TRAGEDY AND HOPE Chapter 7 & 8 Analysis
* Turmel analysis has indented paragraphs, Quigley's text does not. * R&R = Rothschilds and Rockefellers * to mort = to murder by poverty of life-support tickets
JCT: I'm going coin a new verb for our discussions: to "mort" from the word "mort-gage." This would mean to cut off someone's life- support tickets (money) until they were pushed to starvation or revolt. So instead of saying that Rothschilds and Rockefellers committed genocide by poverty on 15 million children last year, I'd say that R&R "morted" 15 million last year or 15 million were morted by R&R last year. In discussing recent history, there is just so much genocide of the poor by financial policies that we such action does need its own word.
CHAPTER VII: FINANCE, COMMERCIAL POLICY, AND BUSINESS POLICY 1897-1947
REFLATION AND INFLATION 1897-1925 page 315 A real understanding of the economic history of twentieth century Europe is imperative to any understanding of the events of the period. Such an understanding will require a study of the history of finance. JCT: That we can't find any other recent historians to say this indicates how important Quigley is to finding out about real history.
Page 316 The outbreak of war in 1914 showed these financial capitalists in their worst, narrow in outlook, ignorant and selfish, while proclaiming, as usual, their total devotion to the social good. They generally agreed that war could not go on for more than six to ten months because of the "limited financial resources" of the belligerents (by which they meant gold reserves). This idea reveals the fundamental misunderstanding of the nature and of money on the part of the very persons who were reputed to be experts on the subject. Wars are not fought with gold or even with money but by proper organization of real resources. JCT: Gee, because they didn't understand how credit could work to finance a war that would last 5 years, we accidentally stumbled into a war that profited them over 5 years. Though this could be true of the Professor Flahertys of the world who teach these falsehoods to their students while actually believing them themselves, it can't be true for the few higher bankers who understand the banking system as well as we who understand that once the gold runs out, the credit can finance everything even better than the gold ever could. We find that Quigley often repeats the theme of international bankers stumbling into such profitable wars accidentally, the only serious errors I've found in his work. If he were right that history if mostly accidental, then one would expect that the half the accidents might benefit us. Yet, that all the accidents always benefit the bankers must indicate that these are not accidental policies at all.
The attitudes of bankers were revealed most clearly in England, where every move was dictated by efforts to protect their own position and to profit from it rather than by considerations of economic mobilization for war or the welfare of the British people. War found the British banking system insolvent in the sense that its funds, created by the banking system for profit and rented out to the economic system to permit it to operate, could not be covered by the existing volume of gold reserves or collateral which could be liquidated rapidly. JCT: So we know that Quigley understands that money is created by the banking system for profit and rented out to the economic system to permit it to operate implying that they could choose not to permit the economic system to operate, as they often have done.
Accordingly,the bankers secretly devised a scheme by which their obligations could be met by fiat money (so-called Treasury Notes), but as soon as the crisis was over, they then insisted that the government must pay for the war without recourse to fiat money (which was always damned by the bankers as immoral) but by taxation and by borrowing at high interest rates from the bankers. JCT: Only in times of crisis, usually war or deprivation severe enough for the population to revolt, would the bankers not object too much to "Treasury Notes" interest-free which they call fiat money but then would insist that it be paid for with money created by the bankers and borrowed at high interest. What's interesting is that bankers' money is also "fiat money" though they never all it so. Just like Abraham Lincoln's Treasury Notes are created by the Treasury money plates and borrowed by the government interest-free to cover expenses, Bankers' