CHAPTER FOURTEEN Congressional Exposé [SECRETS OF THE FEDERAL RESERVE By Eustace Mullins]
"Mr. Volcker’s politics is something of an enigma."--New York Times
Since 1933 when Eugene Meyer resigned from the Federal Reserve Board of Governors, no member of the international banking families has personally served on the Board of Governors. They have chosen to work from behind the scenes through carefully selected presidents of the Federal Reserve Bank of New York and other employees.
The present chairman of the Federal Reserve Board of Governors is Paul Volcker. His appointment was greeted by one well-known economist with the following prediction, "Volcker’s selection has been by far the worst. Carter has put Dracula in charge of the blood bank. To us, it means a crash and depression in the 80s is more certain than ever."
Col. E.C. Harwood’s Research Report, August 6, 1979, gave much the same view. "Paul Volcker is from the same mold as the unsound money men who have misguided the monetary actions of this nation for the past five decades. The outcome probably will be equally disastrous for the dollar and the U.S. economy."
Despite these gloomy views, the report from The New York Times on the selection of Volcker was positively ecstatic. On July 26, 1979, The Times commented that Volcker learned "the business" from Robert Roosa, now partner of Brown Brothers Harriman, and that Volcker had been part of the Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at the Treasury in the Kennedy administration. "David Rockefeller, the chairman of Chase, and Mr. Roosa were strong influences in the Mr. Carter decision to name Mr. Volcker for the Reserve Board chairmanship." The New York Times did not point out that David Rockefeller and Robert Roosa had previously chosen Mr. Carter, a member of the Trilateral Commission, as the presidential candidate of the Democratic Party, or that Mr. Carter would hardly refuse to appoint their choice of Paul Volcker as the new Chairman of the Federal Reserve Board. Nor is it straining the point to be reminded that this manner of selection of the Chairman of the Board of Governors is directly in the line of royal prerogative going back to George Peabody’s initial agreement with N.M. Rothschild, to the Jekyll Island meeting, and to the enactment of the Federal Reserve Act.
The Times noted that "Volcker’s choice was approved by European banks in Bonn, Frankfurt and Zurich." William Simon, former Secretary of Treasury, was quoted as saying "a marvelous choice." The Times further noted that the Dow market rose on Volcker’s nomination, registering the best gains in three weeks for a rise of 9.73 points, and that the dollar rose sharply on foreign exchange@ at home and abroad.
Who was Volcker, that his appointment could have such an effect on the stock market and the value of the dollar in foreign exchange? He represented the most powerful house of "the London Connection," Brown Brothers Harriman, and the London houses which directed the Rockefeller empire. On July 29, 1979, The Times had said of Volcker, "New Man Will Chart His Own Course".
Volcker’s background shows that this was nonsense. His course has always been charted for him by his masters in London. He attended Princeton, obtained an M.A. at Harvard, and went to the London School of Economics 1951-52, the banker’s graduate school. He then came to the Federal Reserve Bank of New York as an economist from 1952-57, economist at Chase Manhattan Bank, 1957-61, with Treasury Department 1961-65, as deputy under secretary for monetary affairs, 1963-65, and under secretary for monetary affairs, 1969-74. He then became President of the Federal Reserve Bank of New York from 1975-79, when Carter, at the behest of Robert Roosa and David Rockefeller, appointed him Chairman of the Federal Reserve Board of Governors. He was succeeded as President of Federal Reserve Bank of New York by Anthony Solomon, a Harvard Ph.D. who was with the OPA 1941-42 and with the government financial mission to Iran 1942-46. He operated a canned food company in Mexico from 1951-61, was president of International Investment Corp. for Yugoslavia 1969-72 (a communist country), under secretary for monetary affairs at Treasury 1977-80. In short, Solomon’s background was much the same as Paul Volcker’s.
The New York Times stated on December 2, 1981, "For years the Federal Reserve was the second or third most secret institution in town. The Sunshine Act of 1976 penetrated the curtain a trifle. The board now holds a public meeting once a week on Wednesday at 10 a.m., but not to discuss Monetary policy, which is still regarded as top secret and not to be discussed in public." The Times mentioned that when Open Market Committee meetings are held, Solomon and Volcker sit together at the head of the table and relay the instructions which they have received from abroad.
