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Stairs Made Out of Laws and Out of Love

Karen Hudes Sun, Feb 22, 2015 at 6:07 AM

Dear Björn, Thanks for your analysis. Sitting here in Washington and processing my emails shows me how unified we all really are: From an in-law of Sonja Hillgren, who was President of the National Press Club, I get a long list of documents showing how the Federal Reserve System was designed to bring down the United States. From a farm planning on celebrating the 600th anniversary of the Magna Carta, I get questions about the power transition model. The power transition model is nothing more and nothing less than the recipe for avoiding WWIII. In answering the questions, I can document the treason in the US military and Congress. From you I get a description of the task we have in educating our fellow man. From twitter I get criticism about my tactlessness:

The learning curve has been steep, and I always welcome feedback to get me ready for the next step up the ladder. We are nearly there.

Best, Karen Hallo CARING KAREN ! The "Cabal" is following their old script like slaves. Let us call it "Rome´s AGENDA" . ( Akhasic Records, the Maya script that the Coquistadors destoyed, Nostradumus etc. ) The Year of the Sheeps will however NOT be the year of the big slaughter of the sheeple, as they hope. They have corrupted nearly ALL organizations that excists.

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People at large are not up to the level of sanity, do not know the true name of the game, have to little of confront, does not think that they can win, do not know of any enemy, do not know what is happening, has been mislead, made stupid, made small, and are only interested in bread and entertainment. I wish that we all will HAVE and love and own the total situation. Then after that we can BE the persons, and wear the HATS necessary, and then DO what is necessary. The correct, logical sequence. What about those that are possible to reach ? It is a giant step from knowingness to the level of DOINGNESS ! You have taken this step KAREN. Wish that I knew what Your next step upwards / forward should be Karen. Wish I knew what is necessary for our fellow billions of Friends to walk Your path Karen. We are all at different steps on the stairway that starts in hell and ends in heaven.

STAIRS MADE OUT OF LAWS AND OUT OF LOVE !

ML, Björn

The Power Transition Model https://s3.amazonaws.com/khudes/Twitter12.19.14.pdf Discussing the power transition model in the context of Chuck Hagel's forced resignation as Secretary of Defense. In 2008 I spoke to Chuck Hagel about the power transition model when he was Senator from Nebraska, and forwarded Julia Pierson, Director of the Secret Service, the email to Senator Grassley's aide concerning my meeting with then Senator Hagel's staffmember https://s3.amazonaws.com/khudes/lss.pdf "Playing cat and mouse with the serious governance issues at the World Bank is a security risk to the world order." relevant exerpts from the power transition model:

http://philosophyofmetrics.com/2014/02/18/sdrs-and-the-new-bretton-woods-part-

six/comment-page-1/#comment-584

links to the DOD Power Transition Model

http://citation.allacademic.com/meta/p_mla_apa_research_citation/0/7/4/2/7/pages74272/p7427

2-1.php

www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA454175

Rule of Law at the World Bank in 2004 using the power transition model:

http://kahudes.net/wp-content/uploads/2012/05/board-of-governors.pdf (p16-23) http://www.larsschall.com/2013/05/08/governance-issues-at-the-world-bank-a-security-risk-to-the-world-order/ footnotes 7,8 and 10

the link to the Silverson article in footnote 7 discussing the model's accuracy (see p 62) was

broken and the article is also here: https://s3.amazonaws.com/khudes/silverson.pdf

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Dear Bob,

Thanks for this. I will upload it to my social media, which has about 30,000 followers and gets retweeted to many more.

Best, Karen

On Sun, Feb 22, 2015 at 2:08 AM, Bob wrote:

“Follow the money: find the answers.”

Chart Source: www.usgovernmentspending.com/debt_deficit_history

From time to time …the curtain has been lifted long enough for us to see behind it. A number of reputable authorities have attested to what is going on, including Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s. He declared in an address at the University of Texas in 1927:

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit. “

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Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta in the Great Depression, wrote in 1934:

“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is.

It is the most important subject intelligent persons can investigate and reflect upon.”6

Graham Towers, Governor of the Bank of Canada from 1935 to 1955, acknowledged:

“Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.”7

Robert B. Anderson, Secretary of the Treasury under Eisenhower, said in an interview reported in the August 31, 1959 issue of U.S. News and World Report:

“[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower.”

Source: http://www.webofdebt.com/articles/dollar-deception.php

"If the people only understood the rank injustice of our Money and Banking system, there

would be a revolution before morning." ~ Andrew Jackson (7

th U.S. President)

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"I believe that banking institutions are more dangerous to our liberties than standing armies. If

the American people ever allow private banks to control the issue of their currency, first by

inflation, then by deflation, the banks and corporations that will grow up around the banks will

deprive the people of all property - until their children wake-up homeless on the continent their

fathers conquered." ~ Thomas Jefferson (3

rd U.S. President)

“The process by which banks create money is so simple that the mind is repelled.”

~ John Kenneth Galbraith (20th Century Economist, Diplomat, Harvard Professor)

[Our current "Federal Reserve" is such a private bank as Jefferson spoke of; the FED is this Country’s privately owned national Central Bank.

In 1913, the Constitutional power provided our government to "coin money and regulate the value thereof" was turned over to a private cartel of international financiers and bankers under the Federal Reserve Act (Aldrich Plan). The cartel named their corporation, The Federal Reserve. In truth, they are no more Federal than Federal Express.

That same year, the sixteenth amendment, the Federal Income Tax Amendment, was (supposedly, over the Christmas holidays) ratified by Congress allowing the federal government to begin taxing the labor of its citizens to secure and repay the money (with interest) that the United States government would now borrow from this private banking cartel, which does not itself have money to 'loan', but rather has been privileged with the legal authority (The Federal Reserve Act) to create money/credit ‘out-of-thin-air’ and to then 'loan' it - at interest - to the government. The interest on this odious debt-money, continuously growing, exponentially, by design, is, of course, to be ‘repaid’ by every working American citizen to perpetuity; thus lowering their standard of living and curtailing the due and just prosperity of the productive many to enrich the unproductive, parasitic few.

With the creation of the Federal Reserve Corporation and the legislative enactment of the Federal Reserve Act in 1913, a veiled corporatist-state (fascist) structure was created; the looting and plundering of the American people was now fully legitimized and enforced by the United States government.

Since 1913, the United States government has abdicated its responsibility to fulfill its Constitutional obligation of coining and regulating the value of The Peoples' own, sovereign debt-free money.

The sixteenth amendment was required to institute this aberration as taxing the American people’s individual labors meant subverting one of the most important, fundamental, and primary pillars of the United States Constitution: a person's labor is an intrinsic, God-given sovereign possession

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belonging to an individual for their full, exclusive, and inalienable rights to freedom, liberty, and prosperity. ~ rwd]

"Where there is government unaccountable to, and unrestrained by, Constitution or Law, there is tyranny."

