2015-12-22

This
first appeared in World Market Perspective (1984) and
later as a monograph published by the Center for libertarian
Studies (1995). Afterword By Justin Raimondo.

Businessmen

or manufacturers can either be genuine free enterprisers or

statists; they can either make their way on the free market

or seek special government favors and privileges. They choose

according to their individual preferences and values. But bankers

are inherently inclined toward statism.

Commercial

Ardently

backing the pro-war course was Edwin F. Atkins, and August Belmont,

on behalf of the Rothschild banking interests. The House’ of

Rothschild, which had been long-time financiers to Spain, refused

to extend any further credit to Spain, and instead under-wrote

Cuban Revolutionary bond issues, and even assumed full obligation

for the unsubscribed balance.

During

the conquest of Cuba in the Spanish-American War, the United

States also took the occasion to expand its power greatly in

Asia, seizing first the port of Manila and then all of the Philippines,

after which it spent several years crushing the revolutionary

forces of the Philippine independence movement.

An

Aggressive Asian Policy

The

late 1890s also saw a new turn in the United States’ attitude

toward the Far East. Expanding rapidly into the Pacific in pursuit

of economic and financial gain, the U.S. government saw that

Russia, Germany, and France had been carving up increasing territorial

and economic concessions in the near corpse of the Chinese imperial

dynasty. Coming late in the imperial game of Asia, and not willing

to risk large-scale expenditure of troops, the U.S., led by

Olney and continued by the Republicans, decided to link up with

Great Britain. The two countries would then use the Japanese

to provide the shock troops that would roll back Russia and

Germany and parcel out imperial benefits to both of her faraway

allies, in a division of spoils known euphemistically as the

“Open Door.” With Britain leaving the field free to the U.S.

in Latin America, the U.S. could afford to link arms in friendly

fashion with Britain in the Far East.

A

major impetus toward a more aggressive policy in Asia was provided

by the lure of railroad concessions. Lobbying heavily for railroad

concessions was the American China Development Company, organized

in 1895, and consisting of a consortium of the top financial

interests in the U.S., including James Stillman of the then

Rockefeller-controlled National City Bank; Charles Coster, railroad

expert of J.P. Morgan and Co.; Jacob Schiff, head of the New

York investment bank of Kuhn, Loeb and Co.; and Edward H. Harriman,

railroad magnate. Olney and the State Department pressed China

hard for concessions to the ACDC for a Peking-Hankow Railway

and for a railway across Manchuria, but in both cases the American

syndicate was blocked. Russia pressured China successfully to

grant that country the right to build a Manchurian railway;

and a Belgian syndicate, backed by France and Russia, won the

Peking-Hankow concession from China.

It

was time for sterner measures. The attorney for the ACDC set

up the Committee on American Interests in China, which soon

transformed itself into the American Asiatic Association, dedicated

to a more aggressive American policy on behalf of economic interests

in China. After helping the European powers suppress the nationalist

Boxer Rebellion in China in 1900, the U.S. also helped push

Russian troops out of Manchuria. Finally, in 1904, President

Theodore Roosevelt egged Japan on to attack Russia, and Japan

succeeded in driving Russia out of Manchuria and ending Russia’s

economic concessions. Roosevelt readily acceded to Japan’s resulting

dominance in Korea and Manchuria, hoping that Japan would also

protect American economic interests in the area.

Theodore

Roosevelt had been a Morgan man from the beginning of his career.

His father and uncle were both Wall Street bankers, both of

them closely associated with various Morgan-dominated railroads.

Roosevelt’s first cousin and major financial adviser, W. Emlen

Roosevelt, was on the board of several New York banks, including

the Astor National Bank, the president of which was George F.

Baker, close friend and ally of J.P. Morgan and head of Morgan’s

flagship commercial bank, the First National Bank of New York.’

At Harvard, furthermore, young Theodore married Alice Lee, daughter

of George Cabot Lee, and related to the top Boston Brahmin families.

Kinsman Henry Cabot Lodge soon became T.R.’s long-time political

mentor.

Throughout

the 19th century, the Republicans had been mainly a high-tariff,

inflationist party, while the Democrats had been the party of

free trade and hard money, i.e., the gold standard. In 1896,

however, the radical inflationist forces headed by William Jennings

Bryan captured the Democratic presidential nomination, and so

the Morgans, previously dominant in the Democratic Party, sent

a message to the Republican nominee, William McKinley, through

Henry Cabot Lodge. Lodge stated that the Morgan interests would

back McKinley provided that the Republicans would support the

gold standard. The deal was struck.

William

McKinley reflected the dominance of the Republican Party by

the Rockefeller/Standard Oil interests. Standard Oil was originally

headquartered at Rockefeller’s home in Cleveland, and the oil

magnate had long had a commanding influence in Ohio Republican

politics. In the early 1890s, Marcus Hanna, industrialist and

high school chum of John D. Rockefeller, banded together with

Rockefeller and other financiers to save McKinley from bankruptcy,

and Hanna became McKinley’s top political adviser and chairman

of the Republican National Committee. As a consolation prize

to the Morgan interests for McKinley’s capture of the Republican

nomination, Morgan man Garret A. Hobart, director of various

Morgan companies, including the Liberty National Bank of New

York City, became Vice-President.

The

death of Hobart in 1899 left a “Morgan vacancy” in the Vice-Presidential

spot, as McKinley walked into the nomination. McKinley and Hanna

were both hostile to Roosevelt, considering him “erratic” and

a “Madman,” but after several Morgan men turned down the nomination,

and after the intensive lobbying of Morgan partner George W.

Perkins, Teddy Roosevelt at last received the Vice-Presidential

nomination. It is not surprising that virtually Teddy’s first

act after the election of 1900 was to throw a lavish dinner

in honor of J.P. Morgan.

