EIRHistory The Morgan Fascist Coup Plot and How FDR Defeated It byL.Wolfe the U.S. constitutional system was a critical feature of this Introduction pushforfascism. Some12yearsago,thisnewsservicepublishedareporton Theireffortscame closetosucceedingand mighthave, the1930sfascistcoupplotagainsttheFranklinD.Roosevelt haditnotbeenforthecourageofAmerica’sthen-mostdecor- government,ledbyaMorgan-centeredcabalofpowerfulfi- ated officer, Marine Corps Maj. Gen. Smedley Darlington nancialinterests;thecoupwouldhavereplacedFDRwitha Butler,andtheextraordinarypoliticalleadershipofFDRhim- puppetgovernmentwhosepolicieswouldbecontrolledbya self.WhileButlerexposedtheplot,FDRandhisallieswaged cabalofwealthyfinancialplutocrats.Asthereportmadeclear, war against the power of the private investment banks that theintentionoftheconspiratorswastousetheanarchyand sponsoredfascismathomeandabroad,seekingtocurbtheir chaos produced by the coup, to eliminate for all time the power,andplacingthesovereignpoweroftheU.S.govern- threattotheirpowerrepresentedbytheU.S.Presidencyand ment and Constitution over them. In asserting that all eco- U.S.Constitution. nomicpolicymustservetheconstitutionallymandatedprinci- Today,wearefacedwiththesameintentionbytheheirs pleoftheGeneralWelfare,FDRputthenationonapathway of that cabal of fascist bankers, who now control most of out ofthe chaos and pessimismthat served asthe breeding theExecutivebranchoftheU.S.governmentandwhohave, groundsforfascistcoupplotters.whilelayingtheeconomic through their agents such as Felix Rohatyn, attempted to and moral foundation for the direct military battle with the emasculatetheDemocraticopposition.Theynowseektoim- bankers’fascistgoleminEuropeinWorldWarII. pose a fascist government that Democratic leader Lyndon Thestoryofthisplotwasfront-pagenewsinevensuch LaRouchehaswarnedwouldbe“SchachtwithoutHitler”— establishmentpapersastheNewYorkTimes,asitoccurred. abrutalausteritygovernmentwithouttheovert“messy”char- However, since the death of Roosevelt in 1945, the Syn- acteristicsoftheHitlerregime.1 archistsweresuccessfulinallbutwipingitfromthepagesof In the intervening dozen years, our research has more historyandcommonmemory.Followingthepublicationof accuratelylocatedtheMorgancoupplotaspartofthebroader our report, and especially in the recent three years, as the pushforafascistworldorder,aspromotedbytheNazi-sup- worldplungestowardseconomiccollapseandfinancialchaos porting,Synarchistnetworksofthiscabal.Thedestructionof worsethantheGreatDepression,andwithit,anewbankers’ driveforfascistdictatorship,therehasbeenarenewedinterest inatleastsomeaspectsof theplot.PBS,forexample,pro- 1.Therehasbeenalonglineofpro-fascistswhohavearguedthattheNazis gavefascismabadname.Thisissimilartotheargumentusedbythelate duced a documentary on it, and there are at least two new pro-fascist economist Abba Lerner in his 1971 debate with Lyndon booksintheoffing.2 LaRouche,wherehemaintainedthatifpeoplehadonlylistenedtoandfol- lowedNaziEconomicsMinisterHjalmarSchacht’sausteritypoliciesHitler wouldnothavebeennecessary.Itisalsothegenesisfor1970spromotion 2.Inthelasttwoyears,twoputativeauthorshavecontactedthisauthorfor bytheRockefellerTrilateralCommissioncirclesoftheideaofmarketing informationaboutthecoupplot,withonemaintainingthatthereisinterest “fascismwithahumanface.” inapossibleHollywoodmovieonthesubject. 46 History EIR August 11, 2006 LibraryofCongress MarineCorpsMaj.Gen.SmedleyButler(left),withthen-NewYork LibraryofCongress Gov.AlSmith.ButlersawthroughtheeffortsoftheMorgan- JohnPierpontMorgan,Jr.wastheheadofthepowerfulAnglo- steeredcoupplotterstooverthrowFDRandinstallafascist DutchMorganinterestswhowereattheheartofthecoupplot. government,usinghimasapawn;histestimonytoCongress stoppedthemintheirtracks. We present here an edited and updated version of our was created by Lazard. Behind them was a larger cabal of 1994reportasanurgentmatterofinteresttothosewhomust privateinvestmentbankinginterests,whohadastranglehold onceagainrisetofighttherenewedfascistthreat,sothatthey onU.S.governmentcreditpolicy,includingtheinvestment mightknowtheirtrueenemiesandwhattheyarecapableof; banksofKuhn,Loeb;theMorganinterests;theRockefellers; andtoknowthatevensuchpowerfulforcescanbedefeated DillonRead;BrownBrothersHarriman;andLazardFre`res.3 with the kind of policies and leadership that today are pro- Since the 1876 Specie Resumption Act, U.S. economic videdbyLyndonLaRoucheandourmovement. andcreditpolicyhadincreasinglybeendictatedfromLondon. Since1913,themainvehiclefortheimplementationofthat TheSetting policyhadbeentheFederalReserve,aprivatecentralbank, AsFDRpreparedtotakeofficeinthelateWinterof1932- establishedbyBritishpolicyinterests,andrunbythoseinter- 33,theU.S.government,muchastoday,wasacaptiveofa estsandtheirU.S.alliesintheWallStreetinvestmentbanks. cabal of private financial interests: the London-New York The Morgan bank, at times official U.S. banker for the banking axis, whose strategists were the prime sponsors of Britishgovernment,wasfoundedandalwaysbasedinLon- fascisminEurope. don,knownthereasMorgan,Grenfell,withitsarmsinNew President Herbert Hoover’s economic team was con- trolledbyhisAmbassadortoBritain,formerTreasurySecre- 3.Wealthy“tories”—loyaliststotheBritishsideintheAmericanRevolu- taryAndrewMellon,andFederalReserveChairmanEugene tion—foundedthebanksinBostonandNewYorkwhichcrystallizedinthe Meyer,whosefatherhadhelpedfoundtheAmericanbranch 19thandearly20thCenturiesastheBritishstrategicoutpostcalledWall of the Lazard Fre`res banking house and whose own career Street. EIR August 11, 2006 History 