6Ibid., pp. 231, 233. See also Louise Ware, George Foster Peabody (Athens: University of Georgia Press, 1951), pp. 161–67.
7See Kolko, Triumph, pp. 147–48.
8See Livingston, Origins, pp. 106–07.
9See Livingston, Origins, pp. 107–08.
10Ibid., pp. 109–10.
11Ibid., pp. 113–15.
12See Rothbard, “Federal Reserve,” pp. 95–96.
13On Hadley, Jenks, and especially Conant, see Carl P. Parrini and Martin J. Sklar, “New Thinking about the Market, 1896–1904: Some American Economists on Investment and the Theory of Surplus Capital,” Journal of Economic History 43 (September 1983): 559–78. The authors point out that Conant’s and Hadley’s major works of 1896 were both published by G.P. Putnam’s Sons of New York. President of Putnam’s was George Haven Putnam, a leader in the new banking reform movement. Ibid., p. 561, n. 2.
14Frank W. Taussig, “What Should Congress Do About Money?” Review of Reviews (August 1893): 151, quoted in Joseph Dorfman, The Economic Mind in American Civilization (New York: Viking Press, 1949), 3, p. xxxvii. See also ibid., p. 269.
15Ibid., pp. 392–93.
16The final report, including its recommendations for a central bank, was hailed by F.M. Taylor, in his “The Final Report of the Indianapolis Monetary Commission,” Journal of Political Economy 6 (June 1898): 293–322. Taylor also exulted that the convention had been “one of the most notable movements of our time—the first thoroughly organized movement of the business classes in the whole country directed to the bringing about of a radical change in national legislation.” Ibid., p. 322.
17Livingston, Origins, p. 153.
18Rothbard, “Federal Reserve,” pp. 94–95.
19Livingston, Origins, p. 123.
20Frank W. Taussig, “The Currency Act of 1900,” Quarterly Journal of Economics 14 (May 1900): 415.
21Joseph French Johnson, “The Currency Act of March 14, 1900,” Political Science Quarterly 15 (1900): 482–507. Johnson, however, deplored the one fly in the Bank of England ointment—the remnant of the hard-money Peel’s Bank Act of 1844 that placed restrictions on the quantity of bank note issue. Ibid., p. 496.
22Ibid., pp. 497f.
23Kolko, Triumph, pp. 149–50.
24See Livingston, Origins, pp. 150–54.
25Nelson W. Aldrich, who entered the Senate a moderately wealthy wholesale grocer and left years later a multimillionaire, was the father-in-law of John D. Rockefeller, Jr. His grandson and namesake, Nelson Aldrich Rockefeller, later became vice president of the United States, and head of the “corporate liberal” wing of the Republican Party.
26Baker was head of the Morgan-dominated First National Bank of New York, and served as a director of virtually every important Morgan-run enterprise, including: Chase National Bank, Guaranty Trust Company, Morton Trust Company, Mutual Life Insurance Company, AT&T, Consolidated Gas Company of New York, Erie Railroad, New York Central Railroad, Pullman Company, and United States Steel. See Burch, Elites, pp. 190, 229.
27On the meeting, see Livingston, Origins, p. 155.
28Burch, Elites, pp. 134–35.
29Livingston, Origins, p. 156. See also ibid., pp. 161–62.
30On Gage’s and Shaw’s manipulations, see Rothbard, “Federal Reserve,” pp. 94–96; and Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, 1867–1960 (Princeton, N.J.: National Bureau of Economic Research, 1963), pp. 148–56.
31Indeed, the adoption of this theory of the alleged necessity for imperialism in the “later stages” of capitalism went precisely from pro-imperialists like the U.S. Investor, Charles A. Conant, and Brooks Adams in 1898–99, read and adopted by the Marxist H. Gaylord Wilshire in 1900–01, in turn read and adopted by the English left-liberal anti-imperialist John A. Hobson, who in turn influenced Lenin. See in particular Norman Etherington, Theories of Imperialism: War, Conquest, and Capital (Totowa, N.J.: Barnes and Noble, 1984). See also Etherington, “Reconsidering Theories of Imperialism,” History and Theory 21, no. 1 (1982): 1–36.
32Review of Charles A. Conant’s The United States in the Orient, by S.J. Chapman in Economic Journal 2 (1901): 78. See Etherington, Theories of Imperialism, p. 24.
33David Healy, U.S. Expansionism: The Imperialist Urge in the 1890s (Madison: University of Wisconsin Press, 1970), pp. 200–01.
34Ibid., pp. 202–03.
35The Investor, 19 January 1901, pp. 65–66, cited in Etherington, Theories of Imperialism, p. 17. Also ibid., pp. 7–23.