Teddy

Roosevelt and the “Lone Nut”

The

sudden appearance of one of the “lone nuts” so common in American

political history led to the assassination of McKinley, and

suddenly Morgan man Theodore Roosevelt was President. John Hay,

expansionist Secretary of State whom Roosevelt inherited from

McKinley, had the good fortune of having his daughter marry

the son of William C. Whitney of the great Morgan-connected

family. TR’s next Secretary of State and former Secretary of

War was his old friend Elihu Root, personal attorney for J.P.

Morgan. Root appointed as his Assistant Secretary a close friend

of TR’s, Robert Bacon, a Morgan partner, and in due course Bacon

became TR’s Secretary of State. TR’s first appointed Secretary

of the Navy was Paul Morton, vice-president of the Morgan-controlled

Atchison, Topeka and Santa Fe Railroad, and his Assistant Secretary

was Herbert L. Satterlee, who had the distinction of being J.P.

Morgan’s son-in-law.

Theodore

Roosevelt’s greatest direct boost to the Morgan interests is

little known. It is well known that Roosevelt engineered a phony

revolution in Columbia in 1903, creating the new state of Panama

and handing the Canal Zone to the United States. What has not

been fully disclosed is who benefited from the $40 million that

the U.S. government paid, as part of the Panama settlement,

to the owners of the old bankrupt Panama Canal Company, a French

company which had previously been granted a Colombian concession

to dig a Panama canal.

The

Panama Canal Company’s lobbyist, Morgan-connected New York attorney

William Nelson Cromwell, literally sat in the White House directing

the “revolution” and organizing the final settlement. We now

know that, in 1900, the shares of the old French Panama Canal

Company were purchased by an American financial syndicate, headed

by J.P. Morgan & Co., and put together by Morgan’s top attorney,

Francis Lynde Stetson. The syndicate also included members of

the Rockefeller, Seligman, and Kuhn, Loeb financial groups,

as well as Perkins and Saterlee.

The

syndicate did well from the Panama revolution, purchasing the

shares at two-thirds of par and selling them, after the revolution,

for double the price. One member of the syndicate was especially

fortunate: Teddy Roosevelt’s brother-in-law, Douglas E. Robinson,

a director of Morgan’s Astor National Bank. For William Cromwell

was named the fiscal agent of the new Republic of Panama, and

Cromwell promptly put $6 million of the $10 million payoff the

U.S. made to the Panamanian revolutionaries into New York City

mortgages via the real estate firm of the same Douglas E. Robinson.

After

the turn of the century, a savage economic and political war

developed between the Morgan interests on the one hand, and

the allied Harriman-Kuhn, Loeb-Rockefeller interests on the

other. Harriman and Kuhn, Loeb grabbed control of the Union

Pacific Railroad and the two titanic forces battled to a draw

for control of the Northern Pacific. Also, at about the same

time, a long-lasting and world-wide financial and political

“oil war” broke out between Standard Oil, previously a monopolist

in both the crude and export markets outside of the U.S., and

the burgeoning British Royal Dutch Shell–Rothschild combine.

And

since the Morgans and Rothschilds were longtime allies, it is

certainly sensible to conclude – though there are no hard

facts to prove it – that Teddy Roosevelt launched his savage

anti-trust assault to break Standard Oil as a Morgan contribution

to the worldwide struggle. Furthermore, Mellon-owned Gulf Oil

was allied to the Shell combine, and this might well explain

the fact that former Morgan-and-Mellon lawyer Philander Knox,

TR’s Attorney-General, was happy to file the suit against Standard

Oil.

Roosevelt’s

successor, William Howard Taft, being an Ohio Republican, was

allied to the Rockefeller camp, and so he proceeded to take

vengeance on the Morgans by filing anti-trust suits to break

up the two leading Morgan trusts, International Harvester and

United States Steel. It was now all-out war, and so the Morgans

in 1912 deliberately created a new party, the Progressive Party,

headed by former Morgan partner, George W. Perkins. The successful

aim of the Progressive Party was to bring Theodore Roosevelt

out of retirement to run for President, in order to break Taft,

and to elect, for the first time in a generation, a Democratic

President. The new party was liquidated soon after.

Supporters

of Roosevelt were studded with financiers in the Morgan ambit,

including Judge Elbert Gary, chairman of the board of U.S. Steel;

Medill McCormick of the International Harvester family, and

Willard Straight, Morgan’s partner. In the same year, Straight

and his heiress wife, Dorothy Whitney, founded the weekly magazine

of opinion, The New Republic, symbolizing the growing

alliance for war and statism between the Morgans and various

of the more moderate (i.e., non-Marxist) progressive and socialist

intellectuals.

Morgan,

Wilson and War

The

Morgan-Progressive Party ploy deliberately insured the election

of Woodrow Wilson as a Democratic President. Wilson himself,

until almost the time of running for President, was for several

years on the board of the Morgan-controlled Mutual Life Insurance

Company. He was also surrounded by Morgan men. His son-in-law,

William Gibbs McAdoo, who became Wilson’s Secretary of the Treasury,

was a failing businessman in New York City when he was bailed

out and befriended by J.P. Morgan and his associates. The Morgans

then set McAdoo up as president of New York’s Hudson and Manhattan

Railroad until his appointment in the Wilson Administration.

McAdoo was to spend the rest of his financial and political

life securely in the Morgan ambit.

The

main sponsor of Wilson’s run for the Presidency was George W.

Harvey, head of Morgan-controlled Harper & Brothers publishers;

other major backers included Wall Street financier and Morgan

associate Thomas Fortune Ryan, and Wilson’s college classmate

and Morgan ally, Cyrus H. McCormick, head of International Harvester.