47 YorkbeingJ.P.Morgan,MorganGuaranty,andsomeother theBankofEngland’sMontaguNorman,tofunnelcashinto institutions. the Nazi coffers. The principal Wall Street bank chosen to Kuhn,LoebaroseasJacobSchiff’senterprise,guidedby handlethisoperationwasBrownBrothersHarriman,whose hisLondonpartner,SirErnstCassel,personalbankerforKing principlesincludederstwhileplayboyAverellHarriman,who EdwardVII,theBritishRoundTable,andtheFabianSociety. waslatertogainanimportantholdonthe“liberal”wingof Kuhn,LoebwasthentakenoverbytheLondon/GermanWar- theDemocraticParty,andPrescottBush,grandfatherofthe burg family, the biggest stockholders in the Nazi cartel IG currentoccupantoftheWhiteHouse;PrescottBushactually Farben. servedasbagman,takingthefundstoGermany.4 TheRockefellerfamily,beginningwithaBritishpartner intheirearlyoilmonopoly,extendedintoacartelwithBrit- AHailofBullets ain’sShellOil,intoChaseManhattanBankandCitibank,and FromtheonsetoftheGreatDepressionin1929,Hoover’s into family foundations, all put into the service of British fascisteconomicpolicies“succeeded”incollapsingdomestic imperialpolicy. U.S.economicactivity.Whilethiscreatedtheconditionsof BrownBrothersHarrimancombinedBrownBrothers(the mass unemployment and economic dislocation which were familyfirmofMontaguNorman,knowninEnglandasBrown breedinggroundsfor pessimismandafascist movement,it Shipley) in a 1931 merger with the Harrimans, who were alsomadehaplessHooveraveryweakstandardbearerforthe madepowerfulbySirErnstCassel’sarrangementofBritish synarchist bankers in the 1932 election. By the late Fall of crown financial backing for Averell Harriman to acquire thatyear,whiletheywererescuingHitler,itwasobviousthat, UnionPacificRailroad. despite the best efforts to sabotage FDR’s campaign from Inthis“secretgovernment,”whichdefinedtheparameters theinsidebytheDemocraticPartyleadershipcontrolledby andoftenthedetailsofcriticalpolicies,theHouseofMorgan Morgan lawyer John W. Davis and the Synarchist John heldthemostimportantportfolio,asthemostimportantagent Raskob,anagentoftheMorgan-controlledduPontinterests, ofAnglo-VenetianinterestsintheUnitedStates.TheMorgan Rooseveltwasonhiswaytoalandslidevictory.5 partnershelddirectorshipsin167industrialconcerns,banks, However,therewasstillthe periodofthreemonthsbe- railroads, and utilities, and they controlled, through their tween theelection in November1932 and FDR’sMarch 4, bankingrelationships,themostimportantmediaintheUnited 1933inauguration,forthebankers’totrytodealwiththeir States,includingtheNewYorkTimes.Andmostimportantly, “problem.” theMorgans,alongwiththeothermerchantbanks,controlled OnFeb.15,1933,whenFDRreturnedtoMiamifroma themarketinthepublicdebtoftheUnitedStates,inconcert yachtingtripwithfriends,headdressedacrowdof10,000at withtheFederalReserve,throughthelatter’s“openmarket” an outdoor waterfront rally. Suddenly, several shots were operations. firedfromcloserangefromthecrowdatthePresidentialparty. Agentsofthiscabal,actingundertheordersofBankof Five people were hit, although Roosevelt, miraculously, EnglandGovernorMontaguNorman,helpedsponsorHitler’s wasnot. Nazisastheirproposedhandmaidenstoimplementthepoli- Themanchargedwithfiringtheshots,GiuseppeZingara, ciesdemandedbytheirdirectagent,MontaguNormanasset, amemberofaMasoniclodgefromNewJersey,wasatfirst Hjalmar Schacht. Schacht was to head the Hitler regime’s brandedan“anarchist”;anFBIinvestigationconcludedthat financial and economic policy. Through Schacht and other he had acted alone. When Chicago Mayor Anton Cermak, assets,theSynarchists—WallStreetandLondoninvestment whowaswoundedinthegunfire,diedthreeweeksafterthe banksandtheirFrenchandGermanpoliticalpartners—had attack, it fed press speculation that he, not Roosevelt, had created huge global cartels, aimed at controlling all basic beenthetarget.Thepresssoonbeganreportingthatvarious industry and raw materials, making governments and their mobsources,includingFrankNitti,bossoftheChicagomob, populationssubjecttotheirpowerovereconomiclife. claimedthatCermakwasonahitlist.Today,mostU.S.his- Throughoutthe1920s,theNewYorkandLondoninvest- mentbanksparticipatedwiththeGermanbackersoftheNazi 4.ItwasamatterofpublicscandalthattheHarrimanfamilyinthe1920s Party,suchasFritzThyssen,increatingglobalcartelsinsteel, and1930sopenlyfundedandsupportedconferencesfeaturingleadingNazi rawmaterials,andchemicals.TheNazisweretheoperatives eugenicists,andmoregenerallypromotedeugenics,includingforcedsteril- chosen to implement the bankers’ policies in Depression- ization“experiments”inthiscountry.SeetheresearchofRobertZubrinon wrackedGermany.WithplanstoseizepowerintheUnited theHarrimaneugenicsconnectioninAntonChaitkin,TreasoninAmerica States,Britain,andFrance,alongwiththeNazisinGermany (NewYork:FranklinHouse,NewYork1984). and Mussolini’s Fascists in Italy, the aim of these private 5.L.Wolfe,“TheBattlefortheSouloftheDemocraticParty:Howthe bankingcircleswasworldpower. RooseveltRevolutionReshapedtheDemocraticParty,”AmericanAlma- nanc,NewFederalist,July26,2004,Vol.27forinformationonRaskoband In1932,astheU.S.Presidentialcampaignmovedtowards Daviseffortstolosethe1932electionforFDR,includingtheirfailureto its conclusion, Hitler’s Nazis were on the edge of financial mobilizevariouspartymachines.Rooseveltovercamethisthroughbuilding ruin.Arescueeffortwasorganized,withthesupervisionof hisown“grassroots”movementthatessentiallytookovertheparty. 