The Money Trust: How a Banking Cartel Captured America’s Financial System (Part 2 of 5)
The supposed Skull and Bones of the Puritans.
Episode Two — The Empire (1914–1945)
Foreword for Clarity
Though often conflated, mafia and cartel differ fundamentally in structure: the mafia is a permanent, vertical shadow-state built on sacred oaths, while the cartel is a fluid, horizontal business alliance where loyalty lasts only as long as the next profitable objective.
Prologue — The Sealed Train
In April 1917, a sealed train left Zurich, Switzerland, bound for Petrograd, Russia. Its passengers could not leave the carriages. It crossed German territory, passed through Sweden, and arrived in Russia carrying Vladimir Lenin. The train was provided by the German army. The journey was financed through a Swiss bank, and the man who helped arrange the financing was Max Warburg — head of M.M. Warburg & Co. in Hamburg, brother of Federal Reserve architect Paul Warburg, and personal banker to Kaiser Wilhelm II.
General Erich Ludendorff later wrote that Lenin’s return “was working just as we wanted.” The sealed train became the basis for accusations that Lenin was a German agent — accusations Soviet historians ridiculed but that historical evidence now supports. The network financed both sides.
In Episode One, the network destroyed the Heinze brothers, designed the Federal Reserve, passed the 16th Amendment, and captured the American money supply. Now in Episode Two, we follow the Warburg brothers as they finance the world wars, fund revolutions, and build a global empire.
The Skull and Bones of the Puritans
The iconography of Yale’s Skull and Bones society centers on the skull and crossbones and the number “322.” This death’s-head motif is eerily similar to the Egyptian sarcophagus, where the pharaoh’s head is framed by the “X” of the crook and flail. As far as Puritanism goes, the iconography is distinctly American. In the 17th and 18th centuries, the skull and crossbones became a dominant feature of New England burial grounds — a memento mori — despite being far less common in Puritan England.
The motif was, however, a genuine tradition on Sephardic Jewish gravestones, appearing in Spain during the 14th century and continuing in Sephardic diaspora cemeteries for centuries afterward.
322: The most widely cited interpretation is that it refers to the year 322 BCE, the death of the Greek orator Demosthenes, who died by suicide in the temple of Poseidon while awaiting the Ptolemaic army. It is associated with the idea of plutocracy replacing rule by the people.
There is another iconography that over time has become synonymous with plutocrats: the winged lion of Venice. Prior to its association with St. Mark, it was most likely cast in the fourth century BCE, possibly as a funerary monument or guardian figure from the city of Tarsus — renowned for being inhabited by a large community of the Hellenistic Jewish diaspora — representing the war and weather god Sandon/Santa.
New Israel: Providence In 17th Century
Long before the network captured the Fed, it had already secured the legal and cultural foundation that allowed it to operate inside America. “He considered Constantine the Great to be a worse enemy to Christianity than Nero because the subsequent state support corrupted Christianity and led to the death of the Christian church.”
— Roger Williams
Roger Williams saw the early church not as a triumphant institution but as a tragedy. He viewed the original Christian community in Jerusalem — led by James, the brother of Jesus — as a Jewish movement rooted in the synagogue and the Temple. Constantine, unlike Nero who only killed Christians, legalized and favored the faith, pouring state power into it and thereby destroying that original Jewish Christian church from within. The resulting state church could compel conformity, persecute, and kill. Williams argued that “forced worship stinks in God’s nostrils” and that civil authorities had no right to compel belief; Constantine’s embrace of the church was therefore worse than Nero’s persecution.
Official histories often obscure that Williams, Thomas Hooker, and Philip Sherman were not merely Puritan theologians. They were political agents operating in a world where faith was the only acceptable language of power. Beneath their arguments about covenant and conscience lay a practical calculation: John Winthrop’s Massachusetts Bay Colony was a Puritan theological fortress that restricted suffrage to church members, banished dissenters, and enforced religious uniformity. While this preserved orthodoxy, it made the colony a commercial backwater that repelled the merchants, financiers, and skilled artisans it needed. Winthrop’s “City upon a Hill” had no place for the Dutch, English, or Sephardic Jewish trading networks that brought capital and letters of credit.
Hooker, Sherman, and Williams reached the same political conclusion by different paths. Thomas Hooker, a respected minister, disagreed with Winthrop’s narrow suffrage and led followers to found Connecticut in 1636. The Fundamental Orders of Connecticut (1639) expanded the franchise while keeping civil power on the consent of the governed. Philip Sherman, after being disarmed and exiled during the Antinomian Controversy, signed the Portsmouth Compact and became a Quaker, understanding that a state that could force worship could also seize property. Roger Williams, banished for denying the king’s right to grant land charters and the state’s authority over the soul, founded Providence Plantations on “liberty of conscience.” The 1663 Royal Charter made Rhode Island the first government in the Western world to separate religious belief from civil power.