Dr. Edwin Vieira, Jr., holds four degrees from Harvard: A.B. (Harvard College), A.M.

and Ph.D. (Harvard Graduate School of Arts and Sciences), and J.D. (Harvard Law School).

For more than thirty years he has practiced law, with emphasis on constitutional issues. In the Supreme Court of the United States he successfully argued or briefed the cases leading to the landmark decisions Abood v. Detroit Board of Education, Chicago Teachers Union v. Hudson, and Communications Workers of America v. Beck, which established constitutional and statutory limitations on the uses to which labor unions, in both the private and the public sectors, may apply fees extracted from nonunion workers as a condition of their employment.

He has written numerous monographs and articles in scholarly journals, and lectured throughout the country. His most recent work on money and banking is the two-volume Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution (2002), the most comprehensive study in existence of American monetary law and history viewed from a constitutional perspective.

http://www.fame.org/HTM/Edwin%20Vieira.htm

Dr. Edwin Vieira, Jr. - Speech at 2008 GATA Washington Conference

Dr. Edwin Vieira, Jr., J.D., Ph. D. Hyatt Regency Crystal City Hotel, Arlington, Virginia Friday, April 18, 2008

www.youtube.com/watch?v=Wj9Aj1RFqBI (14:59 min)

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[Text of Dr. Vieira's speech]:

"Silver and gold are not merely valuable commodities, investments, and media of exchange. More importantly, they are key “checks and balances” in America’s legal and political institutions.

The fight against the use of silver and gold as money that has been waged by bankers and rogue politicians since the 1870s as to silver and the 1930s as to gold — and will intensify as fiat currencies collapse throughout the world — is ultimately directed against America’s national independence, her constitutional government, and every common American’s individual liberty and prosperity.

The Constitution of the United States adopted a monetary system consisting of silver and gold coin, in which the standard is the “dollar,” containing 371 1/4 grains (troy) of fine silver, with the values of gold coins to be measured in “dollars” according to the free market’s rate of exchange between silver and gold. Neither the general government nor any state is authorized to emit paper currency.

These restrictions prevent rogue public officials from turning public debts into currency, as a means for redistributing wealth from society to political elitists and their clients in special-interest groups.

Furthermore, although the Constitution does not mention banks, either public or private, its only correct construction requires separation of bank and state — extirpation of all inherently fraudulent fractional-reserve banking schemes — and rigorous regulation of all other fractional-reserve arrangements that might operate fraudulently. (See Edwin Vieira Jr., “Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution,” second revised edition, 2002.)

But since the early 1800s rogue politicians and bankers have steadily subverted the Constitution by forging an increasingly tight relationship between bank and state. Through the grant of one abusive special privilege after another, politicians have immunized fractional-reserve banking against the just economic and legal consequences of its own inevitable failures, so that public officials and bankers could turn both public and private debts into currency — thus separating the supply and the purchasing power of currency from the economic discipline of the free market, and rendering those matters largely political in nature.

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Under the Federal Reserve System, Americans no longer enjoy “money” in the economic sense but are subjected to what must be denoted as “political currency,” with emphasis on the adjective. Political currency is emitted on the basis of political debts –that is, either 1) public debts or 2) private debts for the payment of which the creditors expect public bailouts if their debtors default.

Unfortunately, the Federal Reserve System is inherently unstable, and must lurch from one self-generated crisis to another, each increasing in severity, until its house of financial cards self-destructs.

Having separated society’s medium of exchange from the production of real goods and services in the free market — and instead linked the currency to creating, packaging, marketing, servicing, and eventually salvaging political debts — the Federal Reserve system encourages, facilitates, and rewards irresponsibility on the part of both lenders and borrowers, in the private as well as the public sector.

For those who benefit from the system to continue to loot society, the supply of political currency must expand. For that supply to expand, political debts must increase.

True enough, political debts can increase, even geometrically, because political currency can be created (as the saying goes) “out of nothing” to float them. But real wealth cannot be generated simply by the emission of paper promises. Neither can new paper promises pay off old ones.

So, avarice being unlimited, insatiable, and imprudent, the whole operation must cumulate and culminate in an unsustainable bubble of debts that either implodes in a depression or explodes in hyperinflation.

Although the Federal Reserve System is fatally flawed, the wealth and power of elitists in high finance, big business, and the political class depend on maintaining it — or replacing it in a timely fashion with something of equal serviceability for their ends.

As it cannot long be maintained, it must and will soon be replaced. With what, remains a matter for speculation. Not open to the slightest doubt, however, is that, as crises have rocked the system, the establishment has always moved farther away from the

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Constitution — deeper into the sump of lawlessness — to shore up the banking cartel, and always at the expense of common Americans.

In the 1930s, in response to the collapse of the fractional-reserve racket, rather than reforming the operations of the banks, the Roosevelt administration and a pliant Congress seized the American people’s gold and outlawed almost all public and private contracts promising to pay in gold. In the 1950s and through the 1960s, until the Nixon administration terminated redemption of Federal Reserve notes in gold in 1971, the inflationary policies of the Federal Reserve System drained off more than half of America’s national stock of gold to foreign banks and the profiteers operating through them. And during the last few decades, surreptitious manipulation of the precious-metals markets has kept the price of gold (measured in Federal Reserve notes) suspiciously low, even as this country’s financial structures have become increasingly shaky.

The price of gold has been manipulated for two reasons, one being the suppression of evidence, the other the throttling of monetary evolution.

First, an ever-increasing price of gold reflects the breakdown of the Federal Reserve System — just as an ever-increasing temperature reveals that the human body is sick, and when it reaches a critical point that death is imminent.

Second, those who fatten off of political currency need to prevent ordinary people from realizing that only a return to silver and gold as common media of exchange can stabilize America’s economy, and especially from actually employing silver and gold in preference to Federal Reserve notes in their day-to-day transactions. However, as the Federal Reserve System experiences ever-more-frequent, ever-more-serious, and ever-less-tractable problems, downward manipulations of the prices of gold and silver will become impossible. And that the system is beyond repair will become apparent to all.

At that point, the question will arise — and behind the scenes doubtlessly already has arisen among bankers and politicians — as to how and with what to replace the banking cartel.

When a political currency has failed, the traditional trick of the bankers and politicians has been to introduce a new, supposedly more stable currency — often within a new, supposedly more stable banking apparatus. This was the sleight of hand that moved America from the independent state banks in operation prior to the Civil War, through

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the partially cartelized national banks created in the 1860s, to the fully cartelized Federal Reserve System established in 1913.

Throughout this devolution, the progression of illegality became increasingly stark.

The state banks violated Article I, Section 10, Clause 1, of the Constitution. But at least they operated only regionally. The national banks violated Article I, Section 8, Clause 2, and operated throughout the country. But at least their emission of paper currency was limited by the amount of public debt a generally thrifty Congress was willing to incur.