48 History EIR August 11, 2006 themoractingintheirinterestsinWashington. As Governor of New York (1928-32), FDR could see firsthand the power of the financial elites, as they tried to appealtohim,asoneoftheirown,comingfromthe“patrician class,”toimplementpoliciesbeneficialtotheirinterests,in- PresidentRoosevelt, cludingmassivetaxbreaksforthebanks.FDRcametounder- bornapatrician, standthatalmostallcurrenteconomictheorywasmerecover upheldthelotofthe forthepowerofthesefinancialinterests,andwastherefore “forgottenman.” uselessinthefaceoftheDepressionthattheCoolidge-Hoover Onecoupplotter maintainedthatFDR policies had brought on. Instead, FDR turned to the tradi- was“weak”:“He tional, anti-monetarist policies of the American System of willcomerightalong AlexanderHamilton,anallyofhisgreat-grandfatherIsaac6, withus.Hewasborn asthebasisfor“experimentation”infindingapathwayoutof inthisclass.Hewas theDepression.7Thiswasthetraditionofeconomicpolicy, raisedinthisclass andhewillcome which,throughtheactionsofLincolnandothers,builtAmeri- back.”Nothingcould canindustryintoaworldpower. havebeenfurther ThebankerssawinRoosevelttheirgreatestnightmare:a fromthetruth. powerfulpoliticalfigurenotundertheircontrol,withavast FDRLibrary baseofpopularsupport,whowasnon-ideological,andcom- mittedtotheviewthatthesovereignconstitutionalgovern- torytextbooksdonotevenmentiontheassassinationattempt, mentoftheUnitedStateshadboththepowerandmoralobli- nordomostAmericansknowthatithappened. gationtotakemeasurestocorrectimbalancesintheeconomy, However,newsaccountspublishedin1933,speakofthe and,whowasnotafraidtoactonthis.Withtheknowledge assassin’sarmbeingdeflectedbyawomaninthecrowd.Her thatnothingcouldbeaccomplishedunlessthepowerofthe reportwasthatthegunwasaimeddirectlyatRoosevelt,who financialeliteweretamed,FDRsetaboutimmediatelytofree wasspeakingfromanopencar.Hadshenotacted,Roosevelt theFederalgovernmentfromitsclutches,andthentousethe wouldhavebeenhitandlikelykilled. power of that government to level the playing field, with a Itwasreportedatfirst,thatZingarawasa“brickmason”; permanentreductioninthefinancialelites’power,byplacing stilllater,itwasrevealedthathewasaFreemason.TheScot- themunderFederalregulation. tish Rite of Freemasonry felt compelled to issue a pledge HesetthetoneforthatbattleinhisstirringMarch4Inau- of loyalty to the new President and a condemnation of the gural address, declaring that he was holding the financial assassination.Meanwhile,afterCermak’sunexpecteddeath powerthathadcreatedtheDepressionaccountableforwhat inMarch,Zingarawasswiftlysenttotheelectricchairand theyhaddone;theDepressionwasnonaturaloccurrence,but thestoryfadedfromthepress. thewasaproductofthefailureofthosewhoruledeconomic Itisstillnotclearhowthisassassinationattemptwasset policy. up.Onethingisclear,however:theSynarchistfascistswho Thoseresponsiblefor“theexchangeofmankind’sgoods opposedFDRwouldhavebeenitspotentialprincipalbenefi- have failed through their own stubbornness and their own ciaries.HadFDRbeenassassinatedpriortoinauguration,a incompetence,haveadmittedtheirownfailure,andhaveab- constitutionalcrisiswouldhavebeencreated,providingcover dicated,” FDR said. “Practices of the unscrupulous money for the bankers and their allies to move to their fascist op- changersstandindictedinthecourtofpublicopinion,rejected tion—agovernmentimposedfromoutsidetheConstitution. bytheheartsandmindsofmen.... Hadtheassassinationbeensuccessful,thehistoryofthelast “Themoneychangershavefledfromtheirhighseatsin centurywouldhavebeendramaticallydifferent. thetempleofourcivilization.Wemaynowrestorethattemple totheancienttruths.Themeasureoftherestorationliesinthe FDR’sWarwiththe‘MoneyChangers’ extenttowhichweapplysocialvaluesmorenoblethanmere The Roosevelt who came into office that March was a monetaryprofit. muchwisermanthantheonewhohadrunforVicePresident “Happinessliesnotinthemerepossessionofmoney;it in1920andbeenbeatenbadly.AsFDRstruggledtoovercome liesinthejoyofachievement,inthethrillofcreativeeffort. polioin1921-28,healsomaturedasapoliticalfigure,anchor- inghisidentityinastrongcommitmenttotheGeneralWel- 6.RoosevelthadmorethanakeeninterestonHamiltonandhispolicies, fare;hesawtheFederalgovernment,undertheswayofWall datingbacktohisseniorthesisonthesubjectatHarvard. Street-LondondictatedpoliciesoffirsttheCoolidge,andthen 7.AsGovernorofNewYork,FDRandhistrustedaideHarryHopkinshelped the Hoover Administrations, bringing suffering to the vast craftareliefandpublic/conservationworksprogramthatwasthemodelfor majorityofAmericans,whonowhadnovoicespeakingfor largerprogramsduringtheNewDeal. EIR August 11, 2006 History 49 The joy and moral stimulation of work no longer must be ciesbroughtonbankingcollapses. forgotteninthemadchaseforevanescentprofits.Thesedark Eachoftheseactionsstruckblowsagainstthepowerof dayswill beworth alltheycost usifthey teachus thatour thefinancialoligarchy;together,theyamountedtoavirtual true destiny is not to be ministered unto but to minister to declarationofwaragainstthefinancialpowerswhofortoo ourselvesandtoourfellowman. longhadheldswayovertheeconomicandfinancialpolicyof “Recognitionofthefalsityofmaterialwealthasthestan- theUnitedStates.9 dardofsuccessgoeshandinhandwiththeabandonmentof Twocriticalaspectsofthisoffensiveagainstthemoney thefalsebeliefthatpublicofficeandhighpoliticalposition changersdeservehighlighting. aretobevaluedonlybythestandardsofprideofplaceand TheFed,createdbythefinancialeliteasamechanismto personal profit; and there must be an end to a conduct in controlthecreditoftheU.S.government,whilemakinghuge bankingandinbusinesswhichtoooftenhasgiventoasacred financialprofitsforthesesameinterestsintheconductofthe trustthelikenessofcallousandselfishwrongdoing....”8 sale of government debt, stood as a major obstacle to any