36Parrini and Sklar, “New Thinking,” p. 565, n. 16.
37Seligman was also related by marriage to the Loebs and to Paul Warburg of Kuhn, Loeb. Specifically, E.R.A. Seligman’s brother, Isaac N., was married to Guta Loeb, sister of Paul Warburg’s wife, Nina. See Stephen Birmingham, Our Crowd: The Jewish Families of New York (New York: Pocket Books, 1977), app.
38Quoted in Edward T. Silva and Sheila A. Slaughter, Serving Power: The Making of the Academic Social Science Expert (Westport, Conn.: Greenwood Press, 1984), p. 103.
39Ibid., pp. 120–21.
40Ibid., p. 133.
41Ibid., p. 135. The volume in question is Essays in Colonial Finance (Publications of the American Economic Association, 3rd series, August 1900).
42See the illuminating article by Emily S. Rosenberg, “Foundations of United States International Financial Power: Gold Standard Diplomacy, 1900–1905,” Business History Review 59 (Summer 1985): 172–73.
43Also getting their start in administering imperialism in Puerto Rico were economist and demographer W.H. Willcox of Cornell, who conducted the first census on the island as well as in Cuba in 1900, and Roland P. Falkner, statistician and bank reformer first at the University of Pennsylvania, and then head of the Division of Documents at the Library of Congress. Faulkner became commissioner of education in Puerto Rico in 1903, then went on to head the U.S. Commission to Liberia in 1909 and to be a member of the Joint Land Commission of the U.S. and Chinese governments. Harvard economist Thomas S. Adams served as assistant treasurer to Hollander in Puerto Rico. Political scientist William F. Willoughby succeeded Hollander as treasurer (Silva and Slaughter, Serving Power, pp. 137–38).
44See Rosenberg, “Foundations,” pp. 177–81. Other economists and social scientists helping to administer imperialism in the Philippines were: Carl C. Plehn of the University of California, who served as chief statistician to the Philippine Commission in 1900–01, and Bernard Moses, historian, political scientist, and economist at the University of California, an ardent advocate of imperialism who served on the Philippine Commission from 1901 to 1903, and then became an expert in Latin American affairs, joining in a series of Pan American conferences. Political scientist David P. Barrows became superintendent of schools in Manila and director of education for eight years, from 1901 to 1909. This experience ignited a lifelong interest in the military for Barrows, who, while a professor at Berkeley and a general in the California National Guard in 1934, led the troops that broke the San Francisco longshoremen’s strike. During World War II, Barrows carried over his interest in coercion to help in the forced internment of Japanese Americans in concentration camps. On Barrows, see Silva and Slaughter, Serving Power, pp. 137–38. On Moses, see Dorfman, Economic Mind, pp. 96–98.
45Parrini and Sklar, “New Thinking,” pp. 573–77; Rosenberg, “Foundations,” p. 184.
46See Rosenberg, “Foundations,” pp. 186–88.
47It is certainly possible that one of the reasons for the outbreak of the nationalist Mexican Revolution of 1910, in part a revolution against U.S. influence, was reaction against the U.S.-led currency manipulation and the coerced shift from silver to gold. Certainly, research needs to be done into this possibility.
48See Rosenberg, “Foundations,” pp. 189–92.
49The failure, however, did not diminish the U.S. government’s demand for Jenks’s services. He went on to advise the Mexican government, serve as a member of the Nicaraguan High Commission under P
resident Wilson’s occupation regime, and also headed the Far Eastern Bureau of the State Department. See Silva and Slaughter, Serving Power, pp. 136–37.
50Rosenberg, “Foundations,” p. 197.
51Ibid., p. 198.
52Ibid.
53For an excellent study of the Kemmerer missions in the 1920s, see Robert N. Seidel, “American Reformers Abroad: The Kemmerer Missions in South America, 1932–1931,” Journal of Economic History 32 (June 1972): 520–45.
54On Schiff’s speech, see Bankers Magazine 72 (January 1906): 114–15.
55Schiff and Warburg were related by marriage. Schiff, from a prominent German banker family himself, was a son-in-law of Solomon Loeb, cofounder of Kuhn, Loeb; and Warburg, husband of Nina Loeb, was another son-in-law of Solomon Loeb’s by a second wife. The incestuous circle was completed when Schiff’s daughter Frieda married Paul Warburg’s brother Felix, another partner of Schiff’s and Paul Warburg’s. See Birmingham, Our Crowd, pp. 21, 209–10, 383, and appendix. See also Jacques Attali, A Man of Influence: Sir Siegmund Warburg, 1902–82 (London: Weidenfeld and Nicholson, 1986), p. 53.
56See Livingston, Origins, pp. 159–64.