The Federal Reserve System, though, is a corporative-state (or fascist) structure that purports to delegate Congress’ supposed monetary powers to private interests; and the system’s bubble of both public and private debts will expand to the limit of the avarice of the cartel’s operators, their clients, and their political henchmen.

Nonetheless, as unconstitutional and economically unsound as they were and are, all these schemes operated and even now operate under color of the national sovereignty and laws of the United States, subject in principle to overarching control by the American people. Indeed, Section 30 of the Federal Reserve Act still explicitly reserves to Congress the right to repeal, alter, or amend the system at will. But with the Federal Reserve System the bankers and politicians have gone about as far as they can go within the economic and political institutions of the United States. And they have separated paper currency from the discipline of free markets about as far as possible, while still pretending to maintain some semblance of a connection to free markets.

So as the Federal Reserve System shakes itself to pieces, the likelihood is that first, a new currency will arise outside of the United States in some regional supra-national entity such as the proposed North American Union; and, second, the value of this new currency will not be controlled by free financial markets but, instead, propping up the currency’s value will be the excuse for extensive governmental intervention in and manipulation of the markets.

This plan is so alien to the experiences and desires of most Americans that its implementation will probably require a controlled meltdown of the Federal Reserve System to bludgeon them into accepting the North American Union as the only way to obtain a new, supposedly stable currency and to return to something approaching economic normalcy. Yet even a controlled meltdown, along with the accompanying

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absorption of the United States into a new Northern Hemispheric political order, will unavoidably generate extensive economic, social, and political unrest that will threaten the financial establishment’s power.

Even dumbed-down Americans will not long suffer conditions of depression akin to those of the 1930s, let alone South American levels of inflation as well. Desperate people will ask questions and assign blame. Perhaps not just a few will abandon debt currency altogether and substitute silver and gold as their media of exchange. They and others will conclude that the Federal Reserve System is unconstitutional — and therefore that its operations are arguably a complex of criminal offenses. (See 18 U.S.C. §§ 241 and 242.)

Many will realize that the establishment’s scheme for replacing Federal Reserve Notes with a supra-national currency is a political crime on a more stupendous scale yet, because it depends upon destroying both the Constitution and the Declaration of Independence. Then an aroused people will take political action against the institutions and individuals responsible for foisting the funny-money scheme on their country.

On the other side, the establishment will not be idle. It will do anything and everything possible to maintain its position. Obviously the Constitution and the Declaration of Independence will be expendable, because the establishment has been trying to whittle away the former on a piece-by-piece basis over the years, and intends to do away with the latter at one fell swoop in the near future. So this country, as an independent nation, will be expendable too. And if this country, why not the freedom and prosperity of common Americans as well?

Will ordinary Americans — at least 80 to 90 million of whom are armed — meekly put up with a program aimed at their own country’s assisted suicide? Why should they, when they have nothing to lose economically or politically? If they refuse to knuckle under, the establishment’s only recourse will be to attempt to lock down the whole country under a para-militarized police state, perhaps with the assistance of “peacekeepers” from Canada and Mexico (for the employment of whom negotiations are apparently already in progress).

That is why careful observers conclude that the paranoia being generated by politicians and the big media over “homeland security” — and the frenetic para-militarization of law-enforcement agencies at the national, state, and even local levels in the name of “homeland security” — are not caused by or aimed at foreign “terrorists” at all, but instead target ordinary Americans in their own home towns.

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The establishment is preparing to force justifiably angry Americans into line when its financial house of cards comes tumbling down, either in a controlled demolition or otherwise.

Americans will not be the only victims of such repression. The establishment must prevent other peoples, in other parts of the world, from jumping off the financial treadmill of political currency. That will require the use not only of economic and political pressure, but also — indeed, especially — of military coercion. For the provision of which the establishment will attempt to force common Americans to pay, and to send their sons and even their daughters off to fight, die, and be maimed and sickened in foreign lands.

Little good, then, will it do for an ounce of gold to soar to $2,000, $3,000, or higher — and for silver to increase in value proportionately too — if the ultimate consequences are a police state in America, then a supra-national regime replacing the United States, accompanied by endless military conflicts throughout the world.

In the grand scheme of things, gold and silver are far less important as economic investments or hedges against hyperinflation or depression than as guarantors of individual freedom — and then to the fullest extent only when they are actually used as media of exchange throughout society. Silver and gold as currencies supply the foundation necessary for economic democracy and limited government; whereas fiat currencies inevitably function as the tools of fascism, socialism, and every other form of financial imperialism.

Thus, the fight over gold and silver as media of exchange is about more than mere money, let alone making money. For it is a fight with only two possible outcomes: either control of their own lives by the people themselves, or control of the people and their lives by political and economic elitists. To achieve the first and avoid the second no price will prove too great to pay."

An index of Dr. Edwin Vieira's extensive articles can be found here: www.newswithviews.com/Vieira/edwinA.htm

Attached, a worthy endeavor and consideration for conscientious Constitutional advocates, and sincere freedom-,

justice-, and truth-seeking, self-determined free-agents of the World:

US Constitution and Money (Corruption and Decline) by Michael Rozeff

An academic study of Pieces of Eight: The Monetary Powers and Disabilities of the U.S. Constitution by Dr. Edwin Vieira, Jr.

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Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution (Dr. Edwin Vieira, Jr.; J.D., Ph.D.)

Amazon Book Review

Dr. Edwin Vieira is the most un-Harvard-lawyer-like Harvard lawyer you will ever meet. The "Dr." comes from his Ph.D. in chemistry from the same institution, which he earned a few years before he went back and got his J.D. He is among the foremost Constitutional scholars in the U.S., and the undisputed expert on the history and Constitutional Law of Money and Banking.

If you really want to learn something about American History, the History of Money, or the devolution over the past 150 years of what passes for 'Law' in these United States, I cannot recommend this book highly enough. Pieces of Eight is an exhaustive, detailed, and copiously footnoted (but highly readable, and routinely fascinating) compilation, synthesis, and exegesis of the history and Constitutional Law (and un-Constitutional 'law'!) of money and banking in the U.S. and is the result of a lifetime of research by a tenacious, literate, and scary-smart dude who is 3 for 4 in front of the Supreme Court.

If you want to know what the Framers of the Constitution really knew about money -- actually, quite a lot, certainly MUCH more than our purported "statesmen" today -- and why they put VERY specific language in the Constitution to ensure the proper rôle of money and banking consistent with a “free” Society, this book lays it out in stark, clear terms. In particular, if you want the definitive, airtight (and sordid) answers to politically incorrect questions such as "Why has nobody ever challenged the clearly unconstitutional Fed's constitutionality in court?”, this book is the only place you're going to find them.