AsFDRwasspeaking,thecoupplotwasalreadyinmo- effectiveNewDealrecoveryprogram.AsrunfirstbyEugene tion.ItwasnotFDR’swordsthatspedtheprocessalong,as MeyerandthenbyanotherWallStreetflunky,EugeneBlack, weshallsee,buthispropensitytobacksuchstatementswith the Fed had demanded that Roosevelt act in a “financially stronganddirectactions,aswithhislarge-scaleinfrastructure prudent”way—keepingbudgetdeficitslowandlimitingthe building and employment and emergency relief programs. issuanceofdebt;citingprohibitionstheyhadputinplaceon Theseactionsrepresentatruerevolutioninpolicy,therever- long-term debt issuance, they insisted on use of expensive sal of years of treason against the American System. They short-termdebtfinancingtotrytocurbFDR’sspendingon includedthefollowing: recovery programs. In response, FDR had considered mea- • ThefreeingofU.S.creditfrommanipulationbyforeign suresthatwouldhaveeffectivelynationalizedtheFed,plac- centraland privatebanking interests,byremoving theU.S. ingitunderTreasurycontrol,andrunningitasaHamiltonian dollarfromagoldstandard—i.e.,theabilitytodemandpay- nationalbank.However,herejectedsuchaplan,indicating mentfordollarsingold;inaddition,FDRactedtobangold tohisaidesin1933thathewouldprefernottofightthatfight sales to individuals and to allow for transfer of gold funds at the moment, fearing a lack of guts by the Congress in from banks. He did this in a series of steps in 1933, as the backingsuchaction,andapossibleabilityofthebankersto U.S.currencycameunderattackfromforeignanddomestic dividetheNewDealcamp.10Instead,hewantedtowaitfor bankingsources.Ifthishadnotbeendone,thedollarwould theopportunityto“seize”theFed,inhisownway. havecollapsed,and,moreimportantly,thegovernmentwould As the New Deal gained momentum and FDR gained have been restricted in the issuance of dollar-denominated political strength, some time inthe Spring of 1934, Roose- debttotheamountofgoldonhandforwhichsuchfungible velt’snewTreasurySecretaryandcloseally,HenryMorgen- debt could have been exchanged. The freeing of the dollar thau, was summoned to the New York home of George L. fromthegoldstandardenabledFDRtofinancehisjobsand Harrison, the president of the New York Federal Reserve infrastructureprograms; Bank.There,ashewasseatedinachair,HarrisonandOwen • The regulation of the banking system, through such D.Youngstoodoverhim,pointingthreateningfingers;Mor- measuresastheGlassSteagallAct,whichseparatedcommer- genthauwasdeliveredanultimatum.Ashelaterrecounted, cialbankingfromprivateorinvestmentbanking,andrequired hewastold:“Youwilldowhatwewantyoutodoorwewill transparencyinbankingactivity.Bydoingthis,heasserted notsupportyourgovernmentbondmarkets.”11 thepoweroftheFederalgovernmentoverallfinancialtrans- TheTreasurySecretarywentbacktoRoosevelt,whothen actions; decideditwastimetotakeactionagainsttheFed.Butinstead • The regulation by the new Securities and Exchange ofseizingit,whichwouldhavebeenwellwithinhisrightas Commission (SEC) of all trading in stocks and bonds, pre- ChiefExecutive,heaskedMorgenthautorecommendaWall venting insider trading operations which were the highly StreetoutsiderwhomhecouldappointtotheBoardandmake profitableandcorruptwaysthatthefinancialelitewereshown itschairman.12Themanchosen,MarrinerEcclesofUtah,was toenlargetheirfortunes; • Theregulationofspeculationincommoditiesthrough 9.Seetheearlierversionofthisarticle,mostrecentlypublishedinTony theCommoditiesTradingCommission(CTC); Papert,ed.,TheSynarchistResurgenceBehindtheMadridTrainBombing • Increased bank supervision by the Treasury Depart- ofMarch11,2004),LaRouchein2004;alsoRichardFreeman,“Thenand mentandothers,ofallbankoperations;theprotectionofthe Now:WhyRoosevelt’sExplosive1933-1945RecoveryProgramWorked,” smaller bank depositors against the loss of their deposits, EIR,April26,2002. whilelimitingtheprotectionofthefinancialelite,whosepoli- 10.Ibid. 11. See Marriner S. Eccles, Beckoning Frontiers (New York: Alfred 8.QuotesfromFDRspeechesaretakenfromJohnGabrielHunt,ed.,The Knopf,1951). EssentialFranklinDelanoRoosevelt(NewYork:GramercyBooks,1995). 12.Ibid. 50 History EIR August 11, 2006 aself-maderegionalbanker,aformerindustrialist,wholike Evenbeforehetookoffice,Roosevelthadseentoitthat FDR,wascommittedtotheprinciplethateconomicandfi- alliesintheSenate,workingthroughitsBankingCommittee, nancial policymust serve theGeneral Welfare, andnot the had launched a highly publicized investigation of the prac- profitsoftheprivatebankersandcorporateshareholders.It ticesandpoweroftheNewYorkcommercialbanks.InFebru- wasthisalliancebetweenaPresidentcapableofmobilizing ary 1933, the committee’s exposure of their questionable thepopulationforGeneralWelfarepolicies,andhisoutspo- bankingpracticeshadforcedtheresignationoftwoFDRene- kenchiefbanker,committedtothesamegeneralgoals,that mies—NationalCityBank’sCharlesMitchellandthepresi- allowedtheFedtofunction,evenagainstthewillofsomeits dentofthebank’sholdingcompany,HughBaker,bothlead- BoardmembersandReserveBankpresidents.Thispermitted ing Morgan allies. Mitchell’s successor, James Perkins, the financing of FDR’s recovery program and later his war immediatelymovedtoseparatethecommercialdepositbank mobilization.ItwasEccleswho,workingonFDR’sbehalf, operations from its investment banking, to emphasize the actuallydraftedandredraftedthecriticallandmarkbankregu- banks’returnto“commercialbanking.”14 lationacts,includingwhatbecametheGlassSteagallbanking TheRockefellers’ChaseNationalBankwasnextonthe regulationbill.13 Senateprobers’list.Itsnewhead,Rockefellerbrother-in-law WinthropAldrich,announcedonthedayfollowingPerkins’ ‘PitilessPublicity’ action,thatChasetoowasgoingtodivorceitssecuritiesaf- FDRhadearlieropenedanotherflankinhisassaultonthe filiate. power of the financial oligarchy: the use of what he liked Thebankerslobbiedforthehearingstobecalledoff.But to refer toas “pitiless publicity,” telling thetruth about the President-elect Roosevelt demanded that they continue. He secretive,destructivewaysandcorruptionofthemonetarist asked his political troops to turn their fire directly onto financialpowersandtheirhiredhands. MorganandhisalliesatKuhn,LoebandDillonRead. Inparticular,FDRwentafterthevastpowercombinations Inlate1932,Rooseveltapprovedthecommittee’shiring thathadeffectivelycartelizedAmericanfinanceandindustry, asitsspecialcounselFerdinandPecora,aformerdistrictattor- givingtheinternationalSynarchyvastcontrol,throughinter- neyfromNewYorkwithareputationforfearlessness.Pecora lockingdirectoratesandprivate,unregulatedfinancialopera- planned to place the most powerful people on Wall Street tions,overeveryaspectofAmerican(andinternational)eco- in “the dock,”and try them in a waythat would have been nomiclife;thiswasanecessaryprerequisitefortakingaway impossibleincourt,giventheirabilityto“purchase”justice. suchpowerthroughtheactionofsovereigngovernment,as- Intheopeninghearingsonthecommercialbanks,Pecora sertingitsauthoritytoregulatefinanceintheinterestofthe establishedthatsomeofthemostpowerfulbankofficers,such GeneralWelfare. as Mitchell of National City, and Albert Wiggin of Chase, had lied to their shareholders, manipulated stocks for their ownbenefit,andhadmadeprofitsbeyondanythingreason- 13.Eccles,aMormon,wasinvolvedwithminingandlumberproduction, able,withouttheleastbitofconcernforthenationalinterest. beforehegotintobanking.Inhisautobiography,EccleswritesthattheDe- pressiontaughthimtwothings:thateverythinghehadeverthoughtabout Pecorarefusedtoallowthemtobeevasive,andhisquestion- economicswaswrong,thattherewasanabsolutenecessityforman,acting ing often made them look ridiculous. Public sentiment, throughhisconstitutionalgovernment,tointervenetoreverseactionsofmal- arousedbyRoosevelt’sspeechon“themoneychangers,”was feasanceandnegligence,torevivetheeconomy.Theargumentsagainstgov- thenfurtherarousedwithconcreteevidence. ernmentinterventiontoputpeopletoworkatsociallyandeconomicallynec- InearlyMarch,Pecorafiredoffaseriesofdetailedand essarytasksandtoproviderelieffromsufferingwere“nothingmorethanthe determinationofthisorthatinterest,speciallyfavoredbythestatusquo,to embarrassingquestionsabouttheoperationsoftheHouseof resistanynewrulesthatmightbetotheirdisadvantage....Isaw[that]men Morgananditsrelationshiptootherbanks,corporations,and withgreateconomicpowerhadanundueinfluenceinmakingtherulesofthe clients.Morgancounsel,formerDemocraticParty1924Pres- economicgame,inshapingtheactionofgovernmentthatenforcedthose identialcandidate,andformerambassadortoGreatBritain, rules,andinconditioningtheattitudeofpeopletowardsthoserules....” JohnW.Davis,declaredthequestionstobeoutrageous.But Ecclessaysthatthewealthofthenationisreallydefinedinphysicaland notmonetaryterms,andinplacingapremiumonthevalueofphysicaland Morgan was forced ultimately to answer them, and then to creativelaborthatproduceswealth.WhilestatingthatheisnotaKeyensian submittohearingsinMayandJunethatshookthefoundations oranykindofbelieverineconomic“theories,”heexpoundsaphilosophyof ofthe“secretgovernment.” banking that demands the determination of the value of an asset, not in PecoraandhisstaffspentmostofFebruary,March,and monetaryterms,butinitslong-termworthtotheeconomy;itwerebetterto April1933inNewYork,workingfromearlymorninguntil lendforthingsoflong-termrealworth,thathavethepotentialtoaddreal wealthovertimethantoseektomaximizeshort-termmonetaryprofit.Eccles 6 p.m. in the offices of J.P. Morgan and Company, poring becameafullycommittedadvocateofusinggovernmentfundsandcreditto overitsrecordsoffinancialdealingssincethewar.Hetold createemploymentinproductivework,forthelong-termbenefitofthenation. Inthatway,whilenotaHamiltonian,hewasdeterminedtousetheFed,as itschairman,forthispurposeofnationalbanking.Notsurprisingly,once 14.ThereportsontheSenateTestimonycomefromanumberofsources, FDRwasgone,TrumanwastedlittletimeinremovingEcclesfromtheBoard includingthetranscriptsoftheMcCormack-Dicksteinhearings;also,Ferdi- chairmanship,atthebehestofpowerfulNewYorkbankinginterests. nandPecora,WallStreetUnderOath(NewYork,1939). EIR August 11, 2006 History 51 noone,withthepossibleexceptionoftheWhiteHouse,what record: lists of companies in which Morgan partners held hewaslookingforandwhattackhewouldtake,fearingthat directorships,listsofbanksonwhichtheyweredirectors,lists thatinformationwouldbeleakedtoMorgan. of banks which held their deposits, and the firm’s balance ThehearingsopenedonMay24,topackedchambers.J.P. sheetsforthepreviousthreeyears. Morgan,Jr.,wasthefirstwitness.Inhisopeningstatement, Most shocking were the lists of “preferred clients” and printed in the next day’s New York Times, Morgan heaped friends of the bank, who had been let in at a below-market praiseonhimselfandonthe“honorabletradition”ofprivate price on a major 1929 speculative stock offering. The list banking in the United States, which he said performed an revealed two tiersof Morgan “cronies.” The firstwere true essential function. Morgan had once stated that he would “friendsofthefirm”whowereMorganalliesandoperatives, neverinvestin“unfinishedindustry,”sincehesoughttomax- and the second was a “fishing list,” by which they sought imize his clients’ monetary profit. That edict, which was prospectivenewoperatives,withwhomtheywoulddeepen