Reply #20: The Story of the Fed Is a Story of a Crime

[54anickel]

Sound familiar? Reaching for the tin foil box....

http://www.strike-the-root.com/4/smith/smith5.html

snip>

The Morgans had always been closely connected to the Rothschild financial empire in Europe. When war in Europe broke out, the House of Morgan, in partnership with the Rothschilds, became the American sales agent for English and French war bonds. When the money came back to the States to acquire war-related materials, it was funneled through Morgan as the U.S. purchase agent. From 1915 to 1917, J. P. Morgan arranged for $3 billion in exports to France and England, earning a commission of $30 million. <4> As historian Thomas Fleming has dryly noted, the U.S. became a branch of the British armament industry during the first 32 months of its neutrality. <5>

But it was a precarious feast. If the Allies should lose, American investors would sustain huge losses and Morgan’s business would nosedive. Getting the U.S. into the war would extend the financial windfall, but the American public opposed involvement by ten to one.

In May 1915, the British passenger ship Lusitania gave war hopefuls a much-needed boost. Nearly 1,200 passengers, including 128 Americans, lost their lives when a German U-boat torpedoed it off the coast of Ireland. With its hold stuffed with U.S. munitions contraband, the Lusitania exploded a second time and sank in less than 18 minutes. As Griffin documents meticulously, British and American officials did everything in their power to make Lusitania a sitting duck.

With Morgan-controlled newspapers beating the drums for American participation, Wilson finally got his war on April 16, 1917. Eight days later, Congress extended $1 billion in credit to the Allies. The British took their initial advance of $200 million and paid it to Morgan. When they ran up an overdraft of $400 million three months later, Morgan turned to the U.S. Treasury for help. Treasury Secretary William McAdoo stalled until Benjamin Strong, the Fed’s main man, came to his rescue and paid Morgan piecemeal during 1917 - 1918. Where did Strong get the money? He simply created it.

The income tax, also enacted in 1913, raised $1 billion during World War I. <6> But 70% of the cost of the war came from inflation, through a doubling of the money supply. As Rothbard understates, “For those who believe that U.S. entry into World War I was one of the most disastrous events . . . in the Twentieth Century, the facilitating of U.S. entry into the war is scarcely a major point in favor of the Federal Reserve.” <7> In addition to grabbing wealth through direct taxes, government, in collusion with the Fed, took roughly one-half of the people’s savings from 1915 – 1920. It also took the lives of nearly a half-million Americans for a war they never wanted. <8>

In his 1919 book, The Economic Consequences of the Peace, John Maynard Keynes wrote that by “a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens . . . and, while the process impoverishes many, it actually enriches some . . . . The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” <9>