As Dr. Vieira mentions in his recent announcement at the gata.org website, the first printing came along at a time when our monetary, economic, and political situation was only marginally less dire than it is today, but even so, marginally enough that Pieces of Eight received less notice at the time than it so overwhelmingly deserves. In the intervening time, the book has begun to become recognized, and our situation has deteriorated to the point at which even the most obtuse among us have begun to sense that something is deeply, deeply, wrong, even if they can't put their finger on what it is. Pieces of Eight nails the source of the wrongness indelibly to the wall. In

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the words of an Amazon review appearing as of this writing: "Reading the last few chapters of this the 2d edition released in 2002 is like reading prophecy about the economic situation that the US is experiencing in 2009."

People who know me well know I'm definitely not one to go around spouting Bible verses, but in this case, one sticks out -- Hosea 4:6 "My people are destroyed for lack of knowledge."

Dr. Vieira is taking the risk that there are a sufficient number of people out there who care enough about our Republic to take the effort to learn what TRULY went wrong, and how to fix it. If there are not, and the free-market of ideas (what little is left of it and the 1st Amendment, anyway) does not choose to support it, then we are all truly, utterly, and completely screwed.

Is that the case? Or will you do what is necessary, NOW, to read this book, and ensure that this powerful "sword of knowledge" does not remain sheathed?

Ø Source: www.amazon.com/Pieces-Eight-Monetary-Disabilities-

Constitution/dp/0967175917/ref=sr_1_1?ie=UTF8&qid=1423907131&sr=8-1&keywords=vieira+pieces+eight

Conclusion (from The Origins of the Federal Reserve by Prof. Murray Rothbard)

“The financial elites of this country, notably the Morgan, Rockefeller, and Kuhn,

Loeb interests, were responsible for putting through the Federal Reserve System, as

a governmentally created and sanctioned cartel device to enable the nation’s banks

to inflate the money supply in a coordinated fashion, without suffering quick

retribution from depositors or noteholders demanding cash. Recent researchers,

however, have also highlighted the vital supporting role of the growing number of

technocratic experts and academics, who were happy to lend the patina of their

allegedly scientific expertise to the elites’ drive for a central bank. To achieve a

regime of big government and government control, power elites cannot achieve their

goal of privilege through statism without the vital legitimizing support of the

supposedly disinterested experts and the professoriate. To achieve the Leviathan

state, interests seeking special privilege, and intellectuals offering scholarship and

ideology, must work hand in hand.”

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"Ignorance may be bliss for those who are ignorant, but for everybody else around them – it’s hell."

Source: US Constitution and Money (Corruption and Decline) (by Michael Rozeff) (Attached)

(An academic summary of 'Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution' by Dr. E. Vieira, Jr.)

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Tragedy and Hope 

A History of Banking and Money by Carroll Quigley  

 

"The powers of financial capitalism had [a] far‐reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences."    ‐‐ Quote from Caroll Quigley's Tragedy and Hope, Chapter 20  

 

Carroll Quigley was a professor of history at Georgetown University from 1941 to 1976. He also taughtat Princeton and at Harvard, and lectured at the Brookings Institution. He was a frequent lecturer at theU.S. Naval Weapons Laboratory, the Foreign Service Institute, and the Naval College at Norfolk, Virginia. In 1958, he  served as a  consultant  to  the Congressional Select Committee which  set up  the NationalSpace  Agency.  Below  are  key  excerpts  on  the  history  of  money  and  banking  from  Prof.  Quigley'smasterpiece Tragedy and Hope: A History of the World in Our Time. 

 

Note: The below excerpts are taken from chapters 5, 9, 20, 65, and 77 of Tragedy and Hope, with a focus on Prof. Quigley's excellent discussion of the role of money and banking  in world history. This  is a 10‐page summary. To go directly to a more in‐depth 40‐page summary, click here.  

 

 

Chapter 5—European Economic Developments 

 

Commercial Capitalism 

Western Civilization is the richest and most powerful social organization ever made by man. One reasonfor this success has been its economic organization, [which] has passed through six successive stages, ofwhich  at  least  four  are  called  "capitalism."  Each  stage  created  the  conditions which  tended  to bringabout the next stage.  

The  [first  stage] of  self‐sufficient agrarian units  (manors) was  in a  society organized  so  that  its upperranks—the lords, lay and ecclesiastical—found their desires for necessities so well met that they soughtto  exchange  their  surpluses  of  necessities  for  luxuries  of  remote  origin.  This  gave  rise  to  a  trade  in foreign  luxuries  (spices,  fine  textiles,  fine  metals)  which  was  the  first  evidence  of  the  stage  ofcommercial capitalism. In this second stage, mercantile profits and widening markets created a demandfor textiles and other goods which could be met only by application of power to production.  

This gave the third stage: industrial capitalism. The stage of industrial capitalism soon gave rise to such

an  insatiable demand  for heavy  fixed capital,  like  railroad  lines, steel mills, shipyards, and so on,  that these investments could not be financed from the profits and private fortunes of individual proprietors.New instruments for financing industry came into existence in the form of limited‐liability corporations and investment banks. These were soon in a position to control the chief parts of the industrial system,since they provided capital to it.  

This  gave  rise  to  financial  capitalism.  The  control  of  financial  capitalism was  used  to  integrate  theindustrial  system  into  ever‐larger  units  with  interlinking  financial  controls.  This  made  possible  a reduction of competition with a resulting  increase  in profits. As a result,  the  industrial system soonfound  that  it  was  again  able  to  finance  its  own  expansion  from  its  own  profits,  and,  with  thisachievement, financial controls were weakened, and the stage of monopoly capitalism arrived.  

In  this  fifth  stage, great  industrial units, working  together either directly or  through cartels and  tradeassociations, were  in a position to exploit the majority of the people. The result was a great economic crisis which soon developed into a struggle for control of the state—the minority hoping to use political power to defend their privileged position, the majority hoping to use the state to curtail the power andprivileges of the minority. This dualist struggle dwindled with the rise of economic and social pluralismafter 1945. 

 

The Primary Goal of Capitalism 

Capitalism  provides  very  powerful motivations  for  economic  activity  because  it  associates  economicmotivations so closely with self‐interest. But this same feature, which is a source of strength in providingeconomic motivation through the pursuit of profits, is also a source of weakness owing to the fact thatso  self‐centered  a  motivation  contributes  very  readily  to  a  loss  of  economic  coordination.  Each individual, just because he is so powerfully motivated by self‐interest, easily loses sight of the role which his own activities play  in the economic system as a whole, and tends to act as  if his activities were the whole, with inevitable injury to that whole.  

Capitalism,  because  it  seeks  profits  as  its  primary  goal,  is  never  primarily  seeking  to  achieveprosperity,  high  production,  high  consumption,  political  power,  patriotic  improvement,  or  moraluplift. Any of these may be achieved under capitalism, and any (or all) of them may he sacrificed andlost under  capitalism, depending on  this  relationship  to  the primary  goal of  capitalist activity—the pursuit  of  profits.  During  the  nine‐hundred‐year  history  of  capitalism,  it  has,  at  various  times, contributed both to the achievement and to the destruction of these other social goals. 

