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