Behind Volcker and Solomon stands Robert Roosa, Secretary of the Treasury in Carter’s shadow cabinet, and representing Brown Brothers Harriman, the Trilateral Commission, the Council on Foreign Relations, the Bilderbergers, and the Royal Economic Institute. He is a trustee of the Rockefeller Foundation*, and a director of Texaco and American Express companies. Dr. Martin Larson points out that "The international consortium of financiers known as the Bilderbergers, who meet annually in profound secrecy to determine the destiny of the western world, is a creature of the Rockefeller-Rothschild alliance, and that it held its third meeting on St. Simons Island, only a short distance from Jekyll Island." Larson also states that "The Rockefeller interests work in close alliance with the Rothschilds and other central banks."**
On June 18, 1983, President Ronald Reagan ended months of speculation by announcing that he was reappointing Paul Volcker as Chairman of the Federal Reserve Board of Governors for another four year term, although Volcker’s term was not up until August 6, 1983. Reagan’s reappointment of a Carter appointee puzzled some political observers, but apparently he had succumbed to considerable pressure, as indicated by a lead editorial in The Washington Post, June 10, 1983, "There is no one who matches Mr. Volcker in both political standing and grasp of the intricate networks that make up the world’s financial system." The anonymous writer gave no documentation for his elevation of Volcker to the standing of the world’s greatest financier, and as for his political standing, The New York Times commented on June 19, 1983, "Mr. Volcker’s politics is something of an enigma." His "non-political" stance conforms with the Washington tradition of "the political independence of the Fed" which has been maintained for many years. However, the problem of its dependence on "the London connection" has never been discussed in Washington.
In reality, Volcker is more of a politician than an economist. After attending the London School of Economics, and finding out who issues the orders of the international financial community, Volcker has ever since played the game. Not once has he failed to carry out the orders of the "London Connection".
Can it really be possible that "The London Connection" exists, and that men like Volcker and Solomon receive their instructions, in however devious or indirect a manner, from foreign bankers? Let us look at the evidence, circumstantial, to be sure, but circumstantial evidence of the quality which has often sent men to the penitentiary or to the electric chair. John Moody pointed out in 1911 that seven men of the Morgan group, allied with the Standard Oil-Kuhn, Loeb group, ruled the United States. Where do these groups stand in the financial picture today?
U.S. News published on April 11, 1983, a list of the largest bank holding companies in the United States by assets as of December 31, 1982. Number 1 is Citicorp, New York, with assets of $130 billion. This is Baker and
* See Chart V
** See Chart I
Morgan’s First National Bank of New York, merged with National City Bank in 1955, two of the largest purchasers of Federal Reserve Bank of New York stock in 1914. Number 3, is Chase Manhattan, New York, with assets of $80.9 billion. This is Chase and Bank of Manhattan merged, the Rockefeller and Kuhn Loeb group, also purchasers of Federal Reserve Bank of New York stock in 1914. Number 4 is Manufacturers Hanover of New York $64 billion, also purchaser of Federal Reserve Bank of New York stock in 1914. Number 5 is J.P. Morgan Company of New York, $58.6 billion in assets and holder of considerable Federal Reserve Bank stock. Number 6 is Chemical Bank of New York, $48.3 billion also purchaser of Federal Reserve stock in 1914. And Number 11, First Chicago Corporation, the First National Bank of Chicago which was principal correspondent of the Morgan-Baker bank in New York, and which furnished the first two presidents of the Federal Advisory Council.
The direct line which leads from the participants in the Jekyll Island Conference of 1910 to the present day is illustrated by a passage from "A Primer on Money", Committee on Banking and Currency, U.S. House of Representatives, 88th Congress, 2d session, August 5, 1964, p. 75:
"The practical effect of requiring all purchases to be made through the open market is to take money from the taxpayer and give it to the dealers. It forces the Government to pay a toll for borrowing money. There are six ‘bank’ dealers: First National City Bank of New York; Chemical Crop. Exchange Bank, New York, Morgan Guaranty Trust Co., New York, Bankers Trust of New York, First National Bank of Chicago, and Continental Illinois Bank of Chicago."