[The]  stage  of  commercial  capitalism  became  institutionalized  into  a  restrictive  system,  sometimescalled "mercantilism," in which merchants sought to gain profits, not from the movements of goods butfrom restricting the movements of goods. Thus the pursuit of profits, which had earlier led to increasedprosperity  by  increasing  trade  and  production,  became  a  restriction  on  both  trade  and  production, because profit became an end in itself rather than an accessory mechanism in the economic system as awhole. 

In the course of time, however, some merchants began to shift their attention from the goods aspect ofcommercial  interchange  to  the other, monetary, side of  the exchange. They began  to accumulate  theprofits of these transactions, and became increasingly concerned, not with the shipment and exchangeof goods, but with  the  shipment and exchange of moneys.  In  time  they became  concerned with  the

lending of money to merchants to finance their ships and their activities, advancing money for both, athigh interest rates, secured by claims on ships or goods as collateral for repayment. 

 

The Operations of Banking Were Concealed So They Appeared Difficult to Master 

In sum, specialization of economic activities, by breaking up the economic process, had made it possiblefor people to concentrate on one portion of the process and, by maximizing that portion, to jeopardizethe rest. The process was not only broken up into producers, exchangers, and consumers but there werealso  two  kinds  of  exchangers  (one  concerned  with  goods,  the  other  with  money),  with  almostantithetical,  short‐term,  aims.  The  problems which  inevitably  arose  could  be  solved  and  the  systemreformed only by reference to the system as a whole.  

Unfortunately,  however,  three  parts  of  the  system,  concerned  with  the  production,  transfer,  andconsumption of goods, were concrete and clearly visible so that almost anyone could grasp them simplyby  examining  them,  while  the  operations  of  banking  and  finance were  concealed,  scattered,  andabstract  so  that  they  appeared  to many  to  be  difficult.  To  add  to  this,  bankers  themselves  dideverything  they  could  to make  their activities more  secret and more esoteric. Their activities were reflected in mysterious marks in ledgers which were never opened to the curious outsider. 

In  the  course of  time  the  central  fact of  the  developing  economic  system,  the  relationship betweengoods and money, became clear, at least to bankers. This relationship, the price system, depended uponfive things: the supply and the demand for goods, the supply and the demand for money, and the speedof exchange between money and goods.  

An increase in three of these (demand for goods, supply of money, speed of circulation) would move the prices of goods up and the value of money down. This inflation was objectionable to bankers, althoughdesirable to producers and merchants. On the other hand, a decrease in the same three items would bedeflationary and would please bankers, worry producers and merchants, and delight consumers  (whoobtained more goods  for  less money). The other  factors worked  in  the opposite direction,  so  that anincrease in them (supply of goods, demand for money, and slowness of circulation or exchange) would be deflationary [and vice versa]. 

Such changes of prices, either inflationary or deflationary, have been major forces in history for the lastsix centuries at  least. Over that  long period, their power to modify men's  lives and human history has been increasing. 

 

Bankers Obsessed With Maintaining Value of Money 

Rising prices benefit debtors and  injure creditors, while  falling prices do  the opposite. A debtor calledupon to pay a debt at a time when prices are higher than when he contracted the debt must yield up less goods and services than he obtained at the earlier date, on a  lower price  level when he borrowedthe money. A creditor, such as a bank, which has lent money—equivalent to a certain quantity of goods and services—on one price level, gets back the same amount of money—but a smaller quantity of goods and  services—when  repayment  comes at a higher price  level, because  the money  repaid  is  then  lessvaluable.  

This  is why bankers, as creditors  in money terms, have been obsessed with maintaining the value of money,  although  the  reason  they have  traditionally  given  for  this obsession—that  "sound money" maintains "business confidence"—has been propagandist rather than accurate. 

Hundreds of years ago, bankers began to specialize, with the richer and more influential ones associatedincreasingly with  foreign  trade  and  foreign‐exchange  transactions.  Since  these were  richer  and morecosmopolitan and  increasingly concerned with questions of political  significance,  such as  stability and debasement of currencies, war and peace, dynastic marriages, and worldwide trading monopolies, theybecame the financiers and financial advisers of governments.  

Moreover,  since  their  relationships with  governments were  always  in monetary  terms  and  not  real terms,  and  since  they were  always  obsessed with  the  stability  of monetary  exchanges  between  onecountry's money  and  another,  they used  their power  and  influence  to do  two  things:  (1)  to  get  allmoney and debts expressed in terms of a strictly limited commodity—ultimately gold; and (2) to get all monetary matters out of  the control of governments and political authority, on  the ground  thatthey would be handled better by private banking interests. 

 

Bankers Create Money Out of Nothing 

For generations men had sought  to avoid  the one drawback of gold,  its heaviness, by using pieces ofpaper  to  represent  specific  pieces  of  gold.  We  call  such  pieces  of  paper  gold  certificates.  Such  acertificate  entitles  its  bearer  to  exchange  it  for  its  piece  of  gold  on  demand,  but  in  view  of  the convenience of paper, only a small fraction of certificate holders ever did make such demands. 

It early became clear that gold need be held on hand only to the amount needed to cover the fraction ofcertificates  likely  to  be  presented  for  payment;  accordingly,  the  rest  of  the  gold  could  be  used  forbusiness purposes, or, what amounts to the same thing, a volume of certificates could be issued greaterthan  the  volume of  gold  reserved  for payment of demands  against  them.  Such  an  excess  volume of paper claims against reserves we now call bank notes. 

In effect, this creation of paper claims greater than the reserves available means that bankers werecreating money out of nothing. The same thing could be done in another way, not by note‐issuing banks but by deposit banks. Deposit bankers discovered  that orders  and  checks drawn  against deposits bydepositors and given to third persons were often not cashed by the  latter but were deposited to theirown accounts. Thus  there were no actual movements of  funds, and payments were made  simply bybookkeeping transactions on the accounts.  

Accordingly,  it was necessary  for  the banker  to keep on hand  in actual money  ... no more  than  thefraction of deposits likely to be drawn upon and cashed; the rest could be used for loans, and if these loans were made by creating a deposit for the borrower, who in turn would draw checks upon it ratherthan withdraw  it  in money,  such  "created  deposits"  or  loans  could  also  be  covered  adequately  byretaining reserves to only a fraction of their value.  

 

The Dynasties of International Bankers 

The  merchant  bankers  of  London  ...  brought  into  their  financial  network  the  provincial  banking

centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these  into a single financial system on an  international scale which manipulated the quantity andflow  of money  so  that  they were  able  to  influence,  if  not  control,  governments  on  one  side  andindustries on the other.  

The men who did this, looking backward toward the period of dynastic monarchy in which they had theirown roots, aspired to establish dynasties of international bankers and were at least as successful at thisas were many  of  the  dynastic  political  rulers.  The  greatest  of  these  dynasties,  of  course, were  the descendants of Meyer Amschel Rothschild  (1743‐1812) of  Frankfort, whose male descendants,  for at least two generations, generally married first cousins or even nieces.  