Another

close friend and leading political adviser of Wilson was New

York City banker George Foster Peabody, son of the Boston Brahmin

and a Morgan banker. A particularly fascinating figure in Wilson’s

fateful foreign policy was “Colonel” Edward Mandell House, of

the wealthy House family of Texas, which was deeply involved

in landowning, trade, banking, and railroads. House himself

was head for several years of the Trinity and Brazos Valley

Railway, financed by the House family in collaboration with

Morgan-associated Boston financial interests, particularly of

the Old Colony Trust Company. The mysterious House, though never

graced with an official government post, is generally acknowledged

to have been Wilson’s all-powerful foreign policy adviser and

aide for virtually his entire two terms.

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.”

Accordingly,

Henry P. Davison, Morgan partner, set up the Aerial Coast Patrol

in 1915, to get the public in the mood to search the

skies for German planes. Bernard M. Baruch, long-time associate

of the extremely wealthy copper magnates, the Guggenheim family,

financed the Businessmen’s Training Camp, at Plattsburgh, New

York, designed to push for universal military training and preparations

for war. Also participating in financing the camp were Morgan

partner Willard Straight, and former Morgan partner Robert Bacon.

In addition to J.P. Morgan himself, a raft of Morgan-affiliated

political leaders whooped it up for immediate entry of the U.S.

into the war on the side of the Allies: including Henry Cabot

Lodge, Elihu Root, and Theodore Roosevelt.

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.”

The

NSL also advocated universal military training, conscription,

and the U.S. buildup of the largest navy in the world. Prominent

in the organization of the National Security League were Frederic

R. Coudert, Wall Street attorney for the British, French, and

Russian governments; Simon and Daniel Guggenheim; T. Coleman

DuPont, of the munitions, family; and a host of prominent Morgan-oriented

financiers; including former Morgan partner Robert Bacon; Henry

Clay Prick of Carnegie Steel; Judge Gary of U.S. Steel; George

W. Perkins, Morgan partner, who has been termed “the secretary

of state” for the Morgan interests; former President Theodore

Roosevelt; and J.P. Morgan himself.

A

particularly interesting founding associate of NSL was a man

who has dominated American foreign policy during the 20th century:

Henry L. Stimson, Secretary of War under William H. Taft and

Franklin D. Roosevelt, and Secretary of State under Herbert

Hoover. Stimson, a Wall Street lawyer in the Morgan ambit, was

a protégé of Morgan’s personal attorney Elihu

Root, and two of his cousins were partners in the Morgan-dominated

Wall Street utility stock market and banking firm of Bonbright

& Co.

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. Page’s

salary in this prestigious influential post was handsomely subsidized

through Colonel House by copper magnate Cleveland H. Dodge,

a prominent adviser to Wilson, who benefited greatly from munitions

sales to the Allies.

Colonel

House liked to pose as an abject instrument of President Wilson’s

wishes. But before and after U.S. entry into the war, House

shamelessly manipulated Wilson, in secret and traitorous collaboration

with the British, to push the President first into entering

the war and then into following British wishes instead of setting

an independent American course.

Thus,

in 1916, House wrote to his friend Frank L. Polk, Counselor

to the State Department and later counselor to J.P. Morgan,

that “the President must be guided” not to be independent of

British desires. 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 nave Wilson would not

accept, and they both agreed to keep the treaties from the President.

Similarly,

soon after the U.S. entered the war, the British sent to the

U.S. as personal liaison between the Prime Minister and the

White House the young chief of British military intelligence,

Sir William Wiseman. 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.

In

turn, Britain’s top intelligence agent manipulated House, constantly

showering him with flattery, and established a close friendship

with the Colonel, getting an apartment in the same building

in New York City, and travelling together abroad. Collaborating

with House in his plan to manipulate Wilson into pro-British

policies was William Phillips, an Assistant Secretary of State

who had married into the Astor family.

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.

Lippmann

soon vaulted into important roles in the war effort: assistant

to the Secretary of War; then secretary of the secret group

of historians called The Inquiry, established under Colonel

House in late 1917 to plan the peace settlement at the end of

the war. Lippmann later left The Inquiry

to go overseas for American military intelligence.

Another

important collaborator with Wiseman was businessman and scholar

George Louis Beer, who was in charge of African and Asian colonial

matters for The Inquiry. Wiseman secretly showed British documents

on African colonies to Beer, who in turn leaked Inquiry reports

to British intelligence.

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.

Particularly

notable among the Rockefeller interests were Senator Nelson

W. Aldrich (R.-R.I.), father-in-law of John D. Rockefeller,

Jr., and Frank A. Vanderlip, vice president of Rockefeller’s

National City Bank of New York. From the Kuhn, Loebs came the

prominent Paul Moritz Warburg, of the German investment-banking

firm of M.M. Warburg and Company. Warburg emigrated to the United

States in 1902 to become a senior partner at Kuhn, Loeb &

Co., after which he spent most of his time agitating for a central

bank in the United States.

Also

igniting the drive for a Federal Reserve System was Jacob H.

Schiff, powerful head of Kuhn, Loeb to whom Warburg was related

by marriage. Seconding and sponsoring Warburg in academia was

the prominent Columbia University economist Edwin R.A. Seligman,

of the investment-banking family of J. & W. Seligman and

Company; Seligman was the brother of Warburg’s brother-in-law.

The

Morgans were prominently represented in the planning and agitation

for a Central Bank by Henry P. Davison, Morgan partner; Charles

D. Norton, president of Morgan’s First National Bank of New

York; A. Barton Hepburn, head of Morgan’s Chase National Bank;

and Victor Morawetz, attorney and banker in the Morgan ranks

and chairman of the executive committee of the Morgan-controlled

Atchison, Topeka, and Santa Fe Railroad.