Moses Michael Hays, a Dutch Sephardic Jew, settled in Boston, refused a Christian loyalty oath, became a founder and first depositor of the Massachusetts Bank, and was elected Grand Master of the Massachusetts Grand Lodge with Paul Revere as his deputy. Judah Monis, a Venetian Jew, taught Hebrew at Harvard yet marked his grave with the Sephardic skull and crossbones. This symbol appears on Sephardic graves from 14th-century Spain to 17th-century Amsterdam to 18th-century Curaçao and Suriname. It represents Techiat Hametim — the revival of the dead. Harvard taught Jewish studies in its earliest days, though it was strictly from a “Christian Hebraism” perspective. In the 17th and 18th centuries, Harvard required all undergraduates to study Hebrew so they could read the Old Testament in its original language and analyze rabbinical writings. Ezra Stiles, the Newport minister who became president of Yale College, maintained an ecumenical friendship with Haim Carigal, an itinerant rabbi from Palestine. The Redwood Library in Newport received donations of Hebrew Bibles from the Jewish community. Rhode Island College (later Brown University) taught Hebrew to its first class. The Touro Synagogue in Newport, consecrated in 1763, remains the oldest surviving synagogue in America — a direct monument to the religious liberty that Williams pioneered. When Oscar Straus, a Jewish diplomat and philanthropist, wrote a biography of Roger Williams in the 1890s, he named his son Roger Williams Straus, acknowledging his intellectual debt to the man who first made Jewish integration into American life possible. Straus understood what the official histories often obscure: that the same radical Puritan who considered Constantine worse than Nero — because Constantine destroyed the original Jewish Christian community — was the first Christian in America to argue that Jews had an equal civil right to practice their faith.
Hooker, Sherman, and Williams did not stumble into religious toleration by accident. They understood Winthrop’s orthodoxy was a commercial dead end. Unable to speak openly of trade or capital, they used the language of covenant and heresy to create colonies that welcomed the very merchants Winthrop excluded. The skull and crossbones on Monis’s grave, the Sephardic cemeteries, the Masonic records, the Hebrew taught at Harvard, and the Rhode Island charter are the visible traces of this network: crypto-Jews, Sephardic merchants, and radical Puritans who built the first wall of separation between church and state.
They did not agree on theology, yet they shared one political conclusion: inclusion of the Dutch, the Venetians, and the Sephardic Jews was not merely a matter of conscience — it was a matter of survival. The wall Williams built was not intended as protection for Jews, but it became one. Hooker and Sherman (see Episode 1: Dead Ends, Dead Partners, and the Information Monopoly) are direct blood ancestors of the Morgans, the Tafts, the Burrs, and the Dwights (the Yale dynasty) and other later financial families; Williams is their political ancestor. The Touro Synagogue, Brown University, the Massachusetts Bank, and the Masonic Grand Lodge are not anomalies. They are the harvest of seeds planted by men who understood that Winthrop’s orthodoxy was a cage, and that the only way out was a wall.
The Heir Takes Command: J.P. Morgan Jr. and the Financing of the Great War
With the network’s American financial machine now in place, it found its perfect operator in the son of its architect. John Pierpont “Jack” Morgan Jr. inherited J.P. Morgan & Co. when his father died in 1913. The firm was not the largest American bank by assets, but it was the most influential due to its long-standing relationships with European governments. Within months of taking control, the outbreak of war in Europe in August 1914 turned the firm’s existing British connections into a major opportunity.
The House of Morgan had already acted as a financial agent for Britain during the Boer War in 1900. That earlier relationship created the pipeline it would use again in 1914.
In August 1914, senior partner Henry Davison traveled to London and met with Prime Minister Asquith and Chancellor Lloyd George. He presented a proposal that Asquith approved in full. By January 1915, J.P. Morgan & Co. was formally appointed the sole purchasing agent for the British government in the United States. This gave the firm authority to buy and ship vast quantities of war supplies on Britain’s behalf.
The arrangement was helped by a personal connection: British Ambassador Sir Cecil Spring-Rice, who recommended Morgan for the role, had been best man at Jack Morgan’s wedding.
Under Edward R. Stettinius Sr., the firm’s Export Department purchased and shipped approximately $3 billion in goods — from food and clothing to locomotives and munitions. For this service Morgan charged a 1 percent commission, generating roughly $30 million in direct profit.
In 1915 Morgan attempted to float a $187 million Anglo-French loan in the U.S. market. The issue sold slowly and remained partly unsold until major American corporations with British contracts — including DuPont, Westinghouse, and Bethlehem Steel — stepped in to buy the bonds. They did so to protect their own wartime profits.
A British Treasury official sent to New York, Samuel Lever, privately criticized Morgan’s “want of organization and slipshod methods,” accusing the firm of being primarily concerned with maximizing its own fees.
The newly created Federal Reserve was the only institution able to restrain Morgan’s influence. In 1916 the firm proposed a $1 billion Treasury bill issue that the Federal Reserve Board blocked. Henry Davison suspected the opposition came from Paul Warburg, a “pro-German” member of the Board and one of the original architects of the Federal Reserve system.
By the end of the war J.P. Morgan & Co. had underwritten or facilitated approximately $2 billion in Allied loans and earned substantial commissions. American neutrality was effectively ended not by German submarines but by American balance sheets. Jack Morgan inherited a powerful banking house and transformed it into the financial engine of the Allied war effort, binding the U.S. economy to a British victory and helping pave the way for America’s eventual entry into the war.
William Gibbs McAdoo: The Son-in-Law Who Sold the War
While Morgan financed the Allies from the private side, the man who sold the war to the American public sat at the very center of government. The 1913 Act made the Treasury Secretary the sitting head of the Fed, giving McAdoo control over both tax revenue and monetary policy.