In concentrating, as we must, on the financial or economic activities of  international bankers, we mustnot totally ignore their other attributes. They were, especially in later generations, cosmopolitan ratherthan nationalistic. They were usually highly civilized, cultured gentlemen, patrons of education and of the arts, so  that  today colleges, professorships, opera companies, symphonies,  libraries, and museumcollections still reflect their munificence. For these purposes they set a pattern of endowed foundationswhich still surround us today. 

 

Bankers Felt Politicians Could Not Be Trusted With the Monetary System 

The influence of financial capitalism and of the international bankers who created it was exercised bothon business and on governments, but could have done neither if it had not been able to persuade both these  to accept  two  "axioms" of  its own  ideology. Both of  these were based on  the assumption  thatpoliticians were too weak and too subject to temporary popular pressures to be trusted with control ofthe  money  system;  accordingly,  the  sanctity  of  all  values  and  the  soundness  of  money  must  beprotected  in  two ways: by basing  the value of money on gold and by allowing bankers  to control  thesupply of money. To do this  it was necessary to conceal, or even to mislead, both governments andpeople about the nature of money and its methods of operation. 

In most countries  the central bank was  surrounded closely by  the almost  invisible private  investmentbanking firms. These, like the planet Mercury, could hardly be seen in the dazzle emitted by the central bank which  they,  in  fact, often dominated.  Yet  a  close observer  could hardly  fail  to notice  the  closeprivate associations between these private, international bankers and the central bank itself. 

Two of the five factors which determined the value of money are the supply and the demand for money. The  supply  of money  in  a  single  country was  subject  to  no  centralized,  responsible  control  in mostcountries  over  recent  centuries.  Instead,  there  were  a  variety  of  controls  of  which  some  could  beinfluenced  by  bankers,  some  could  be  influenced  by  the  government,  and  some  could  hardly  beinfluenced by either.  

Central banks can usually vary the amount of money in circulation by "open market operations" or byinfluencing the discount rates of lesser banks. In open market operations, a central bank buys or sells government bonds in the open market. If it buys, it releases money into the economic system; if it sellsit  reduces  the amount of money  in  the community. The change  is greater  than  the price paid  for  the securities [due to the fractional reserve system].  

Central banks can also change the quantity of money by influencing the credit policies of other banks.

This  can  be  done  by  various  methods,  such  as  changing  the  re‐discount  rate  or  changing  reserve requirements. By changing the re‐discount rate, we mean the  interest rate which central banks chargelesser banks for loans. By raising the re‐discount rate the central bank forces the lesser bank to raise its discount rate  in order to operate at a profit; such a raise  in  interest rates tends to reduce the demandfor credit and thus the amount of deposits (money). Lowering the re‐discount rate permits an opposite result. 

The powers of governments over  the quantity of money are of various kinds, and  include  (a)  control over a central bank, (b) control over public taxation, and (c) control over public spending. The control of governments over central banks varies greatly from one country to another, but on the whole has been increasing.  Since  most  central  banks  have  been  (technically)  private  institutions,  this  control  isfrequently based on custom rather than on law. 

The powers of the government over the quantity of money in the community exercised through taxation and public spending are largely independent of banking control. Taxation tends to reduce the amount ofmoney  in a community and  is usually a deflationary force; government spending tends to  increase theamount  of  money  in  a  community  and  is  usually  an  inflationary  force.  The  total  effects  of  agovernment's policy will depend on which item is greater. An unbalanced budget will be inflationary; abudget with a surplus will be deflationary. 

 

Money Power—Controlled by International Investment Bankers—Dominates Business and Government 

On  the whole,  in  the  period  up  to  1931,  bankers,  especially  the Money  Power  controlled  by  theinternational investment bankers, were able to dominate both business and government. They coulddominate business, especially in activities and in areas where industry could not finance its own needsfor  capital, because  investment bankers had  the  ability  to  supply or  refuse  to  supply  such  capital.Thus,  Rothschild  interests  came  to  dominate  many  of  the  railroads  of  Europe,  while  Morgan dominated at least 26,000 miles of American railroads.  

Such bankers went further than this. In return for flotations of securities of industry, they took seats onthe boards of directors of industrial firms, as they had already done on commercial banks, savings banks, insurance  firms,  and  finance  companies.  From  these  lesser  institutions  they  funneled  capital  toenterprises  which  yielded  control  and  away  from  those  who  resisted.  These  firms  were  controlledthrough  interlocking  directorships,  holding  companies,  and  lesser  banks.  They  engineeredamalgamations and generally reduced competition, until by the early twentieth century many activitieswere so monopolized that they could raise their noncompetitive prices above costs to obtain sufficient profits to become self‐financing.  

But before that stage was reached a relatively small number of bankers were  in positions of  immenseinfluence  in European and American economic  life. As early as 1909, Walter Rathenau, who was  in aposition  to  know  (since  he  had  inherited  from  his  father  control  of  the  German  General  ElectricCompany and held scores of directorships himself), said, "Three hundred men, all of whom know oneanother, direct the economic destiny of Europe and choose their successors from among themselves." 

 

The Power of Investment Bankers Over Governments 

The power of  investment bankers over governments  rests on a number of  factors, of which  the mostsignificant, perhaps,  is the need of governments to  issue short‐term treasury bills as well as  long‐term government bonds. Just as businessmen go to commercial banks for current capital advances to smoothover  the  discrepancies  between  their  irregular  and  intermittent  incomes  and  their  periodic  andpersistent outgoes, so a government has to go to merchant bankers (or institutions controlled by them)to tide over the shallow places caused by irregular tax receipts.  

As experts  in government bonds,  the  international bankers not only handled  the necessary advances,but  provided  advice  to  government  officials  and,  on many  occasions,  placed  their  own members  inofficial posts for varied periods to deal with special problems. This is so widely accepted even today thatin  1961  a  Republican  investment  banker  became  Secretary  of  the  Treasury  in  a  Democratic Administration in Washington without significant comment from any direction. 

Naturally, the  influence of bankers over governments during the age of financial capitalism (roughly1850‐1931) was not something about which anyone talked freely, but it has been admitted frequently enough by those on the  inside, especially  in England.  In 1852 Gladstone, chancellor of the Exchequer,declared, "The hinge of the whole situation was this: the government itself was not to be a substantivepower  in matters  of  Finance,  but was  to  leave  the Money  Power  supreme  and  unquestioned."  OnSeptember 26, 1921, The Financial Times wrote, "Half a dozen men at the top of the Big Five Banks couldupset the whole fabric of government finance by refraining from renewing Treasury Bills." 