57Livingston, Origins, pp. 168–69.
58See the collection of Warburg’s essays in Paul M. Warburg, The Federal Reserve System, 2 vols. (New York: Macmillan, 1930). See also Warburg, “Essays on Banking Reform in the United States,” Proceedings of the Academy of Political Science 4 (July 1914): 387–612.
59When the Federal Reserve System was established, Warburg boasted of his crucial role in persuading the Fed to create an acceptance market in the U.S. by agreeing to purchase all acceptance paper available from a few large acceptance banks at subsidized rates. In that way, the Fed provided an unchecked channel for inflationary credit expansion. The acceptance program helped pave the way for the 1929 crash.
It was surely no accident that Warburg himself was the principal beneficiary of this policy. Warburg became chairman of the board, from its founding in 1920, of the International Acceptance Bank, the world’s largest acceptance bank, as well as director of the Westinghouse Acceptance Bank and of several other acceptance houses. In 1919, Warburg was the chief founder and chairman of the executive committee of the American Acceptance Council, the trade association of acceptance houses. See Murray N. Rothbard, America’s Great Depression, 4th ed. (New York: Richardson and Snyder, 1983), pp. 119–23.
60Bankers Magazine 75 (September 1907): 314–15.
61Livingston, Origins, p. 175, n. 30.
62Ibid., p. 177.
63The emergency currency provision was only used once, shortly before the provision expired, in 1914, and after the establishment of the Federal Reserve System.
64Livingston, Origins, pp. 182–83.
65Victor Morawetz was an eminent attorney in the Morgan ambit who served as chairman of the executive committee of the Morgan-run Atchison, Topeka and Santa Fe Railway, and member of the board of the Morgan-dominated National Bank of Commerce. In 1908, Morawetz, along with J.P. Morgan’s personal attorney, Francis Lynde Stetson, had been the principal drafter of an unsuccessful Morgan-National Civic Federation bill for a federal incorporation law to regulate and cartelize American corporations. Later, Morawetz was to be a top consultant to another “progressive” reformer of Woodrow Wilson’s, the Federal Trade Commission. On Morawetz, see Rothbard, “Federal Reserve,” p. 99.
66Wall Street Journal, 16 September 1909, p. 1. Cited in Livingston, Origins, p. 191.
67Ibid.
68Ibid., p. 194.
69See Rothbard, “Federal Reserve,” pp. 98–99. Also, on Warburg’s speech, see Livingston, Origins, pp. 194–98.
70Livingston, Origins, p. 203.
71Ibid., pp. 205–07.
72See Rothbard, “Federal Reserve,” pp. 99–101; and Frank A. Vanderlip, From Farm Boy to Financier (New York: D. Appleton-Century, 1935), pp. 210–19.
73Henry Parker Willis, The Federal Reserve System (New York: Ronald Press, 1923), pp. 149–50. Willis’s account, however, conveniently overlooks the dominating operational role that both he and his mentor Laughlin played in the Citizens’ League. See Robert Craig West, Banking Reform and the Federal Reserve, 1863–1923 (Ithaca, N.Y.: Cornell University Press, 1977), p. 82.
74Kolko, Triumph, p. 186.
75Ibid., p. 235.
76On the essential identity of the two plans, see Friedman and Schwartz, A Monetary History of the United States, p. 171, n. 59; Kolko, Triumph, p. 235; and Paul M. Warburg, The Federal Reserve System, Its Origins and Growth (New York: Macmillan, 1930), 1, chaps. 8 and 9. On the minutiae of the various drafts and bills and the reactions to them, see West, Banking Reform, pp. 79–135; Kolko, Triumph, pp. 186–89, 217–47; and Livingston, Origins, pp. 217–26.
77On the capture of banking control in the new Federal Reserve System by the Morgans and their allies, and on the Morganesque policies of the Fed during the 1920s, see Rothbard, “Federal Reserve,” pp. 103–36.
Part 3
1On the National Civic Federation, see James Weinstein, The Corporate Ideal in the Liberal State, 1900–1918 (Boston: Beacon Press, 1968).
2So close were Strong and Davison that, when Strong’s wife committed suicide after childbirth, Davison took the three surviving children into his home. On Strong and the Morgans, see Murray N. Rothbard, “The Federal Reserve as a Cartelization Device,” Money in Crisis, Barry Siegel, ed. (San Francisco: Pacific Institute for Public Policy, 1984), p. 109; Lester V. Chandler, Benjamin Strong, Central Banker (Washington, D.C.: Brookings Institution, 1958), pp. 23–41; and Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Atlantic Monthly Press, 1990), pp. 142–45, 182.