On April 24, 1917, just weeks after the U.S. declared war, McAdoo announced the Liberty Loan plan. He chose to market bonds directly to the general public, not just to bankers. This was a revolutionary concept. He deployed two specific strategies: patriotism as a sales tool — using famous artists to create posters that framed bond buying as a patriotic duty — and affordability for the masses.
McAdoo fought the “Money Trust” in public, yet he was a beneficiary of the Morgan “preferred list.” In 1929, while serving as a U.S. Senator, McAdoo was revealed to be one of a select group of insiders (including Supreme Court justices and cabinet officials) who were offered shares of Alleghany Corporation stock at $20 per share by J.P. Morgan & Co.
As a policy maker, he was an opponent — he structurally designed the Fed to weaken Wall Street’s control. In a crisis, he was a partner — he cooperated with Morgan to save the financial system in 1914. As a private citizen, he was a beneficiary — he gladly accepted insider deals from the House of Morgan.
The War That Broke the Gold Standard (And Gave the Fed Its Real Power)
With the war machine fully funded, the network turned its attention to the final constraint on its power: gold. When the United States entered World War I in 1917, the Treasury needed to sell billions of dollars in Liberty Bonds. But banks had limited “eligible paper” to discount, and the Fed could not lend against bonds.
Commercial paper, in the language of the original 1913 Federal Reserve Act, referred to short-term, self-liquidating loans and promissory notes arising from actual commercial transactions — such as a manufacturer borrowing to buy raw materials or a merchant financing inventory. These were considered “productive” credit tied to real goods and services. Government bonds were deliberately excluded to prevent the Fed from financing the state.
Congress solved this problem by amending the Federal Reserve Act twice. After June 1917, a bank could buy a Liberty Bond, pledge that bond at the Fed as collateral for a 15-day advance (a short-term loan), and then use that advance as backing for Federal Reserve Notes. The Fed was now lending against government debt, not commercial paper.
As one analysis notes, “the Fed’s balance sheet began filling with government bonds. And that led to an accidental discovery” — open market operations, the Fed’s most powerful monetary policy tool.
Without the massive bond issuance of World War I, the Fed might have remained a much smaller, more constrained institution. The war accidentally gave the Fed the tool that would become the basis of modern monetary policy.
The Brothers Warburg: One in Washington, One in Berlin
While Morgan and McAdoo handled the American side of the war machine, the Warburg brothers operated on both sides of the Atlantic. The Warburg family is thought to have originated from Venice, at which point they bore the surname del‑Banco. Historical documents describe Anselmo del Banco as Jewish and as having been one of the wealthiest residents of Venice in the early 16th century. In 1513, del Banco was granted a charter by the Venetian government permitting the lending of money with interest. The family settled in Bologna, and from there moved to the German town of Warburg, adopting that town’s name as their own surname after relocating to Hamburg following the Thirty Years’ War.
Paul Warburg and his older brother Max Warburg were the two most influential bankers on opposite sides of the Atlantic. Paul designed the Federal Reserve in Washington. Max advised Kaiser Wilhelm II in Berlin. They shared a vision: a German-American financial axis that would end British dominance. Their banks would be so entangled that war between the two countries would be impossible. They failed. But the attempt is revealing.
During World War I, Imperial Germany provided substantial financial support to Vladimir Lenin and the Bolsheviks. The German High Command calculated that destabilizing Russia from within would force the Eastern Front to collapse, freeing German troops for the Western Front. Max Warburg was personally involved. Several historical sources state that Lenin traveled with an estimated five to six million dollars’ worth of gold from this arrangement.
By 1918, the German High Command had collapsed. As it did, Max Warburg played a central role in helping Jewish industrialists and businessmen liquidate their assets and transfer capital out of Germany. Real assets — factories, land, foreign currency — were bought for pennies on the mark by foreign investors with dollars. The Warburg network, through Max in Germany and Paul in America, was ideally positioned to coordinate this transfer of German wealth out of the country and into American hands.
Jacob Schiff: The Banker Who Punished the Tsar
The network’s reach extended even further east. Jacob Schiff — the senior partner of Kuhn, Loeb and Company in New York, the patriarch of the same banking network we have traced — had a long history of financing revolutionary movements against the Tsar on the basis of anti-Semitism. During the Russo-Japanese War of 1904-1905, Schiff raised $200 million for Japan, hoping a Japanese victory would destroy the Tsarist regime. He also funded propaganda — through the Society of Friends of Russian Freedom — for the failed Russian Revolution of 1905.
Here is Schiff’s own words. On March 19, 1917, he sent this cablegram to Paul Miliukov, Foreign Minister of the Russian Provisional Government:
“A persistent foe of the tyrannical autocracy, the merciless persecutors of my co-religionists, may I congratulate through you the Russian people upon what they have now so wonderfully achieved, and wish you and your colleagues in the new Government every success in the great task you have so patriotically taken upon yourselves. God bless you.”
The Carthaginian Peace: How the Versailles Treaty Was Set Up to Fail
With the war won and the old empires dismantled, the network turned its attention to the peace. At the Paris Peace Conference, Paul Warburg and John Maynard Keynes publicly warned that the proposed reparations on Germany would lead to economic collapse and a future war. The two men — one American, one British — argued that the treaty’s terms were unsustainable.