 

Montagu Norman and J. P. Morgan Dominate the Financial World 

In  addition  to  their power over  government based on  government  financing  and personal  influence,bankers  could  steer  governments  in ways  they wished  them  to  go  by  other  pressures.  Since most government officials felt ignorant of finance, they sought advice from bankers whom they consideredto be experts in the field. The history of the last century shows, as we shall see later, that the advicegiven to governments by bankers, like the advice they gave to industrialists, was consistently good forbankers, but was often disastrous for governments, businessmen, and the people generally.  

Such advice could be enforced if necessary by manipulation of exchanges, gold flows, discount rates, and even  levels of business activity. The powers of these  international bankers reached their peak  inthe last decade of their supremacy, 1919‐1931, when Montagu Norman and J. P. Morgan dominated notonly the financial world but international relations and other matters as well.  

On November  I  l, 1927,  the Wall Street  Journal called Mr. Norman "the currency dictator of Europe."This was admitted by Mr. Norman himself before the Court of the Bank on March 21, 1930, and beforethe Macmillan Committee of the House of Commons five days later. On one occasion ... Mr. Norman isreported  to have said, "I hold  the hegemony of  the world."  It might be added  that Governor Normanrarely acted in major world problems without consulting with J. P. Morgan's representatives. 

 

Chapter 9—The British Imperial Crisis 

 

Britain  acquired  the  world's  greatest  empire  because  it  possessed  certain  advantages  which  other

countries lacked. We mention three of these advantages: (1) that it was an island, (2) that it was in theAtlantic,  and  (3)  that  its  social  traditions  at  home  produced  the  will  and  the  talents  for  imperialacquisition. 

 

Cecil Rhodes Organized a Secret Society in 1891 

[Cecil] Rhodes  (1853‐1902) feverishly exploited the diamond and goldfields of South Africa, rose to be prime  minister  of  the  Cape  Colony  (1890‐1896),  contributed  money  to  political  parties,  controlledparliamentary seats both  in England and  in South Africa, and sought  to win a strip of British  territoryacross Africa  from  the Cape of Good Hope  to Egypt and  to  join  these  two extremes  together with a telegraph line and ultimately with a Cape‐to‐Cairo Railway.  

Rhodes inspired devoted support for his goals from others in South Africa and in England. With financialsupport from Lord Rothschild and Alfred Beit, he was able to monopolize the diamond mines of SouthAfrica as De Beers Consolidated Mines and to build up a great gold mining enterprise as ConsolidatedGold Fields.  In the middle 1890's Rhodes had a personal  income of at  least a million pounds sterling a year [equivalent to about $100 million a year  in current U.S. dollars] which was spent so freely for hismysterious purposes that he was usually overdrawn on his account.  

[An]  association was  formally  established  on  February  5,  1891, when  Rhodes  and  [William]  Stead organized a secret society of which Rhodes had been dreaming for sixteen years. In this secret society Rhodes was to be leader; Stead, Brett, and Milner were to form an executive committee; Arthur (Lord)Balfour,  (Sir) Harry  Johnston,  Lord Rothschild, Albert  (Lord) Grey, and others were  listed as potentialmembers of a "Circle of  Initiates"; while there was  to be an outer circle known as the "Association ofHelpers" (later organized by Milner as the Round Table organization).  

In 1919 [Rhodes' followers] founded the Royal Institute of International Affairs (Chatham House) forwhich the chief financial supporters were Sir Abe Bailey and the Astor family (owners of The Times). Similar  Institutes of  International Affairs were established  in  the chief British dominions and  in  the United States  (where  it  is known as  the Council on Foreign Relations)  in  the period 1919‐1927. The power and influence of this Rhodes‐Milner group in British imperial affairs and in foreign policy since1889, although not widely recognized, can hardly be exaggerated. We might mention as an examplethat this group dominated The Times from 1890 to 1912, and has controlled it completely since 1912(except for the years 1919‐1922). 

In  spite  of  the  terms  of  the  Rhodes wills,  Rhodes  himself was  not  a  racist.  Nor was  he  a  politicaldemocrat. He worked as easily and as closely with Jews, black natives, or Boers as he did with English.His greatest weakness rested on the fact that his passionate attachment to his goals made him overly tolerant in regard to methods. He did not hesitate to use either bribery or force to attain his ends if hejudged they would be effective. 

 

Chapter 20—The Period of Stabilization, 1922‐1930 

 

America Becomes the World's Greatest Creditor 

By 1914 Britain's supremacy as financial center, as commercial market, as creditor, and as merchant

shipper was being threatened. At this critical stage  in Britain's development, the World War occurred.This had a double result as far as this subject is concerned. It forced Britain to postpone indefinitely any reform of her industrial system to adjust it to more modern trends; and it speeded up the developmentof these trends so that what might have occurred in twenty years was done instead in five.  

The war changed the position of the United States  in respect to the rest of the world from that of adebtor  owing  about  $3  billion  to  that  of  a  creditor  owed  $4  billion.  This  does  not  includeintergovernmental debts of about $10 billion owed to the United States as a result of the war. At the same time, Britain's position changed from a creditor owed about $18 billion to a creditor owed about$13.5 billion. In addition, Britain was owed about $8 billion in war debts from her Allies ... and owed tothe United  States war debts of well over $54 billion. Most of  these war debts and  reparations weresharply reduced after 1920, but the net result for Britain was a drastic change in her position in respectto the United States. 

The basic economic organization of the world was modified in other ways. The more backward areas of Europe and  the world had been  industrialized  to a great degree and were unwilling  to  fall back  to aposition  in which they would obtain  industrial products from Britain, Germany, or the United States  inreturn for their raw materials and food. This refusal was made more painful for both sides by the factthat  these backward areas had  increased  their outputs of  raw materials and  food  so greatly  that  thetotal could hardly have been sold even if they had been willing to buy all their industrial products from their prewar sources.  

The  result was a  situation where all countries were eager  to  sell and  reluctant  to buy, and  sought  toachieve these mutually irreconcilable ends by setting up subsidies and bounties on exports, tariffs, and restrictions on imports, with disastrous results on world trade.  

The  only  sensible  solution  to  this  problem  of  excessive  productive  capacity  would  have  been  asubstantial  rise  in  domestic  standards  of  living,  but  this  would  have  required  a  fundamental reapportionment of the national income so that claims to the product of the excess capacity would goto those masses eager to consume, rather than continue to go to the minority desiring to save. Such areform was rejected by the ruling groups  in both "advanced" and "backward" countries, so that thissolution was reached only to a relatively small degree in a relatively few countries. 

The system of international payments which had worked ... before 1914 worked only haltingly after thatdate, and practically ceased to work at all after 1930. The chief cause of these factors was that neithergoods nor money obeyed purely economic forces and did not move as formerly to the areas  in whicheach was most  valuable. The  chief  result was a  complete mal‐distribution of gold, a  condition which became acute after 1928 and which by 1933 had forced most countries off the gold standard. 