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.

Overshadowing

these three were three definite Morgan men, and a university

economist, Professor Adolph C. Miller of Berkeley, whose wife’s

family had Morgan connections. The three definite Morgan men

were Secretary of the Treasury McAdoo; Comptroller of the Currency

John Skelton Williams, a Virginia banker and long-time McAdoo

aide on Morgan railroads; and Assistant Secretary of the Treasury

Charles S. Hamlin, a Boston attorney who had married into a

wealthy Albany family long connected with the Morgan-dominated

New York Central Railroad.

But

more important than the composition of the Federal Reserve Board

was the man who became the first Governor of the New York Federal

Reserve Bank and who single-handedly dominated Fed policy from

its inception until his death in 1928. This man was Benjamin

Strong, who had spent virtually his entire business and personal

life in the circle of top associates of J.P. Morgan. A secretary

of several trust companies (banks doing trust business) in New

York City, Strong became neighbor and close friend of three

top Morgan partners, Henry P. Davison, Dwight Morrow, and Thomas

W. Lamont. Davison, in particular, became his mentor, and brought

him into Morgan’s Bankers Trust company, where he soon succeeded

Lamont as vice-president, and then finally became president.

When Strong was offered the post of Governor of the New York

Fed, it was Davison who persuaded him to take the job.

Strong

was an enthusiast for American entry into the war, and it was

his mentor Davison who had engineered the coup of getting Morgan

named as sole underwriter and purchasing agent for Britain and

France. Strong worked quickly to formalize collaboration with

the Bank of England, collaboration which would continue in force

throughout the 1920s. The Federal Reserve Bank of New York became

foreign agent for the Bank of England, and vice versa.

The

main collaboration throughout the 1920s, much of it kept secret

from the Federal Reserve Board in Washington, was between Strong

and the man who soon became Governor of the Bank of England,

Montagu Collet Norman. Norman and Strong were not only fast

friends, but had important investment-banking ties, Norman’s

uncle having been a partner of the great English banking firm

of Baring Brothers, and his grandfather a partner in the international

banking house of Brown Shipley & Co., the London branch

of the Wall Street banking firm of Brown Brothers. Before coming

to the Bank of England, Norman himself had worked at the Wall

Street office of Brown Brothers, and then returned to London

to become a partner of Brown Shipley.

The

major fruit of the Norman-Strong collaboration was Strong’s

being pressured to inflate money and credit in the U.S. throughout

the 1920s, in order to keep England from losing gold to the

U.S. from its inflationary policies. Britain’s predicament came

from its insistence on going back to the gold standard after

the war at the highly overvalued pre-war par for the pound,

and then insisting on inflating rather than deflating to make

its exports competitively priced in the world market. Hence,

Britain needed to induce other countries, particularly the U.S.,

to inflate along with it. The Strong-Norman-Morgan connection

did the job, setting the stage for the great financial collapse

of 1929–1931.

As

World War I drew to a close, influential Britons and Americans

decided that intimate post-war collaboration between the two

countries required more than just close cooperation between

the central banks. Also needed were permanent organizations

to promote joint Anglo-American policies to dominate the postwar

world.

The

Round Table

In

England, Cecil Rhodes had launched a secret society in 1891

with the aim of maintaining and expanding the British Empire

to re-incorporate the United States. After the turn of the 20th

century, the direction, organization, and expansion of the society

fell to Rhodes’s friend and executor, Alfred Lord Milner. The

Milner Group dominated domestic planning in Britain during World

War I, and particularly the planning for post-war foreign and

colonial policy. The Milner Group staffed the British delegation

of experts to Versailles. To promote the intellectual agitation

for such a policy, the Milners had also set up the Round Table

Groups in England and abroad in 1910.

The

first American to be asked to join the Round Table was George

Louis Beer, who came to its attention when his books attacked

the American Revolution and praised the British Empire of the

18th century. Such loyalty could not go unrewarded, and so Beer

became a member of the Group about 1912 and became the American

correspondent of Round Table magazine. We have seen Beer’s

pro-British role as colonial expert for The Inquiry. He was

also the chief U.S. expert on colonial affairs at Versailles,

and afterward the Milner Group made Beer head of the Mandate

Department of the League of Nations.

During

the war, Beer, Anglophile Yale historian George Burton Adams,

and powerful Columbia University historian James T. Shotwell,

an important leader of The Inquiry and head of the National

Board for Historical Services, which emitted deceptive propaganda

for the war effort, formed a secret society to promote Anglo-American

collaboration. Finally, led by Beer for the United States and

the head of the Round Table group in England, Lionel Curtis,

the British and U.S. historical staffs at Versailles took the

occasion to found a permanent organization to agitate for an

informally, if not formally, reconstituted Anglo-American Empire.

The

new group, the Institute of International Affairs, was formed

at a meeting at the Majestic Hotel in Paris on May 3O, 1919.

A six-man organizing committee was formed, three Milnerites

from Britain, and three Americans: Shotwell; Harvard historian

Archibald C. Coolidge, head of the Eastern European desk of

the Inquiry, and member of the Morgan-oriented Boston financial

family; and James Brown Scott, Morgan lawyer who was to write

a biography of Robert Bacon. The British branch, the Royal Institute

of International Affairs, set up a committee to supervise writing

a multi-volume history of the Versailles Peace Conference; the

committee was financed by a gift from Thomas W. Lamont, Morgan

partner.

The

CFR

The

American branch of the new group took a while to get going.

Finally, the still inactive American Institute of International

Affairs merged with a defunct outfit, begun in 1918, of New

York businessmen concerned with the postwar world, and organized

as a dinner club to listen to foreign visitors. This organization,

the Council on Foreign Relations, had as its honorary chairman

Morgan lawyer Elihu Root, while Alexander Hemphill, chairman

of Morgan’s Guaranty Trust Company, was chairman of its finance

committee. In August 1921, the two organizations merged into

the new Council on Foreign Relations, Inc., a high-powered organization

embracing bankers, lawyers, and intellectuals.