Their warnings clashed directly with the positions of the leading Allied bankers. On the American side, Thomas Lamont of J.P. Morgan & Co. pushed for high reparations to ensure Germany could service the massive inter-Allied war debts the bankers had helped create. On the British side, Lord Cunliffe, Governor of the Bank of England, was the chief advocate for harsh terms. He insisted on reparations high enough to cripple Germany’s industrial competitiveness and fully supported Article 231 — the “War Guilt Clause” — which provided the legal basis for those demands.
Contemporary records show that American and British financial experts deliberately understated Germany’s capacity to pay. Their goal was not long-term European stability but the preservation of the existing debt structure. This created an internal contradiction: the treaty required a solvent Germany to make payments, yet its terms made such solvency impossible.
The result was exactly what Warburg and Keynes had predicted. By 1923, the reparations triggered hyperinflation that destroyed German savings and the middle class. The War Guilt Clause became central propaganda for the rising Nazi movement. Max Warburg watched his Hamburg bank seized under the Nuremberg Laws. He fled to the United States in 1938. Paul Warburg had died in 1932. The brothers, who had warned against the treaty from opposite sides of the Atlantic, ended up buried in the same city — where the financial system they had helped shape continued to operate.
Financing Fascism: J.P. Morgan, Standard Oil, and I.G. Farben
With the old order in ruins, the network showed it was ideologically flexible. The banking interests that helped create the Federal Reserve did not oppose fascism. They did business with it when it suited their interests.
In Italy, J.P. Morgan & Co. provided loans to Benito Mussolini’s regime beginning in the mid-1920s. Morgan partner Thomas W. Lamont actively supported the Fascist government, describing himself in private correspondence as “something like a missionary” for Italian fascism. He saw Mussolini’s authoritarian rule as having restored stability after the chaos of post-World War I Italy. By 1926, Morgan had helped reorganize the Bank of Italy and extended high-interest loans (7–8 percent) that were initially profitable. The firm acted as a major financier until Mussolini’s alliance with Hitler led to defaults in the late 1930s.
In Germany, I.G. Farben — the giant chemical cartel on whose board Max Warburg served until the Nuremberg Laws forced him out in 1935 — contributed financially to Adolf Hitler’s 1933 election campaign. Standard Oil (the Rockefeller-controlled company) had a major business partnership with I.G. Farben. The two firms exchanged patents and technology; Standard Oil licensed its hydrogenation process to I.G. Farben, which used it to produce synthetic fuel for the Luftwaffe. The relationship included significant cross-ownership and continued even after the United States entered the war.
Chase Bank, part of the Rockefeller network, participated in the Nazi government’s Rückwanderer Mark Scheme. Under this program, the Nazis used assets looted from German Jews to subsidize special marks sold at a discount to Americans of German descent who were considering returning to Germany. Chase helped facilitate the scheme and raised millions of dollars for the regime between the late 1930s and 1941.
In Spain, Chase Bank also extended loans to Francisco Franco’s regime after the Spanish Civil War ended in 1939.
The banking network did not invent fascism. It simply treated fascist regimes as acceptable business partners — provided they protected private property, repaid debts, and opposed socialism and independent labor unions.
The Bush-Harriman Axis: Auschwitz, Slave Labor, and the Union Banking Corporation
Even as fascism rose in Europe, the network’s American arm continued its German industrial ties. During and immediately after World War I, the Harriman family expanded its international ambitions. In 1918, W.A. Harriman & Co. was formed with George Herbert Walker — grandfather of George H.W. Bush — at its head. Through partners Paul and Felix Warburg (brothers of Max Warburg in Germany), the firm maintained direct ties to the German banking house M.M. Warburg & Co.
After the war, Harriman used this connection to acquire control of the German Hamburg-Amerika Line in 1920 through negotiations with Max Warburg. This gave the firm a foothold inside German industrial infrastructure years before the Nazi Party came to power.
The 1931 merger between Brown Brothers and W.A. Harriman & Co. — which employed Prescott Bush — created a powerful new banking entity. The partnership established the Union Banking Corporation (UBC) in New York as a commercial proxy for German industrialist Fritz Thyssen, an early and major financial backer of Adolf Hitler.
The Bush-Harriman group owned one-third of Thyssen’s vast Silesian coal, steel, and zinc cartel through the Consolidated Silesian Steel Corporation. The cartel’s operations were concentrated in the mineral-rich region of Upper Silesia in Poland. Its primary facilities were located near the Polish town of Oświęcim — known in German as Auschwitz.
According to historical research cited by former Nazi war crimes prosecutor John Loftus, the location was no coincidence. The area’s coal deposits could be processed into fuel or additives for aviation gasoline, making it strategically valuable for the Nazi war machine.
In 1942, the U.S. government seized the assets of the Union Banking Corporation under the Trading with the Enemy Act. The Bush-Harriman interests did not voluntarily cut ties; federal authorities were forced to confiscate them. After the war, the family connections remained strong. George H.W. Bush later became Director of the CIA, and his son became President.
The Dulles Brothers: The Legal and Intelligence Shield
With the war over and the network’s German assets seized, the same families turned to the Dulles brothers to manage the aftermath. John Foster Dulles never became a partner at Brown Brothers Harriman, but he played a far more important role: he was the firm’s designated legal fixer. As a senior partner at the powerful law firm Sullivan & Cromwell — a firm whose founders had assisted J.P. Morgan Sr. in the creation of General Electric and pioneered the concept of the holding company — his clients included both Brown Brothers Harriman and Standard Oil. He did more than offer advice — he shaped the bank’s most controversial dealings.