 Money Power Seeks to Create a World System of Financial Control in Private Hands Able to Dominate Every Nation on Earth 

The powers of financial capitalism had [a] far‐reaching aim, nothing less than to create a world systemof  financial  control  in private hands able  to dominate  the political  system of each  country and  theeconomy  of  the world  as  a whole.  This  system was  to  be  controlled  in  a  feudalist  fashion  by  the central  banks  of  the world  acting  in  concert,  by  secret  agreements  arrived  at  in  frequent  private

meetings and conferences. The apex of the system was to be the Bank for International Settlements inBasel,  Switzerland,  a private bank  owned  and  controlled  by  the world's  central banks which werethemselves private corporations.  

Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strongof the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought  to dominate  its government by  its ability  to control Treasury  loans,  to manipulateforeign  exchanges,  to  influence  the  level  of  economic  activity  in  the  country,  and  to  influencecooperative politicians by subsequent economic rewards in the business world. 

 

Norman Was the Commander‐in‐Chief of the World System of Banking Control 

The commander  in chief of the world system of banking control was Montagu Norman, Governor ofthe Bank of England, who was built up by the private bankers to a position where he was regarded asan oracle  in all matters of government and business.  In  January, 1924, Reginald McKenna, who had been chancellor of the Exchequer  in 1915‐1916, as chairman of the board of the Midland Bank told  its stockholders: "I am afraid the ordinary citizen will not like to be told that the banks can, and do, createmoney.... And they who control the credit of the nation direct the policy of Governments and hold in thehollow of their hands the destiny of the people." 

Montagu Norman's position may be gathered from the fact that his predecessors  in the governorship,almost a hundred of  them, had served  two‐year  terms,  increased  rarely  in  time of crisis. But Normanheld the position for twenty‐four years (1920‐1944). Norman was a strange man whose mental outlook was one of successfully suppressed hysteria or even paranoia. He had no use  for governments andfeared  democracy.  Both  of  these  seemed  to  him  to  be  threats  to  private  banking.  Strong‐willed, tireless, and  ruthless, he viewed his  life as a kind of cloak‐and‐dagger struggle with  the  forces of  ... [sound] money. 

Norman had a devoted colleague in Benjamin Strong, the first governor of the Federal Reserve Bankof New York.  Strong owed his  career  to  the  favor of  the Morgan Bank. He became  governor of  theFederal Reserve Bank of New York as the joint nominee of Morgan and of Kuhn, Loeb, and Company in1914. Two years  later, Strong met Norman for the first time, and they at once made an agreement to work in cooperation for the financial practices they both revered. 

In the 1920's, they were determined to use the  financial power of Britain and of the United States  toforce all the major countries of the world to go on the gold standard and to operate it through central banks  free  from  all  political  control,  with  all  questions  of  international  finance  to  be  settled  byagreements by such central banks without interference from governments. 

 

Norman and Strong Were Mere Agents of the Powerful Bankers Who Remained Behind the Scenes and Operated in Secret 

It must not be  felt that these heads of the world's chief central banks were themselves substantivepowers  in  world  finance.  They  were  not.  Rather,  they  were  the  technicians  and  agents  of  thedominant  investment bankers of  their own  countries, who had  raised  them up and were perfectlycapable of throwing them down. The substantive financial powers of the world were in the hands of

these  investment  bankers  who  remained  largely  behind  the  scenes  in  their  own  unincorporated private banks.  These  formed  a  system of  international  cooperation  and national dominance whichwas more private, more powerful, and more secret than that of their agents in the central banks.  

This  dominance  of  investment  bankers  was  based  on  their  control  over  the  flows  of  credit  andinvestment funds  in their own countries and throughout the world. They could dominate the financialand industrial systems of their own countries by their influence over the flow of current funds throughbank  loans,  the  discount  rate,  and  the  re‐discounting  of  commercial  debts.  They  could  dominategovernments by their control over ... government loans and the play of the international exchanges.  

In this system the Rothschilds had been preeminent during much of the nineteenth century, but, at the end of  that century,  they were being replaced by  J. P. Morgan whose central office was  in New York,although  it was always operated as  if  it were  in  London  (where  it had,  indeed, originated as GeorgePeabody and Company  in 1838). The growth of  financial  capitalism made possible a  centralization ofworld  economic  control  and  a use of  this power  for  the direct benefit of  financiers  and  the  indirectinjury of all other economic groups.  

 

Money Power Creates an Ingenious Plan to Create and Control Giant Monopolies 

[Financial  capitalists  eventually]  sought  to  sever  control  from  ownership  of  securities,  believing  theycould hold the former and relinquish the latter. On the industrial side, they sought to advance monopolyand restrict production, thus keeping prices up and their security holdings liquid. 

The efforts of financiers to separate ownership from control were aided by the great capital demands ofmodern  industry.  Such  demands  for  capital  made  necessary  the  corporation  form  of  business organization. This  inevitably brings together the capital owned by a  large number of persons to createan enterprise controlled by a  small number of persons. The  financiers did all  they could  to make  theformer number as  large as possible and the  latter number as small as possible. The result of this was that larger and larger aggregates of wealth fell into the control of smaller and smaller groups of men. 

While  financial  capitalism  was  thus  weaving  the  intricate  pattern  of  modern  corporation  law  and practice on one side,  it was establishing monopolies and cartels on  the other. Both helped  to dig  thegrave  of  financial  capitalism  and  pass  the  reins  of  economic  control  on  to  the  newer  monopolycapitalism. On one side, the financiers freed the controllers of business from the owners of business, buton the other side, this concentration gave rise to monopoly conditions which freed the controllers fromthe banks. 

 

Chapter 65—American Confusions, 1945‐1950 

 

There does exist, and has existed for a generation, an international Anglophile network. I know of theoperations  of  this  network  because  I  have  studied  it  for  twenty  years  and was  permitted  for  twoyears, in the early 1960's, to examine its papers and secret records. I have no aversion to it or to most of  its  aims  and have,  for much of my  life, been  close  to  it  and  to many of  its  instruments.  I haveobjected, both in the past and recently, to a few of its policies ... but in general my chief difference ofopinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be

known. 

 

Chapter 77—Conclusion 

 

The hope of the twentieth century rests on its recognition that war and depression are man‐made and needless. They can be avoided  in the future by turning from  ... nineteenth‐century characteristics  ... and  going  back  to  other  characteristics  that  our Western  society  has  always  regarded  as  virtues:generosity,  compassion,  cooperation,  rationality,  and  foresight,  and  finding  an  increased  role  inhuman life for love, spirituality, charity, and self‐discipline.  

 

 

 Note: The above  is a 10‐page summary. To go to a more in‐depth 40‐page summary, click here. A full copy of Carroll Quigley's Tragedy and Hope can be  found online by clicking here or here. To purchase this landmark book (1,348 pages), click here. For two other short, excellent summaries which touch on the power of the banking elite, click here and here. For eye‐opening news articles filled with revealing information about powerful secret societies, click here.  

 

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