While

varied financial interests were represented in the new organization,

the CFR was Morgan-dominated, from top to bottom. Honorary president

was Elihu Root. President was John W. Davis, Wilson’s Solicitor-General,

and now chief counsel for J.P. Morgan & Co. Davis was to

become Democratic Presidential candidate in 1924. Secretary-Treasurer

of the new CFR was Harvard economic historian Edwin F. Gay,

director of planning and statistics for the Shipping Board during

the war, and now editor of the New York Evening Post, owned

by his mentor, Morgan partner, Thomas W. Lamont.

It

was Gay who had the idea of founding Foreign Affairs, the

CFR’s quarterly journal, and who suggested both his Harvard

colleague Archibald Coolidge as the first editor, and the New

York Post reporter Hamilton Fish Armstrong as assistant

editor and executive director of the CFR. Other prominent officials

in the new CFR were: Frank L. Polk, former Under-Secretary of

State and now lawyer for J.P. Morgan & Co; Paul M. Warburg

of Kuhn, Loeb; Otto H. Kahn of Kuhn, Loeb; former Under-Secretary

of State under Wilson, Norman H. Davis, a banking associate

of the Morgans; and as vice-president, Paul D. Cravath, senior

partner of the Rockefeller-oriented Wall Street law firm of

Cravath, Swaine, and Moore.

After

World War II, the Council on Foreign Relations became dominated

by the Rockefeller rather than by the Morgan interests, a shift

of power reflecting a general alteration in financial power

in the world at large. After World War II, the rise of oil to

prominence brought the Morgans and Rockefellers – once

intense rivals – into an Eastern Establishment of which

the Rockefellers were the senior, and the Morgans the junior,

partners.

Rockefeller,

Morgan, and War

During

the 1930s, the Rockefellers pushed hard for war against Japan,

which they saw as competing with them vigorously for oil and

rubber resources in Southeast Asia and as endangering the Rockefellers’

cherished dreams of a mass “China market” for petroleum products.

On the other hand, the Rockefellers took a non-interventionist

position in Europe, where they had close financial ties with

German firms such as I.G. Farben and Co., and very few close

relations with Britain and France. The Morgans, in contrast,

as usual deeply committed to their financial ties with Britain

and France, once again plumped early for war with Germany, while

their interest in the Far East had become minimal. Indeed, U.S.

Ambassador to Japan, Joseph C. Grew, former Morgan partner,

was one of the few officials in the Roosevelt Administration

genuinely interested in peace with Japan.

World

War II might therefore be considered, from one point of view,

as a coalition war: the Morgans got their war in Europe,

the Rockefellers theirs in Asia. Such disgruntled Morgan

men as Lewis W. Douglas and Dean G. Acheson (a protégé

of Henry Stimson), who had left the early Roosevelt Administration

in disgust at its soft money policies and economic nationalism,

came happily roaring back into government service with the advent

of World War II. Nelson A. Rockefeller, for his part, became

head of Latin American activities during World War II, and thereby

acquired his taste for government service.

After

World War II, the united Rockefeller-MorganKuhn, Loeb Eastern

Establishment was not allowed to enjoy its financial and political

supremacy unchallenged for long. “Cowboy” Sun Belt firms, maverick

oil men and construction men from Texas, Florida, and southern

California, began to challenge the Eastern Establishment “Yankees”

for political power. While both groups favor the Cold War, the

Cowboys are more nationalistic, more hawkish, and less inclined

to worry about what our European allies are thinking. They are

also much less inclined to bail out the now Rockefeller-controlled

Chase Manhattan Bank and other Wall Street banks that loaned

recklessly to Third World and Communist countries and expect

the U.S. taxpayer – through outright taxes or the printing

of U.S. dollars – to pick up the tab.

It

should be clear that the name of the political party in power

is far less important than the particular regime’s financial

and banking connections. The foreign policy power for so long

of Nelson Rockefeller’s personal foreign affairs adviser, Henry

A. Kissinger, a discovery of the extraordinarily powerful Rockefeller–Chase

Manhattan Bank elder statesman John J. McCloy, is testimony

to the importance of financial power. As is the successful lobbying

by Kissinger and Chase Manhattan’s head, David Rockefeller,

to induce Jimmy Carter to allow the ailing Shah of Iran into

the U.S. – thus precipitating the humiliating hostage crisis.

Despite

differences in nuance, it is clear that Ronald Reagan’s originally

proclaimed challenge to Rockefeller-Morgan power in the Council

of Foreign Relations and to the Rockefeller-created Trilateral

Commission has fizzled, and that the “permanent government”

continues to rule regardless of the party nominally in power.

As a result, the much-heralded “bipartisan foreign policy” consensus

imposed by the Establishment since World War II seems to remain

safely in place.

David

Rockefeller, chairman of the board of his family’s Chase Manhattan

Bank from 1970 until recently, established the Trilateral Commission

in 1973 with the financial backing of the CFR and the Rockefeller

Foundation. Joseph Kraft, syndicated Washington columnist who

himself has the distinction of being both a CFR member and a

Trilateralist, has accurately described the CFR as a “school

for statesmen,” which “comes close to being an organ of what

C. Wright Mills has called the Power Elite – a group of

men, similar in interest and outlook, shaping events from invulnerable

positions behind the scenes.” The idea of the Trilateral Commission

was to internationalize policy formation, the commission consisting

of a small group of multinational corporate leaders, politicians,

and foreign policy experts from the U.S., Western Europe, and

Japan, who meet to coordinate economic and foreign policy among

their respective nations.