sharedbymostprivatebankers,meantthattherewouldbeno their relations. It showed that Morgan had effectively con- real economic development and there was limit placed on trolledthosewhomadeU.S. financialpolicyformorethan entrepreneurship—totallycontrarytotheAmericanSystem threedecades,aswellastheleadershipofbothpoliticalpar- principlestowhichFDRsubscribed. ties,andmuchoftheFederalbench! As was to become clear in the Senate testimony of the Pecorashowed,andthepartnersconfirmed,thatMorgan days following, what Morgan meant by “private banking” handledone ofthemost confidentialandcritical aspectsof wastheunregulatedfinancialmanipulationsbyanoligarchi- Britishfinancialpolicy—theBankofEngland’spoundstabi- calclub,inwhichtherichandpowerfulwereallowedtoreap lizationfundoperations.Thiswashandled,onthissideofthe enormous profits, and through which the House of Morgan Atlantic,byJ.P.Morgan,Jr.,personally,andhistophench- wasablenotjusttobuyandsellsecurities,buttogaincontrol man, Thomas Lamont. In London, the office of Morgan of most of U.S. industry, to buy politicians and diplomats, Grenfell, from which two partners were members of the and effectively to control the most powerful banks in the House of Lords, coordinated continental European opera- UnitedStates. tions. Pecorawrotefiveyearslater,inhisbookWallStreetUn- Asimilarfundwassetuptomarket$24millioninsecuri- der Oath: “Undoubtedly, thissmall group of highly placed tiesforMussolini’sFascistItaly(andanadditional£5million financiers,controllingtheveryspringsofeconomicactivity, insecurities),administeredbyMorganGrenfell,andasyndi- holdsmorerealpowerthananysimilargroupintheUnited cateofprivatebankersincludingHambrosandN.M.Roth- States.” schildandSons.Additionalsecuritiesandcurrencyaccounts The meek response of the Morgan partners to these weresetupwithMorganbytheFed,theBankofEngland, chargeswasthat,whileitmightappearthattheyhadcontrol andSchacht’sReichsbank. ofmanycompaniesandbanks,theyweremerelyperforming It was brought up that such operations might in fact be a“service”andexercisednocontrolotherthanthe“powerof against the interests of the United States and some of the argumentandpersuasion.” “clients”MorganrepresentedintheU.S.A.Morgancategori- ThomasLamont,thepartnerwhoeffectivelymanagedthe callydeniedthis.WhenPecorapointedoutthatmembersof firm,toldthecommitteethatthecommonbeliefinthegreat theMorganfirminLondonweremembersoftheHouseof power of the House of Morgan was “a very strong popular Lords and officials of the British government, Morgan and delusion.”Allthefirmdidwasofferadvice,whichitsclients hispartnersblusteredthattherewasa“wall”betweenbusi- could take or leave. “We are credited with having what is nessandpolitics.WhenPecorapursuedtheissue,theraving knownaspowerorinfluence;andweadmitthatwehopethat ToryfascistMorgansimplystatedthattherecouldbenocon- ourcounselsareofsomeavail....” flictinpolicybetweenU.S.andBritishinterestsassuch,andif On the very first day, it was revealed that J.P. Morgan, thereweresuchan“absurd”eventuality,theHouseofMorgan arguablythemostpowerfulbankerinthenation,andallthe wouldbehaveas“reliablebankers”! 20partnersinhisMorganandCompanyanditsPhiladelphia Throughout the country, even the Morgan-controlled operation,DrexelandCo.,hadpaidnoincometaxesin1931 presswasforcedtoprintthedailydispatchesfromthehear- and1932,andhadpaidonlysmallamountsinpreviousyears! ings.Givenwhatwasbeingsaid,givenMorgan’sattitude,it Morgandefendedhimself,claimingthathehadmerelytaken wasimpossibletoeditthemsoastoplaceMorganinafavor- advantage of tax laws: “If the laws are faulty, it is not my ablelight.TheNewYorkTimesmeeklyeditorializedthatthere problem,”hearrogantlytoldthecommittee.Itwasalsoshown was nothingsensational in whatwas being revealed,that it thattheInternalRevenueService(IRS)hadneverexamined wasall“oldnews.”IteventriedtopraiseMorganforpointing Morgan’s transactions—anything that was prepared by the upinadequaciesinincometaxlaw! bankwassimplypassedonbytheexaminerswithoutevena WrotePecora:“ThepowerofJ.P.Morganwasnot‘avery cursoryglance! strongpopulardelusion,’asMr.Lamontwouldhaveit,buta Pecorafoughttohavevariousitemsenteredonthepublic starkfact.Itwasagreatstreamthatwasfedbymanysources: 52 History EIR August 11, 2006 byitsdeposits,byitsloans,byitspromotions,byitsdirector- ships,byitspre-eminentpositionasinvestmentbankers,by its control of holding companies which, in turn, controlled scoresofsubsidiaries,andbyitssilkenbondsofgratitudein whichitskillfullyenmeshedthechosenranksofthe‘preferred lists.’Itreachedintoeverycornerofthenationandpenetrated intopublic,aswellasbusinessaffairs.Theproblemsraised bysuchaninstitutiongofarbeyondbankingregulationinthe narrow sense. It might be a formidable rival to the govern- mentitself.” Senate Banking Committee hearings investigating the NewYorkcommercialbanks,convenedbyRooseveltallies in the Senate, continued through the second week in June 1933. Afterthat,PecoraturnedhisgunsonKuhn,Loebandits flamboyanthead,OttoKahn,whowasinstructedbythecabal toputonamorecongenialfacethanthestiffMorganpartners. TheDillonReadpartnersweresimilarlycongenial,asPecora broughtoutmoreevidenceoftheprivatebankers’manipula- tionofthefinancialmarketsandtheirhighlyirregularprac- tices.ThehearingsweresuspendeduntillateFall,whenthey resumedtoexaminecertainspecificspeculativeswindles;the effectFDRdesiredhadalready beenachieved,asthepress reflected the “common man’s” anger at the corruption and arroganceofinternationalfinance. TheCoupPlotDevelops Meanwhile,whatwastobeexposedasacoupplotagainst AnArizonanewspapertakesnoteoftheangryresponsetoButler’s