In 1934, while serving on the board of the Carnegie Endowment for International Peace, John Foster Dulles traveled to Germany. Upon his return, he told an audience at the Council on Foreign Relations that “nobody need be afraid of German aggression.”
According to multiple accounts, the Bush and Harriman families turned to Allen Dulles to conceal funds derived from their Nazi-era investments and to obscure their dealings with the Third Reich. When the U.S. government seized the assets of Union Banking Corporation under the Trading with the Enemy Act in 1942, Allen Dulles — the future CIA director — was simultaneously serving as the lawyer representing Fritz Thyssen’s bank in Holland while also acting as U.S. intelligence chief in postwar Germany.
Allen Dulles had a direct operational relationship with the Harriman network. Before joining the OSS (the forerunner of the CIA), he had already married into intelligence circles. E. Howard Hunt — later a key CIA officer involved in the Bay of Pigs and Watergate — began his career as a staff assistant to Ambassador Averell Harriman, then a partner at Brown Brothers Harriman.
The brothers’ ties to the banking world were cemented in 1933 when Allen Dulles joined the board of the New York Trust Company alongside Prescott Bush and Averell Harriman. This interlocking directorate linked Sullivan & Cromwell directly with Brown Brothers Harriman.
After the war, Allen Dulles played a central role in facilitating the entry of Nazi-aligned individuals into the United States. As part of early Cold War intelligence operations, he helped recruit and protect former Nazi officers, scientists, and intelligence assets — most notably Reinhard Gehlen, the former head of Nazi military intelligence on the Eastern Front. Gehlen’s organization was absorbed into U.S. intelligence and later became West Germany’s BND, providing the Americans with anti-Soviet networks built on Nazi-era connections. Dulles and other U.S. officials shielded many of these figures from prosecution or deportation, prioritizing their usefulness against the Soviet Union over accountability for war crimes.
The same families that had financed Nazi industrialists hired the Dulles brothers to shield them from legal consequences during the war. After the war, the Dulles brothers, now running the CIA, relied on the same network of banks and industrialists — and the former Nazis they had helped bring into the fold — to prosecute the Cold War.
It formed a complete circuit of power: the bank needed legal protection, the lawyers needed powerful clients, and the future intelligence chiefs needed the financial and political backing of Wall Street. Brown Brothers Harriman supplied the money. The Dulles brothers supplied the impunity.
The Nazi Art Looting Network: Chase, J.P. Morgan, and the Museum of Modern Art
While the Dulles brothers handled the legal and intelligence cleanup, other arms of the network were directly involved in the plunder itself. Contemporaneous U.S. Treasury Department reports, declassified after the war, directly implicated Chase Manhattan Bank and J.P. Morgan & Co. in the systematic plunder of Jewish assets during World War II.
A class-action lawsuit filed in 1998 alleged that the two American banks “readily joined the Nazis in the plunder of millions of dollars in Jewish assets.” The allegations, backed by the Treasury reports, painted a damning picture.
Chase Manhattan’s Paris branch was described as having “a record… of uncalled-for responsiveness to the desires of the Germans and an apparent desire to enhance its influence with them.” The bank was accused of seizing accounts and safe deposit boxes belonging to Jewish customers and then refusing to return the assets after the war.
J.P. Morgan’s Paris office faced similar charges. Its manager was said to have worked closely with the Vichy government and openly boasted about “the anti-Jewish record and policies of J.P. Morgan.” The firm was even branded an “international Aryan organization” in the lawsuit.
The most direct link between the Money Trust and Nazi-looted art lies with the Museum of Modern Art in New York. MoMA was founded in 1929 by Abby Aldrich Rockefeller (wife of John D. Rockefeller Jr.) and two other wealthy philanthropists. Its early board and primary financial backers read like a who’s who of the network: John D. Rockefeller Jr., Andrew Mellon, and J.P. Morgan.
Over the years, MoMA has faced numerous restitution claims for works that were looted by the Nazis and later entered the museum’s collection or the private collections of its founders. In 2023, for example, MoMA returned a drawing by Egon Schiele to the heirs of a Jewish art collector murdered in the Holocaust. The institution created by the network’s founders had, in some cases, become the final resting place for art stolen from the very people their financial relationships had helped destroy.
The Business Plot: The Time Wall Street Tried to Overthrow FDR
Even as the network profited from fascism abroad, some of its members allegedly contemplated a more direct route to power at home. The credibility of the allegation rests heavily on the reputation of Smedley Butler — a man who, after 34 years of service, had become a fierce critic of the very “network” this essay traces. In a 1935 article, he famously wrote: “I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico...safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.”
Butler testified that beginning in July 1933, a bond salesman named Gerald C. MacGuire — acting on behalf of a “Wall Street group” — repeatedly approached him. MacGuire initially asked Butler to give a speech at the American Legion convention calling for a return to the gold standard, a policy FDR had abandoned. Butler refused.
The scheme then escalated. MacGuire allegedly proposed that Butler lead a massive, privately funded army of 500,000 veterans to march on Washington, D.C. The pretext would be that President Roosevelt’s health was failing. Under the plan, Butler would be installed as a powerful “Secretary of General Affairs,” wielding near-absolute power while Roosevelt remained a figurehead.