Perhaps

the most powerful single figure in foreign policy since World

War II, a beloved adviser to all Presidents, is the octogenarian

John J. McCloy. During World War II, McCloy virtually ran the

War Department as Assistant to aging Secretary Stimson; it was

McCloy who presided over the decision to round up all Japanese-Americans

and place them in concentration camps in World War II, and he

is virtually the only American left who still justifies that

action.

Before

and during the war, McCloy, a disciple of Morgan lawyer Stimson,

moved in the Morgan orbit; his brother-in-law, John S. Zinsser,

was on the board of directors of J.P. Morgan & Co. during

the 1940s. But, reflecting the postwar power shift from Morgan

to Rockefeller, McCloy moved quickly into the Rockefeller ambit.

He became a partner of the Wall Street corporate law firm of

Milbank, Tweed, Hope, Hadley & McCloy, which had long served

the Rockefeller family and the Chase Bank as legal counsel.

From

there he moved to become Chairman of the Board of the Chase

Manhattan Bank, a director of the Rockefeller Foundation, and

of Rockefeller Center, Inc., and finally, from 1953 until 1970,

chairman of the board of the Council on Foreign Relations. During

the Truman Administration, McCloy served as President of the

World Bank and then U.S. High Commissioner for Germany. He was

also a special adviser to President John F. Kennedy on Disarmament,

and chairman of Kennedy’s Coordinating Committee on the Cuban

Crisis. It was McCloy who “discovered” Professor Henry A. Kissinger

for the Rockefeller forces. It is no wonder that John K. Galbraith

and Richard Rovere have dubbed McCloy “Mr. Establishment.”

A

glance at foreign policy leaders since World War II will reveal

the domination of the banker elite. Truman’s first Secretary

of Defense was James V. Forrestal, former president of the investment-banking

firm of Dillon, Read & Co., closely allied to the Rockefeller

financial group. Forrestal had also been a board member of the

Chase Securities Corporation, an affiliate of the Chase National

Bank.

Another

Truman Defense Secretary was Robert A. Lovett, a partner of

the powerful New York investment-banking house of Brown Brothers

Harriman. At the same time that he was Secretary of Defense,

Lovett continued to be a trustee of the Rockefeller Foundation.

Secretary of the Air Force Thomas K. Finletter was a top Wall

Street corporate lawyer and member of the board of the CFR while

serving in the cabinet. Ambassador to Soviet Russia, Ambassador

to Great Britain, and Secretary of Commerce in the Truman Administration

was the powerful multi-millionaire W. Averell Harriman, an often

underrated but dominant force within the Democratic Party since

the days of FDR. Harriman was a partner of Brown Brothers Harriman.

Also

Ambassador to Great Britain under Truman was Lewis W. Douglas,

brother-in-law of John J. McCloy, a trustee of the Rockefeller

Foundation, and a board member of the Council on Foreign Relations.

Following Douglas as Ambassador to the Court of St. James was

Walter S. Gifford, chairman of the board of AT&T, and member

of the board of trustees of the Rockefeller Foundation for almost

two decades. Ambassador to NATO under Truman was William H.

Draper, Jr., vice-president of Dillon, Read &Co.

Also

influential in helping the Truman Administration organize the

Cold War was director of the policy planning staff of the State

Department, Paul H. Nitze. Nitze, whose wife was a member of

the Pratt family, associated with the Rockefeller family since

the origins of Standard Oil, had been vice-president of Dillon,

Read & Co.

When

Truman entered the Korean War, he created an Office of Defense

Mobilization to run the domestic economy during the war. The

first director was Charles E. (“Electric Charlie”) Wilson, president

of the Morgan-controlled General Electric Company, who also

served as board member of the Morgans’ Guaranty Trust Company.

His two most influential assistants were Sidney J. Weinberg,

ubiquitous senior partner in the Wall Street investment-banking

firm of Goldman Sachs & Co., and former General Lucius D.

Clay, chairman of the board of Continental Can Co., and a director

of the Lehman Corporation.

Succeeding

McCloy as President of the World Bank, and continuing in that

post throughout the two terms of Dwight Eisenhower, was Eugene

Black. Black had served for fourteen years as vice-president

of the Chase National Bank, and was persuaded to take the World

Bank post by the bank’s chairman of the board, Winthrop W. Aldrich,

brother-in-law of John D. Rockefeller, Jr.

The

Eisenhower Administration proved to be a field day for the Rockefeller

interests. While president of Columbia University, Eisenhower

was invited to high-level dinners where he met and was groomed

for President by top leaders from the Rockefeller and Morgan

ambits, including the chairman of the board of Rockefeller’s

Standard Oil of New Jersey, the presidents of six other big

oil companies, including Standard of California and Socony-Vacuum,

and the executive vice-president of J.P. Morgan & Co.

One

dinner was hosted by Clarence Dillon, the multi-millionaire

retired founder of Dillon, Read & Co., where the guests

included Russell B. Leffingwell, chairman of the board of both

J.P. Morgan & Co. and the CFR (before McCloy); John M. Schiff,

a senior partner of the investment-banking house of Kuhn, Loeb

& Co.; the financier Jeremiah Milbank, a director of the

Chase Manhattan Bank; and John D. Rockefeller, Jr.

Even

earlier, during 1949, Eisenhower had been introduced through

a special study group to key figures in the CFR. The study group

devised a plan to create a new organization called the American

Assembly – in essence an expanded CFR study group –

whose main function was reputedly to build up Eisenhower’s prospects

for the Presidency. A leader of the “Citizens for Eisenhower”

committee, who later became Ike’s Ambassador to Great Britain,

was the multi-millionaire John Hay Whitney, scion of several

wealthy families, whose granduncle, Oliver H. Payne, had been

one of the associates of John D. Rockefeller, Sr. in founding

the Standard Oil Company. Whitney was head of his own investment

concern, J.H. Whitney & Co., and later became publisher

of the New York Herald Tribune.