attackonMussolini,January1931.SecretaryofStateSimpson FDR, financed by Morgan and allied interests, was already cabledapersonalapologyonPresidentHoover’sbehalfto well under way. The plot involved using an asset that had Mussolini,whileButlerwasthreatenedwithcourt-martial. alreadybeencreatedforsuchapurpose—thenetworksofthe AmericanLegion.15 TheLegiontodayisthoughttobearatherdocileassocia- tionofveterans,witha“right-wing”slant.Itwasfoundedin theVFWintoaformofpeople’smilitia,modelledonMusso- 1919,withmoneyfromMorganandotherNewYorkbankers lini’s Fascisti, using the veterans’ anger over Roosevelt’s andtheirallies,asaunion-bustingorganizationofthugsfor reductionandcancellationofbonuspayments. hire.Itsleadership,appropriatelycalledthe“RoyalFamily,” However,in1934,themanwhomthesefascistswished wasculledfrombankers,stockbrokers,andthelike. toleadtheirarmy,Maj.Gen.SmedleyDarlingtonButler,the Manydisgruntledveteransresentedtheirbrothersbeing most honored and decorated soldier in the land, blew the usedascannonfodderinWorldWarIforpoliciesthatthey whistleonthewholerottenaffair.Inspectacularrevelationsto neithersupported,norevenunderstood.Thedisgustledtothe theHouseUn-AmericanActivitiesCommitteeinNovember formation of a rival organization, the Veterans of Foreign and December,Butler reviewed his firsthandknowledge of Wars(VFW),which,astheDepressiondeepened,lobbiedfor theplot,identifyingtheHouseofMorgananditsoperatives theimmediate,acceleratedcashpaymentofpromisedveter- asplayingacentralrole. ans’bonuses. SmedleyButlerappearedtobeanunlikelycandidatefor IntheearlySummerof1933,astheplansforafascistplot thefascistcoupplotters.TwicedecoratedwiththeCongres- developed,itsorganizershopedtodrawboththeLegionand sionalMedalof Honor,hewasaQuaker fromaprominent Pennsylvaniafamily,whothoughtofhimselfasapatriotwho wouldneverbetraythevaluesembodiedintheConstitution. 15.Reportsonthedetailsofthecoupplotandtestimonycomefromanumber He had been both the most distinguished serving officer in ofsources,includingcommitteetranscriptsanditsfinalreport;JulesArcher, thenation,andalsoitsmostoutspoken. ThePlotToSeizetheWhiteHouse(NewYork:HawtorneBooks,1973); Butlerhadoncebeenplacedinchargeofthedeployments JohnL.Spivak,“WallStreet’sFascistConspiracy,Parts1&2,”NewMasses, ofMarinesonbehalfofAmericanbusinessandbankinginter- Jan.29andFeb.5,1935.Butler’sspeechesarequotedinthesearticlesand contemporarypressaccounts. ests in foreign lands. For a long time, he held his tongue, EIR August 11, 2006 History 53 loyally carrying out orders, which he had personally questioned.But,followingastintinChinainthelate 1920s,duringwhichheperceivedthathisorderswere toprotectStandardOil’sinterests,evenattheexpense ofAmericancitizens,hebegantospeakout. In December 1929, addressing veterans in Pitts- burgh,hestatedthat,inhisdeploymentin1912inNica- ragua,hehadhelpedrigelectionstobackthecandidate desiredbythebankingfirmofBrownBrothers.Hewas immediately called on the carpet by Navy Secretary FrancisAdams,whosenamewaslatertoappearonthe Morgan“preferredlist.”Butthelocalpress,andthen somenationalpress,coveredButler’sremarks,andthey were later favorably reported by various members of Congress. Two days after his attack, the Hoover Ad- ministrationwasforcedtobeatahastyretreatfromits publicsupportof“gunboatdiplomacy,”andrepudiated clipart.com theTeddyRooseveltcorollarytotheMonroeDoctrine, TheAmericanLegionbecameastoogeofthefascistbankers,asits commanderinchiefproclaimedin1923that“theAmericanLegion stating that it would not intervene “by right” into the standsreadytoprotectourcountry’sinstitutionsandidealsasthe internalaffairsofanIbero-Americannation. FascistidealtwiththedestructionistswhomenacedItaly.” Butler,however,waspassedoverforcommandant oftheMarineCorps,anappointmentwhich,consider- inghisrankandhisservicecredentials,shouldhavebeenhis. mildreprimand.Herefused,however,toretracthisstatement, InJanuary1931,whileinuniform,atwhatwassupposed sayingonlythathehadbeentoldinadvanceofthemeeting to be an off-the-record private meeting, Butler delivered a thatwhathesaidwouldbeconfinedtothefourwallsofthe stingingattackonMussolini,recountingastorytoldtohim room. about how Mussolini had been riding in his limousine and Butler’sattackonIlDucehadangeredtheMorganinter- hadrunoveralittlechild.Butler’sfriend,whowasinthecar ests, who had played a major role in financing Mussolini’s withMussolini,screamedinhorror.“Mussolinisaidthatyou Fascists.AccordingtotestimonyinCongressionalhearings, shouldn’tdothat,thatitwasonlyonelifeandtheaffairsof theHouseofMorganhadsyndicateda$100millionloanto statecouldnotbestoppedforonelife,”Butlertoldhisshocked Mussolini’sgovernmentin1925,andhadmadesubsequent audience. “How can you talk disarmament with a man like loanstothatgovernment,aswellasa$30millionloantothe that?” government of the city of Rome. Dillon Read, which had AnItaliandiplomat,presentatthemeeting,sentawireto participatedintheMorganloan,alsoarrangedaloanof$30 Rome,andtheItaliangovernmentfiledaprotestwiththeState millionforthecityofMilan. Department. The pro-Mussolini press castigated Butler for Through the mid-1930s, Morgan partners, including insulting the head of a “friendly power.” The Secretary of ThomasLamont,continuedtopraisetheFascistexperiment State,HenrySimpson,cabledapersonalapology,onbehalf inItaly. ofHerbertHoover,toIlDuce. OnJan.29,Butler,thecommandantoftheQuanticoMa- AmericanFascism rinebaseatthetime,wasplacedunderarrestandtoldthathe ItwasbecomingincreasinglyobvioustoButlerandmany wastobecourt-martialledbydirectorderofPresidentHoo- othersthattheAmericanLegionwasastoogeofthesefascist