The most direct financial backer identified was Robert Sterling Clark, an eccentric art collector and an heir to the Singer Sewing Machine fortune. The Congressional committee later noted that Butler’s testimony, except for MacGuire’s direct proposal, was “corroborated in the correspondence of MacGuire with his principal, Robert Sterling Clark.”
The businesspeople and banks that Butler named were deliberately redacted from the public transcripts. The communist journalist John L. Spivak, who observed the proceedings, published the censored portions in the New Masses magazine in 1935, claiming that the plot was part of a broader conspiracy involving J.P. Morgan, the DuPonts, Remington Arms, the National City Bank, and Goodyear. Butler himself later complained: “Like most committees it has slaughtered the little and allowed the big to escape. The big shots weren’t even called to testify.”
The Pecora Commission: The Revelation of Power, Depravity, and Control
While some members of the network allegedly plotted to seize power by force, the public was given a far more damaging look inside the system through legal channels. Before 1933, Wall Street was a hidden fortress. The Pecora Hearings — formally the Senate Committee on Banking and Currency’s investigation into Stock Exchange Practices — shattered its walls. For the first time, ordinary Americans glimpsed not the polished facade of finance, but the raw machinery of power, the casual depravity of its masters, and the terrifying extent of their control over the national economy. The witness stand became a public confessional. The testimony of men like J.P. Morgan Jr., Charles Mitchell, and the ruined everyman Edgar D. Brown painted a portrait that shocked and outraged the nation.
The Machinery of Power: No Minutes, No Laws, No Limits
When J.P. Morgan Jr. — heir to an empire and financial architect of the Allied war machine — took the stand, he did not come to explain a system. He came to defend a private fiefdom. Under questioning, he revealed that his firm, which held $340 million in public deposits, operated with almost no written records. Partners met daily, yet no minutes were kept of their discussions or decisions. When asked for the firm’s articles of copartnership, he refused, calling it a private matter.
The power on display was immense and unaccountable. Morgan calmly explained that private bankers answered not to the law, but to a self-defined “code of professional ethics” that he insisted was “far greater than any law.” To a nation still reeling from the Great Depression, the message was chilling: the men who controlled the nation’s credit believed themselves above legislative reach. His firm’s twenty partners held $53 million in capital against $340 million in deposits, faced no legal reserve requirements, and paid interest on demand deposits — privileges denied to ordinary banks. This was not banking. It was a private government.
The Ultimate Insult: The Morgan Tax Revelation
The most explosive moment came when Pecora turned to Morgan’s personal tax returns. The nation learned that J.P. Morgan Jr., the very symbol of American wealth and power, had paid no federal income taxes in 1931 or 1932.
Pecora laid bare the mechanics of avoidance. In 1931, the Morgan partners claimed a $21 million loss by admitting a new partner on January 2 rather than December 31 — a maneuver that allowed them to carry the loss forward for years. Even more infuriating, Pecora revealed that Morgan had paid taxes to Great Britain every year he escaped U.S. levies, proving the avoidance was deliberate, not accidental. When Pecora pressed him, Morgan admitted he was unfamiliar with his own tax returns. The message was unmistakable: the men who controlled America’s credit considered themselves exempt from the tax burdens borne by every working citizen.
Depravity in the Suites: The Exploitation of Trust
If Morgan embodied unchecked power, Charles E. Mitchell, chairman of National City Bank, embodied institutional depravity. His testimony stripped the mask from one of the nation’s most respected financial institutions. Mitchell admitted that in 1927 the bank had accumulated millions in bad short-term loans to the collapsed Cuban sugar industry. To clean its books, the bank simply transferred the toxic assets to its securities affiliate, National City Company, then sold new stock to the public. The bank was made whole; the public was handed the poison.
Pecora cornered Mitchell on a secret board resolution that excluded this exact sugar stock from the officers’ bonus fund. Mitchell claimed it was merely because current management was “not responsible” for the bad loans. To a horrified public, the meaning was unmistakable: insiders had rigged the system so they collected bonuses on the good deals while shielding themselves from the losses on the bad ones.
Similar abuses surfaced at Chase National Bank, where president Albert Wiggin was caught selling Chase stock short — literally betting against his own bank — at the very moment Chase was part of a group supposedly trying to stabilize the market during the 1929 crash.
The System of Speculation: Credit and Margin Abuses
Beyond individual greed, the hearings exposed a systemic abuse of credit and margin lending that had fueled the speculative frenzy. The nation’s largest banks had transformed themselves from prudent custodians of deposits into speculative casinos.
The evidence was damning. National City Bank offered cash bonuses to traders who sold the most stocks and bonds, with extra incentives for unloading the riskiest securities the bank wanted off its books. Chase Securities Corporation helped finance eight separate stock pools — coordinated buying groups that artificially inflated prices so insiders could profit at the public’s expense. Banks made loans to securities purchasers to prop up inflated stock prices, using depositor money to sustain the bubble. When the crash came, the insiders had already sold out, and the American public paid the price.
The Human Wreckage: Edgar Brown’s Story
The true horror of the system was not found in Morgan’s marble offices or Mitchell’s boardroom, but in the testimony of a single broken man: Edgar D. Brown. A former theater owner from Pottsville, Pennsylvania, Brown walked into National City Company in 1928 with $100,000 in savings — his life’s work.
