of the U.S., once England was defeated, and it called all advocates of peace and non-intervention, "pro-German," "dangerous aliens," "traitors," and "spies."(...)
While the Morgans and other financial interests were beating the drums for war, even more influential in pushing the only partially reluctant Wilson into the war were his foreign policy Svengali, Colonel House, and House's protégé, Walter Hines Page, who was appointed Ambassador to Great Britain. (...)
Advising British Prime Minister Arthur Balfour on how best to handle Wilson, House counselled Balfour to exaggerate British difficulties in order to get more American aid, and warned him never to mention a negotiated peace. Furthermore, Balfour leaked to Colonel House the details of various secret Allied treaties that they both knew the naïve Wilson would not accept, and they both agreed to keep the treaties from the President. (...) House and Wiseman quickly entered a close collaboration, with House coaching the Englishman on the best way of dealing with the President, such as "tell him only what he wants to hear," never argue with him, and discover and exploit his weaknesses.(...)
Collaborating with House in supplying Wiseman with illegal information and working with the British agent against Wilson were two important American officials. One was Walter Lippman, a young socialist who had been named by Morgan partner Willard Straight as one of the three editors of his New Republic, a magazine which, needless to say, led 'the parade of progressive and socialist intellectuals in favor of entering the war on the side of the Allies. (...)
The plans of Colonel House and his biased young historians of The Inquiry were put into effect at the peace settlement at Versailles. Germany, Austria-Hungary, and Russia were cruelly dismembered, thus insuring that Germany and Russia, once recovered from the devastation of the war, would bend their energies toward getting their territories back. In that way, conditions were virtually set for World War II.
Not only that: the Allies at Versailles took advantage of the temporary power vacuum in Eastern Europe to create new independent states that would function as client states of Britain and France, be part of the Morgan-Rothschild financial network, and help keep Germany and Russia down permanently. It was an impossible task for these new small nations, a task made more difficult by the fact that the young historians managed to rewrite the map of Europe at Versailles to make the Poles, the Czechs, and the Serbs dominant over all the other minority nationalities forcibly incorporated into the new countries. These subjugated peoples – the Germans, Ukrainians, Slovaks, Croats, Slovenes, etc – thus became built-in allies for the revanchist dreams of Germany and Russia.
American entry into World War I in April 1917 prevented negotiated peace between the warring powers, and drove the Allies forward into a peace of unconditional surrender and dismemberment, a peace which, as we have seen, set the stage for World War II.
American entry thus cost countless lives on both sides, chaos and disruption throughout central and eastern Europe at war's end, and the consequent rise of Bolshevism, fascism, and Nazism to power in Europe. In this way, Woodrow Wilson's decision to enter the war may have been the single most fateful action of the 20th century, causing untold and unending misery and destruction. But Morgan profits were expanded and assured.
The Fortuitous Fed :
The massive U.S. loans to the Allies, and the subsequent American entry into the war, could not have been financed by the relatively hard-money, gold standard system that existed before 1914. Fortuitously, an institution was established at the end of 1913 that made the loans and war finance possible: the Federal Reserve System. By centralizing reserves, by providing a government-privileged lender of last resort to the banks, the Fed enabled the banking system to inflate money and credit, finance loans to the Allies, and float massive deficits once the U.S. entered the war. In addition, the seemingly odd Fed policy of creating an acceptance market out of thin air by standing ready to purchase acceptance at a subsidized rate, enabled the Fed to rediscount acceptance on munitions exports.
The Federal Reserve was the outgrowth of five years of planning, amending, and compromising among various politicians and concerned financial groups, led by the major financial interests, including the Morgans, the Rockefellers, and the Kuhn, Loebs, along with their assorted economists and technicians.
(...)While the establishment of the Federal Reserve System in late 1913 was the result of a coalition of Morgan, Rockefeller, and Kuhn, Loeb interests, there is no question which financial group controlled the personnel and the policies of the Fed once it was established. (While influential in framing policies of the Fed, Federal Reserve Board member Warburg was disqualified from leadership because of his pro-German views.)
The first Federal Reserve Board, appointed by President Wilson in 1914, included Warburg; one Rockefeller man, Frederic A. Delano, uncle of Franklin D. Roosevelt, and president of the Rockefeller-controlled Wabash Railway; and an Alabama banker, who had both Morgan and Rockefeller connections." Wall Street, Banks, and American Foreign Policy by Murray N. Rothbard
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