ver,withthefullapprovaloftheSecretaryoftheNavy. bankers.Asearlyas1923,theLegion’sCommanderinChief The plans for the court-martial provoked a tremendous AlvinOwsley,hadopenlyembracedMussolini,andendorsed outpouringofsupportforButler.Theanti-fascistlocalpress FascismasaviablepolicyfortheUnitedStates.Havingdone leveledchargesagainsttheHooverAdministrationthatitwas that,heannouncedthattheLegionwas,ifnecessary,prepared knuckling under to the “thug” Mussolini and sacrificing tokickouttheelectedgovernmentoftheUnitedStatesand America’smostdistinguishedmilitaryfigure.FranklinRoo- backanyonewhowouldfollowapolicyof“Americanism.” sevelt,thentheGovernorofNewYork,andafriendofBut- “Ifeverneeded,”hestated,“theAmericanLegionstands ler’s dating from FDR’s days as Assistant Secretary of the ready to protect our country’s institutions and ideals as the Navy,workedtohelpthegeneralandspokeoutagainsthis FascistidealtwiththedestructionistswhomenacedItaly.” court-martial. Askedifthismeanttakingoverthegovernment,hestated: HooverandAdamswereforcedtobackdown.ByFeb.9, “Exactlythat.TheAmericanLegionisfightingeveryelement thecourt-martialwascancelled,andButlerwasgivenonlya that threatens our democratic government—soviets, anar- 54 History EIR August 11, 2006 chists,I.W.W.,revolutionarysocialistsandeveryotherred. WhenButlerfinallyretired,hewasnolongerconstrained ...DonotforgetthattheFascistiaretoItalywhattheAmeri- bymilitaryprotocol.Henowtravelledthecountry,addressing canLegionistotheUnitedStates.” anyone who would listen, attacking the bankers who con- In late March 1931, National Commander Ralph T. trolledthedeploymentofthemilitary. O’NeillpresentedItalianAmbassadordeMartinowithacopy OnDec.5,1931,anarticleunderhisbylineappearedin of a resolution passed by the American Legion’s National LibertyMagazine,titled“ToHellwiththeAdmirals!WhyI ExecutiveCommittee, praisingMussolini asa greatleader. Retired at 50.” In it, Butler charged the leadership of the Meanwhile, the Legion’s leadership propagandized against Navywithcomplicityinpoliciesthatnowrevoltedhimand the“non-Aryan”pollutionoftheAmericanstock,repeating inworkingtotrytopreventhispromotionandultimately,to theracialistgarbageoftheeugenicsmovement. silencehim.HeattackedanumberofCentralAmericanlead- Throughout the 1920s and early 1930s, the legion was ers as Wall Street stooges, naming again Brown Brothers usedasarecruitingbasefortherebirthoftheKuKluxKlan, andMorgan. with many of the Southern Legion branches operating as Klancells. TheBonusArmy Theso-calledcommunistmenaceusedtohelporganizea In late July 1932, the Bonus Army of unemployed and fascist counter-reaction was a bogeyman. The Communist starvingveterans descendedupon Washingtonto backpas- PartyU.S.A.anditssplintergroups,wereeffectivelyrunby sageoftheBonusBill.Butlerwasaskedbytheheadofthe policeagents,andotherstooges,andwereevenfundedbythe VFWtocometolendsupporttothesoldiers.Asthesoldiers bankersthemselves,includingMorgan.Manywell-meaning ralliedinWashington,thebillpassedtheHousebutwasover- people, upset with the effects of Anglo-American policy, whelmingly defeated in the GOP-dominated Senate. Butler wandered into these circles, only to have their actions ren- wasaskedtoaddressthe10,000angryveteranswhohadset deredimpotentbytheoverallcontrolofthesemovementsand upashantytownonthebanksoftheAnacostiaRiver. theirideology. Heurgedthemtofighton.“Ifyoudon’thangtogether, In August 1931, Butler chose an address made before youaren’tworthadamn,”hesaid.“Theymaybecallingyou an American Legion convention in Connecticut to deliver trampsnow,butin1917,theydidn’tcallyoubums....When perhapsthemostremarkablespeechevergivenbyaserving yougohome,gotothepollsinNovember,lickthehelloutof officeraboutthemisuseofmilitarypower.“Ihavespent33 thosewhoareagainstyou.Youknowwhotheyare....Now years...beingahigh-classmusclemanforBigBusiness,for gotoit.”Thecrowdroared. Wall Street and the bankers. In short, I was a racketeer for Butlerstayedwiththeveterans,talkingtothemthrough capitalism,”Butlersaid. “IhelpedpurifyNicaraguafortheinternationalbanking houseofBrownBrothersin1909-1912.IhelpedmakeMex- icoandespeciallyTampicosafeforAmericanoilinterestsin 1916. I helped make Haiti and Cuba a decent place for the NationalCity[Bank]boystocollectrevenuein.Ihelpedrape half a dozen Central American republics for the benefit of WallStreet....InChina,IhelpedseetoitthatStandardOil wentitswayunmolested....Ihad...aswellracket.Iwas rewardedwithhonors,medals,andpromotions.Imighthave givenAlCaponeafewhints.Thebesthecoulddowasoperate aracketinthreecities.TheMarinesoperatedonthreeconti- nents....” To the dismay of the bankers who directed the Legion, Butler’s remarks were greeted with riotous applause. In Washington,Hooverrefusedtoanswerreporters’questions aboutthegeneral’sstatements.Themajorpressblackedout mostofwhatButlersaid,butthewordleakedoutinthere- gionalpress,andwasspreadthroughwordofmouth. LibraryofCongress NavySecretaryAdamsdemandedthatsomeonesilence TheBonusArmyofunemployedveteransconvergedon Butler,butnoonedaredtosayanything,especiallyafterthe WashingtoninJuly1932.GeneralButleraddressedthevast crowd,endorsingtheirdemands,buturgingthemto“keepyour Mussolini flap. Butler continued to hammer away on the senseofhumor,”toavoidviolence(Hooverorderedthestorming themethattheAmericanmilitarywasbeingdeployedtocol- ofthecampsthenextday).Thecoupplotterslatertriedto lectbankers’debtsandsecurelootingrightsinforeigncoun- capitalizeonButler’srapportwiththeex-soldiers,torecruithim tries. totheirscheme. EIR August 11, 2006 History 55