A salesman named Fred Rummel systematically dismantled Brown’s conservative portfolio, selling his safe government bonds, leveraging his assets, and arranging loans at banks Brown had never visited. When safe bonds faltered, Rummel blamed Brown. When stocks soared, Brown was pressured to buy more. By October 1929 he was ruined. In a letter read into the record, Brown wrote with devastating simplicity: “I am now 40 years of age — tubercular — almost totally deaf — my wife and family are depending on me solely and alone and because of my abiding faith in the advice of your company I am to-day a pauper.”
The firm’s reply to his plea for help was a flat refusal. The machine had devoured him and moved on. Edgar Brown was not a cautionary tale. He was the rule.
The Public Horror: A System Built on Conquest
The cumulative effect of the testimony — Morgan’s unaccountable power, his shocking tax avoidance, the institutional depravity of Mitchell and Wiggin, the systemic credit abuses that fueled speculation, and the ruined life of Edgar Brown — produced a wave of national revulsion.
The hearings laid bare a complete anatomy of exploitation: banks made reckless loans to speculators and foreign regimes, transferred the bad assets to securities affiliates to hide the losses, sold the toxic securities to the public with high-pressure tactics, used depositor money to inflate the bubble further, and let insiders collect massive bonuses and pay no taxes. When the crash came, the insiders had already cashed out. The American people paid the price.
The financial elite had not merely failed the country. They had preyed upon it. The “Morgan magic” stood revealed as a club of self-interested oligarchs shielded by a compliant tax system. The “National City” was exposed as a casino where the house always won. And the “American investor” was unmasked as a lamb led to slaughter.
The evidence was unmistakable: the American economy had not collapsed from bad luck or foreign plots. It had been deliberately hollowed out from within by the very men who claimed to be its guardians. The network had not merely survived the patriarch’s death — it had found a new purpose in conquest: not of nations, but of the American public.
The Gold Confiscation of 1933: The End of the Gold Standard
With Wall Street’s inner workings now exposed, the network moved to remove the last major restraint on its power. By the spring of 1933, the United States was in the depths of the Great Depression. Between 1929 and 1933, more than nine thousand banks had failed. Unemployment stood at twenty-five percent. President Franklin D. Roosevelt took office on March 4, 1933, facing a collapsing banking system and a paralyzed economy.
At the heart of the crisis was the gold standard. Since 1900, the government had promised to exchange paper dollars for gold at a fixed rate of $20.67 per troy ounce. Any twenty-dollar bill could be taken to a bank and redeemed for a gold coin. This system imposed strict discipline: if the government printed too much money, people would lose confidence, demand gold, and drain the Treasury’s reserves, forcing the economy to contract. That “brutal logic” had long kept inflation in check, but in the midst of the worst depression in American history, many policymakers saw it as an obstacle to recovery.
Six weeks after taking office, on April 5, 1933, Roosevelt signed Executive Order 6102. It criminalized the private possession of monetary gold by any person, partnership, association, or corporation. All gold coin, bullion, and certificates had to be surrendered to the Federal Reserve by May 1, 1933. The government offered compensation at the official price of $20.67 per ounce. Violations carried penalties of up to $10,000 in fines and ten years in prison.
The stated purpose was vague: “to restore to the country’s reserves gold held for hoarding.” There were almost no congressional hearings. Many lawmakers voted without even seeing a printed copy of the order. The public was told the measure was temporary. It was not.
On June 5, 1933, Congress passed a resolution nullifying all public and private contracts that required payment in gold — including U.S. government bonds. The government had effectively repudiated its own obligations.
The Gold Clause Cases reached the Supreme Court. In a 5-4 decision, the Court ruled in favor of the government. Chief Justice Charles Evans Hughes wrote the majority opinion. While he criticized the administration for immorality — accusing it of repudiating its promises — he held that the plaintiffs had no legal remedy. Justice James McReynolds dissented from the bench, declaring, “This is Nero at his worst. And as for the Constitution, it does not seem too much to say that it is gone.”
The final step came on January 30, 1934, with the Gold Reserve Act. The law did three things. First, it prohibited the Treasury and financial institutions from redeeming dollars for gold, formally ending the domestic gold standard. Second, it devalued the dollar to $35 per troy ounce — a forty percent reduction from the old $20.67 price. Third, it transferred ownership of all monetary gold from the Federal Reserve to the U.S. Treasury.
The government profited approximately $2.8 billion from the devaluation (roughly $65 billion in today’s dollars). That windfall was used to create the Exchange Stabilization Fund, a two-billion-dollar account that gave the Treasury extraordinary power to intervene in currency markets without congressional oversight.
In less than a year, the Roosevelt administration and the banking interests behind it had dismantled one of the oldest restraints on government money creation. The gold standard — the mechanism that had enforced fiscal discipline for more than a century — was gone. The path was now clear for a dramatic expansion of the money supply and the central bank’s power.
The Banking Act of 1935 — Completing the Fed
With gold removed from the system, the network moved to finish the job. In November 1934, President Roosevelt appointed Marriner S. Eccles, a Utah banker, to the Federal Reserve Board. Eccles became the principal architect of the Banking Act of 1935, which gave the Federal Reserve the basic structure it still has today.
The Act made the following key changes:
The Federal Reserve Board was renamed the Board of Governors and its power was centralized in Washington.
The Treasury Secretary and Comptroller of the Currency were removed from the Board, giving the Fed formal independence from day-to-day political control while actually concentrating authority in the hands of presidential appointees.