Thus the banks which receive a "toll" on all money borrowed by the Government of the United States are the same banks which planned the Federal Reserve Act of 1913. There is ample evidence demonstrating the present preeminence of the same banks which set up the Federal Reserve System in 1914. For instance, Warren Brookes writes on the editorial page of The Washington Post, June 6, 1983:
"Citicorp (National City Bank and First National Bank of New York, merged in 1955) just recorded an 18.6% return on equity, J.P. Morgan, 17%, Chemical Bank and Bankers Trust, nearly 16%, an exceptional rate of return."
These are the banks which bought the first issue of Federal Reserve Bank stock in 1914, and which owned the controlling interest in the Federal Reserve Bank of New York, which sets the interest rate and is the bank for all open market operations.
These banks also profit steadily from the otherwise inexplicable fluctuations in monetary growth and interest rates. Brookes further comments on "actual monetary growth rates alternately gyrating from 0 to 17% in successive six month periods for three recession-wracked years. The two measures of money growth most admired by Milton Friedman M2 and M3, have actually shown little change on a year to year basis in the 1972-82 period."
Thus we have money growth rates gyrating from 0 to 17% but no actual year to year changes, which raises the question of why we cannot have stability of monetary growth throughout the year. The answer is that the big profits are made by these gyrations, and the next question is, who sets in motion these gyrations? The answer is "the London Connection".
To draw attention from the continued control of the bankers and their heirs, who obtained the government monopoly of the nation’s money and credit in 1913, the paid propagandists of the controlled media monopoly and academia are constantly trotting forth new and more exotic theories of economics. Thus James Burnham, one of the National Review propagandists, won fame with a ridiculous theory of "the managers". He postulated that the old arbiters of wealth, the J.P. Morgans, the Warburgs and the Rothschilds had, by 1950, disappeared from the scene, being replaced by a new class of "managers". This theory, which had no foundation in fact, served to obscure the fact that the same people still controlled the monetary system of the world. The "managers" were just that, executives like Volcker who were front men, paid employees who would continue to receive their paychecks only as long as they carried out their employers’ instructions. Burnham remains a well-paid propagandist at the National Review, which many prominent leaders, including President Reagan, believe to be a "conservative" publication.
From 1914 to 1982, a period in which many thousands of American banks went bankrupt, the original purchasers of Federal Reserve Bank stock have not only survived but they have consolidated their power. And what of "the London Connection"? Does it still exist, and is it still dictating the economic destiny of the United States? The Washington Post, May 19, 1983, carried a story datelined Nairobi, Kenya, noting the meeting of the African Development Bank. "The British merchant bank, Morgan Grenfell and a syndicate of the United States, Kuhn Loeb, Lehman Brothers International, the French Lazard Freres and Britain’s Warburg are discreetly acting as financial advisors to about ten debt-plagued African states."
There are the same names we encountered in 1914, still managing the finances of the world, with profits for themselves but with disastrous results for everyone else. Perhaps we can look for relief to the present Administration of President Reagan. Unfortunately, before reaching him we have to run the gamut of the long list of his principal staff, composed of men from J. Henry Schroder, Brown Brothers Harriman, and other leading components of "The London Connection".
Lopez Portillo, President of Mexico, in addressing the Mexican National Congress of Mexico in September, 1982, called the world credit boom of the past decade a financial pestilence akin to the Black Death which swept Europe in the fourteenth century. "As in mediaeval times, it flattens country after country. It is transmitted by rats and it yields unemployment and misery, industrial bankruptcy and enrichment by speculation. The remedy prescribed by faith healers is forced inactivity and depriving the patient of food."
Forbes Magazine stated October 11, 1982, "The world gasps for liquidity, not because the supply of money has contracted but because too much of it now goes to pay off old debts rather than fund new productive investments."
The policy of high interest rates and tight money has been disastrous for the United States. In early 1983, a slight easing of money and credit promises some relief, but as long as the Federal Reserve system and its unseen manipulators continue their control of the money supply, we can expect more problems. The Nation on December 11, 1982, in commenting on economic problems, stated, "The blame for all this lies at the door of the Federal Reserve System working as usual on behalf of the international banking system."