Running

foreign policy during the Eisenhower Administration was the

Dulles family, led by Secretary of State John Foster Dulles,

who had also concluded the U.S. peace treaty with Japan under

Harry Truman. Dulles had for three decades been a senior partner

of the top Wall Street corporate law firm of Sullivan &

Cromwell, whose most important client was Rockefeller’s Standard

Oil Company of New Jersey. Dulles had been for fifteen years

a member of the board of the Rockefeller Foundation, and before

assuming the post of Secretary of State was chairman of the

board of that institution. Most important is the little-known

fact that Dulles’s wife was Janet Pomeroy Avery, a first cousin

of John D. Rockefeller, Jr.

Heading

the super-secret Central Intelligence Agency during the Eisenhower

years was Dulles’s brother, Allen Welsh Dulles, also a partner

in Sullivan & Cromwell. Allen Dulles had long been a trustee

of the CFR and had served as its president from 1947 to 1951.

Their sister, Eleanor Lansing Dulles, was head of the Berlin

desk of the State Department during that decade.

Under-Secretary

of State, and the man who succeeded John Foster Dulles in the

spring 1959, was former Massachusetts Governor Christian A.

Herter. Herter’s wife, like Nitze’s, was a member of the Pratt

family. Indeed, his wife’s uncle, Herbert L. Pratt, had been

for many years president or chairman of the board of Standard

Oil Company of New York. One of Mrs. Herter’s cousins, Richardson

Pratt, had served as assistant treasurer of Standard Oil of

New Jersey up to 1945. Furthermore, one of Herter’s own uncles,

a physician, had been for many years treasurer of the Rockefeller

Institute for Medical Research.

Herter

was succeeded as Under-Secretary of State by Eisenhower’s Ambassador

to France, C. Douglas Dillon, son of Clarence, and himself Chairman

of the Board of Dillon, Read & Co. Dillon was soon to become

a trustee of the Rockefeller Foundation.

Perhaps

to provide some balance for his banker-business coalition, Eisenhower

appointed as Secretary of Defense three men in the Morgan rather

than the Rockefeller ambit. Charles B. (“Engine Charlie”) Wilson

was president of General Motors, member of the board of J.P.

Morgan & Co. Wilson’s successor, Neil H. McElroy, was president

of Proctor & Gamble Co. His board chairman, R.R. Deupree,

was also a director of J.P. Morgan & Co. The third Secretary

of Defense, who had been Under-Secretary and Secretary of the

Navy under Eisenhower, was Thomas S. Gates, Jr., who had been

a partner of the Morgan-connected Philadelphia investment-banking

firm of Drexel & Co. When Gates stepped down as Defense

Secretary, he became president of the newly formed flagship

commercial bank for the Morgan interests, the Morgan Guaranty

Trust Co.

Serving

as Secretary of the Navy and then Deputy Secretary of Defense

(and later Secretary of the Treasury) under Eisenhower was Texas

businessman Robert B. Anderson. After leaving the Defense Department,

Anderson became a board member of the Rockefeller-controlled

American Overseas Investing Co., and, before becoming Secretary

of the Treasury, he borrowed $84,000 from Nelson A. Rockefeller

to buy stock in Nelson’s International Basic Economy Corporation.

Head

of the important Atomic Energy Commission during the Eisenhower

years was Lewis L. Strauss. For two decades, Strauss had been

a partner in the investment-banking firm of Kuhn, Loeb &

Co. In 1950, Strauss had become financial adviser to the Rockefeller

family, soon also becoming a board member of Rockefeller Center,

Inc.

A

powerful force in deciding foreign policy was the National Security

Council, which included on it the Duller brothers, Strauss,

and Wilson. Particularly important is the post of national security

adviser to the President. Eisenhower’s first national security

adviser was Robert Cutler, president of the Old Colony Trust

Co., the largest trust operation outside New York City. The

Old Colony was a trust affiliate of the First National Bank

of Boston.

After

two years in the top national security post, Cutler returned

to Boston to become chairman of the board of Old Colony Trust,

returning after a while to the national security slot for two

more years. In between, Eisenhower had two successive national

security advisers. The first was Dillon Anderson, a Houston

corporate attorney, who did work for several oil companies.

Particularly significant was Anderson’s position as chairman

of the board of a small but fascinating Connecticut firm called

Electro-Mechanical Research, Inc. Electro-Mechanical was closely

associated with certain Rockefeller financiers; thus, one of

its directors was Godfrey Rockefeller, a limited partner in

the investment-banking firm of Clark, Dodge & Co.

After

more than a year, Anderson resigned from his national security

post and was replaced by William H. Jackson, a partner of the

investment firm of J. H. Whitney & Co. Before assuming his

powerful position, Dillon Anderson had been one of several men

serving as special hush-hush consultants to the National Security

Council. Another special adviser was Eugene Holman, president

of Rockefeller’s Standard Oil Company of New Jersey.

We

may mention two important foreign policy actions of the Eisenhower

Administration which seem to reflect the striking influence

of personnel directly tied to bankers and financial interests.

In 1951, the regime of Mohammed Mossadegh in Iran decided to

nationalize the British-owned oil holdings of the Anglo-Iranian

Oil company. It took no time for the newly established Eisenhower

Administration to intervene heavily in this situation. CIA director

and former Standard Oil lawyer Allen W. Dulles flew to Switzerland

to organize the covert overthrow of the Mossadegh regime, the

throwing of Mossadegh into prison, and the restoration of the

Shah to the throne of Iran.