3Philip H. Burch, Jr., Elites in American History, vol. 2, The Civil War to the New Deal (New York: Holmes and Meier, 1981), pp. 207–09.
4Hughes was both counsel and chief foreign policy adviser to the Rockefellers’ Standard Oil of New Jersey. On Hughes’s close ties to the Rockefeller complex and their being overlooked even by Hughes’s biographers, see the important but neglected article by Thomas Ferguson, “From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,” International Organization 38 (Winter 1984): 67. On Hughes’s and Rockefeller’s men’s Bible class, see Raymond B. Rosdick, John D. Rockefeller, Jr.: A Portrait (New York: Harper and Bros., 1956), p. 125.
5Stearns, however, had not met Coolidge before being introduced to him by Morrow. Cochran was a leading Morgan partner, and board member of Bankers Trust Company, Chase Securities Corporation, and Texas Gulf Sulphur Company. Burch, Elites, 2, pp. 274–75, 302–03; and Harold Nicolson, Dwight Morrow (New York: Harcourt Brace, 1935), p. 232.
6Morgan partner Dwight Morrow became ambassador to Mexico in 1927, while Nicaraguan affairs came under the direction of Henry L. Stimson, Wall Street lawyer and longtime leading disciple of Elihu Root, and a partner in Root’s law firm. As for Frank Kellogg, in addition to being a director of the Merchants National Bank of St. Paul, he had been general counsel for the Morgan-dominated United States Steel Company for the Minnesota region, and most importantly, the top lawyer for railroad magnate James J. Hill, long closely allied with the Morgan interests. Burch, Elites, 2, pp. 277, 305.
7Chernow, House of Morgan, pp. 254–55.
8Ibid., p. 382.
9Lamont was actually able to induce Hoover to conceal Lamont’s influence by faking entries in a diary left to historians. Ferguson, “From Normalcy to New Deal,” p. 79. See also ibid., p. 77; and Burch, Elites, 2, p. 280.
10Mills was a descendant of the highly aristocratic eighteenth-century Livingston family of New York, as well as related to the Reids, Morgan-oriented owners of the New York Herald-Tribune. Mills’s first wife was a member of the longtime Morgan-connected Vanderbilt family. See Jordan A. Schwarz, The Interregnum of Despair: Hoover, Congress, and the Depression (Urbana: University of Illinois Press, 1970), p. 111.
11On
the Morgan role in pressuring the United States into entering World War I, see the classic work by Charles Callan Tansill, America Goes to War (Boston: Little, Brown, 1938), pp. 67–133.
13See A. Wilfred May, “Inflation in Securities” in The Economics of Inflation, H. Parker Willis and John M. Chapman, eds. (New York: Columbia University Press, 1935), pp. 292–93; Benjamin H. Beckhart, “Federal Reserve Policy and the Money Market, 1923–1931,” in The New York Money Market (New York: Columbia University Press, 1931), 4, pp. 127, 142ff.; and Murray N. Rothbard, America’s Great Depression, 4th ed. (New York: Richardson and Snyder, 1983), pp. 117–23, 142–43, 148, 151–52.
14William T. Foster and Waddill Catchings, “Mr. Hoover’s Plan: What It Is and What It Is Not—The New Attack on Poverty,” Review of Reviews (April 1929): 77–78. See also Foster and Catchings, The Road to Plenty (Boston: Houghton Mifflin, 1928); and Rothbard, America’s Great Depression, pp. 167–78.
15Rothbard, America’s Great Depression, p. 186.
16Chernow, House of Morgan, p. 319.
17Rothbard, America’s Great Depression, pp. 192–93.
18Benjamin M. Anderson, Jr., Economics and the Public Welfare (New York: D. Van Nostrand, 1949), pp. 222–23.
19Reynolds was affiliated with the First National Bank of New York, long a flagship of the Morgan interests.
20Rothbard, America’s Great Depression, p. 332.
21Willis, professor of banking at Columbia University and editor of the Journal of Commerce, had been a student of the great hard-money economist J. Laurence Laughlin at the University of Chicago. Laughlin and Willis were leading proponents of the “real bills” doctrine, the erroneous view that fractional reserve banking is sound and never inflationary, provided that banks confine their lending to short-term business credit that would be “self-liquidating” because loaned for inventory (“real goods”) that would be sold shortly. Laughlin and Willis played an influential role in drafting, and then agitating for, the Federal Reserve System, which they expected would be strictly confined to rediscounting short-term “real bills” held by the banks. Willis was a longtime assistant to, and theoretician for, the powerful Democratic Senator Carter Glass of Virginia, ruling figure on the Senate Banking and Currency Committee.
A History of Money and Banking in the United States: The Colonial Era to World War II Page 46