The evidence of how the Federal Reserve System works on behalf of the international banking system is graphically illustrated by a series of charts drawn up by the staff of the Committee on Banking, Currency and Housing of the House of Representatives, 94th Congress, 2d session, August, 1976, "FEDERAL RESERVE DIRECTORS: A STUDY OF CORPORATE AND BANKING INFLUENCE".* We present as our Chart V page 49 of this study, showing the interlocking directorates of David Rockefeller. As our Chart VI we reproduce page 55 of this study, showing the interlocking directorates of Frank R. Milliken, one of the Class C Directors** of the Federal Reserve Bank of New York. In this chart are all the main personages in our story of the Jekyll Island conference: Citibank, J.P. Morgan and Company, Kuhn Loeb and Company, and many related firms. As Chart VII we reproduce page 53 of this study, showing the interlocking directorates of another Class C Director of the Federal Reserve Bank of New York, Alan Pifer. As President of the Carnegie Corporation of New York, he interlocks with J. Henry Schroder Trust Company, J. Henry Schroder Banking Corporation, Rockefeller Center, Inc., Federal Reserve Bank of Boston, Equitable Life Assurance Society (J.P. Morgan), and others. Thus an August, 1976 study from the House Committee on Banking, Currency and Housing, brings before us all of our main cast of personages, functioning today just as they did in 1914.
* Due to space limitations, only five of the seventy-five charts in the study, all of which show the connections between prominent, powerful individuals with control in the Federal Reserve System have been selected to illustrate the connections between officers and directors of the twelve Federal Reserve Banks in 1976 and the firms listed in this book.
** "The three Class C Directors are appointed by the Board of Governors as representatives of the public interest as a whole." p. 34, Congressional Study, 1976.
This 120 page Congressional study details public policy functions of the Federal Reserve District Banks, how directors are selected, who is selected, the public relations lobbying factor, bank domination and bank examination, and corporate interlocks with Reserve banks. Charts were used to illustrate Class A, Class B, and Class C directorships of each district bank. For each branch bank a chart was designed giving information regarding bank appointed directors and those appointed by the Board of Governors of the Federal Reserve System.
In his Foreword to the study, Chairman Henry S. Reuss, (D-Wis) wrote:
"This Committee has observed for many years the influence of private interests over the essentially public responsibilities of the Federal Reserve System.
As the study makes clear, it is difficult to imagine a more narrowly based board of directors for a public agency than has been gathered together for the twelve banks of the Federal Reserve
Only two segments of American society--banking and big business--have any substantial representation on the boards, and often even these become merged through interlocking directorates . . . . Small farmers are absent. Small business is barely visible. No women appear on the district boards and only six among the branches. Systemwide--including district and branch boards--only thirteen members from minority groups appear.
The study raises a substantial question about the Federal Reserve’s oft-repeated claim of "independence". One might ask, independent from what? Surely not banking or big business, if we are to judge from the massive interlocks revealed by this analysis of the district boards.
The big business and banking dominance of the Federal Reserve System cited in this report can be traced, in part, to the original Federal Reserve Act, which gave member commercial banks the right to select two-thirds of the directors of each district bank. But the Board of Governors in Washington must share the responsibility for this imbalance. They appoint the so-called "public" members of the boards of each district bank, appointments which have largely reflected the same narrow interests of the bank-elected members . . . . Until we have basic reforms, the Federal Reserve System will be handicapped in carrying out its public responsibilities as an economic stabilization and bank regulatory agency. The System’s mandate is too essential to the nation’s welfare to leave so much of the machinery under the control of narrow private interests.
Concentration of economic and financial power in the United States has gone too far."
In a section of the text entitled "The Club System", the Committee noted:
"This ‘club’ approach leads the Federal Reserve to consistently dip into the same pools--the same companies, the same universities, the same bank holding companies--to fill directorships."
This Congressional study concludes as follows:
"Many of the companies on these tables, as mentioned earlier, have multiple interlocks to the Federal Reserve System. First Bank Systems; Southeast Banking Corporation; Federated Department Stores; Westinghouse Electric Corporation; Proctor and Gamble; Alcoa; Honeywell, Inc.; Kennecott Copper; Owens-Corning Fiberglass; all have two or more director ties to district or branch banks.
In Summary, the Federal Reserve directors are apparently representatives of a small elite group which dominates much of the economic life of this nation." END OF CONGRESSIONAL REPORT.