After

lengthy behind-the-scenes negotiations, the oil industry was

put back into action as purchasers and refiners of Iranian oil.

But this time the picture was significantly different. Instead

of the British getting all of the oil pie, their share was reduced

to 40 percent of the new oil consortium, with five top U.S.

oil companies (Standard Oil of New Jersey, Socony-Vacuum –

formerly Standard Oil of N.Y. and now Mobil – Standard

Oil of California, Gulf, and Texaco) getting another 40 percent.

It

was later disclosed that Secretary of State Dulles placed a

sharp upper limit on any participation in the consortium by

smaller independent oil companies in the United States. In addition

to the rewards to the Rockefeller interests, the CIA’s man-on-the-spot

directing the operation, Kermit Roosevelt, received his due

by quickly becoming a vice-president of Mellon’s Gulf Oil Corp.

The

Guatemalan Coup

Fresh

from its CIA triumph in Iran, the Eisenhower Administration

next turned its attention to Guatemala, where the left-liberal

regime of Jacob Arbenz Guzman had nationalized 234,000 acres

of uncultivated land owned by the nation’s largest landholder,

the American-owned United Fruit Company, which imported about

60 percent of all bananas coming into the United States.

Arbenz

also announced his intention of seizing another 173,000 acres

of idle United Fruit land along the Caribbean coast. In late

1953, Eisenhower gave the CIA the assignment of organizing a

counter-revolution in Guatemala. With the actual operation directed

by former Wall Street corporate lawyer Frank Wisner of the CIA,

the agency launched a successful invasion of Guatemala, led

by exiled Army Colonel Castilo Armas, which soon overthrew the

Arbenz regime and replaced it with a military junta. The Arbenz

land program was abolished, and most of its expropriated property

was returned to the United Fruit Company.

Allen

W. Dulles had financial connections with United Fruit and with

various sugar companies which had also suffered land expropriation

from the Arbenz regime. For several years, while a partner at

Sullivan & Cromwell, he had been a board member of the Rockefeller-controlled

J. Henry Schroder Banking Corporation. Members of the board

of Schroder during 1953 included Delano Andrews, Sullivan &

Cromwell partner who had taken Dulles’s seat on the board; George

A. Braga, president of the Manati Sugar Company; Charles W.

Gibson, vice-president of the Rockefeller-affiliated Air Reduction

Company; and Avery Rockefeller, president of the closely linked

banking house of Schroder, Rockefeller, & Co. Members of

the board of Manati Sugar, in the meanwhile, included Alfred

Jaretski, Jr., another Sullivan & Cromwell partner; Gerald

F. Beal, president of J. Henry Schroder and chairman of the

board of the International Railways of Central America; and

Henry E. Worcester, a recently retired of executive of United

Fruit.

United

Fruit, furthermore, was a controlling shareholder in International

Railways, while, as in the case of Beal, the board chairmanship

of the railway had long been held by a high official of Schroder.

The close ties between United Fruit, Schroder, and International

Railways may also be seen by the fact that, in 1959, the board

chairman of the railway became James McGovern, general counsel

for United Fruit. International Railway, in fact, carried most

of United Fruit’s produce from the interior to the port in Guatemala.

In addition, Dulles’s close associate and fellow trustee of

the Council of Foreign Relations in this period, and former

treasurer of the CFR, was Whitney H. Shepardson, formerly vice-president

of International Railways.

Not

only that: Robert Cutler, national security adviser to the President

at the time of the coup against Arbenz, had himself very

close ties to United Fruit. Cutler’s boss at Old Colony Trust,

chairman of the board T. Jefferson Coolidge, was also, and more

importantly, board chairman at United Fruit. Indeed, many members

of the board of United Fruit, a Boston-based company, were also

on the board of Old Colony or its mother company, the First

National Bank of Boston.

Furthermore,

during the period of planning the Guatemalan coup, and up till

a few months before its success in 1954, the Assistant Secretary

of State for Inter-American Affairs was John Moors Cabot, a

well-known anti-Arbenz hawk. Cabot’s brother Thomas D., was

an executive of United Fruit and a member of the board of the

First National Bank of Boston.

The

Council on Foreign Relations played an important role in the

Guatemalan invasion. It began in the fall of 1952, when Spruille

Braden, a former Assistant Secretary of State for Inter-American

Affairs and then consultant for United Fruit, led a CFR study

group on Political Unrest in Latin America. Discussion leader

at the first meeting of the CFR-Braden group was John McClintock,

an executive of United Fruit. Former leading New Dealer and

Assistant Secretary of State Adolf A. Berle, Jr., a participant

in the study group, recorded in his diary that the U.S. should

welcome an overthrow of the Arbenz government, and noted that,

“I am arranging to see Nelson Rockefeller (himself Assistant

Secretary of State for Inter-American Affairs during World War

II) who knows the situation and can work a little with General

Eisenhower.”

In

the actual Guatemalan operation, President Eisenhower himself

was a CFR member, as were Allen Dulles, John M. Cabot and Frank

Wisner, the man in charge of the coup and the CIA’s deputy director

for plans. Of the twelve people in the U.S. government identified

as being involved at the top level in the Guatemalan affair,

eight were CFR members or would be within a few years. These

included, in addition to the above, Henry F. Holland, who succeeded

Cabot in the assistant secretary of state slot in 1954; Under-Secretary

of State Walter Bedell Smith, a former director of the CIA;

and Ambassador to the UN Henry Cabot Lodge.

Paving

the way for the coup was a public report, issued in December

1953 by the Committee on International Policy of the National

Planning Association on the Guatemalan situation. Head of the

Committee was Frank Altschul, secretary and vice-president of

the CFR and a partner of the international banking house of

Lazard Freres, as

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