The modern Federal Open Market Committee (FOMC) was created. Before 1935, each of the twelve regional Reserve Banks conducted its own open-market operations. The new law centralized this authority, with the seven Board members (presidential appointees) holding a majority of the votes and only five of the twelve regional bank presidents allowed to vote at any one time.
Board members were given fourteen-year staggered terms to insulate them from short-term political pressure.
The Board gained the power to set reserve requirements and regulate deposit interest rates.
The Fed moved out of the Treasury Building and into its own headquarters on Constitution Avenue.
By the end of 1935, the transfer of monetary power was complete. The network had not succeeded in 1907. It succeeded in 1913 with the creation of the Fed, in 1933 with the gold confiscation, and in 1935 with the Banking Act. The gold confiscation and the 1935 Act together ended the last major restraints on the central bank. FDR opened the door. The network walked through it.
The Long Con: How the Network Lost Battles but Won the War (1907-1945)
Between the Panic of 1907 and the end of World War II, the American financial system was reshaped not once, but twice. To the casual observer, the period appears as a steady march of progressive reform: the creation of the Federal Reserve, the breakup of Standard Oil, the Pecora Hearings, and the passage of Glass-Steagall. Each seems a blow to the concentrated power of the “money trust.” Yet, a closer look reveals a more unsettling truth. When you add up everything from 1907 to 1945, the network of J.P. Morgan, the Rockefellers, and Kuhn, Loeb did not lose power—they transferred it from private banks to a public-private cartel they controlled, shedding liabilities while retaining influence. They abandoned the gold standard not as a defeat, but as a liberation.
Phase 1: The Carving Up (1911-1913)
The narrative that the government “broke up” Standard Oil in 1911 misses the strategic genius of the network. While the Supreme Court fragmented the monopoly into 34 competing entities, the Rockefeller family and their allies at National City Bank and Chase simply exchanged direct operational control for financial control. They now held the stocks, managed the trusts, and financed the “competitors”. Simultaneously, the secret Jekyll Island meeting of 1910—featuring Morgan partners Henry Davison and Frank Vanderlip of National City—crafted the blueprint for the Federal Reserve Act of 1913. The network didn’t fight centralized banking; they designed it. They knew that a public “Fed” would be far more powerful than a private one, and far easier to influence.
Phase 2: The Golden Handcuffs (1933)
The twin blows of 1933—the abolition of the domestic gold standard and the passage of Glass-Steagall—are usually seen as the network’s nadir. FDR’s Executive Order 6102 forced citizens to turn in gold, severing the dollar’s internal convertibility. Glass-Steagall then forced J.P. Morgan & Co. to choose between deposits and securities, culminating in the spin-off of Morgan Stanley in 1935.
But was this a loss? The gold standard had been a constraint on the Morgan-Rockefeller network. It limited how much credit they could extend and, crucially, how much war they could finance. By removing the “barbarous relic,” FDR—inadvertently echoing the network’s desires—unleashed the Fed to inflate without limit. The network simply exchanged a finite metal for infinite political currency.
Regarding Glass-Steagall: While it forced a formal split of Morgan & Co., it did not destroy the network. The senior partners of the new Morgan Stanley were the same men who ran the old house. More importantly, the Act did nothing to dismantle the decentralized collusion of the network. Decentralization is not an impediment to a cartel; it is the ideal camouflage. As long as the heads of Chase, National City, and Morgan Stanley lunched at the same clubs and funded the same political campaigns, the structure of competition was a facade.
Phase 3: The Bretton Woods Coup (1944)
The final conquest was Bretton Woods. When the Allies met in 1944 to design the post-war monetary system, they enshrined the dollar—backed by gold at $35/oz—as the world’s reserve currency. The dollar replaced gold. And who controlled the dollar? The Federal Reserve, designed at Jekyll Island, and the New York banks who dominated its open market operations. The network effectively made the U.S. Treasury their junior partner.
The Verdict: Net Gain
The network began the era as private bankers with unlimited liability. They ended the era as the architects of a global fiat standard, with the taxpayer backstopping their risks via the FDIC. They lost the subsidiary battles of anti-trust and Glass-Steagall, but they won the existential war: they replaced a system of hard money (which they could not control) with a system of political money (which they could).
Collusion is never impeded by decentralization; it is merely hidden by it. By 1945, the “House of Morgan” did not need to own the bank—it just needed to own the ability to create credit. And that, they now held in perpetuity.
Epilogue: What the Network Won (1914–1945)
The network achieved the following:
First, control of the discount window. The Fed lends to member banks in a crisis. The network’s banks are member banks. Their competitors are not.
Second, control of the payment system. The Fed processes every large transaction. The network’s banks have access. Their competitors do not.
Third, control of the money supply. The Fed decides how much money exists. The network’s members influence that decision.
Fourth, a guaranteed market for government debt. The Fed buys government bonds. The network’s banks are the primary dealers. They profit from underwriting and trading.
Fifth, a reliable revenue stream from the income tax. The government pays interest on its debt. That interest flows to the bondholders — including the network’s banks.
In feudalism, the lord controlled the land. In the 20th century, the network discovered something more valuable than land. They discovered the power to create money itself.
The king is gone. The lords remain. The Federal Reserve is the castle. The member banks are the barons. The rest of us are the serfs.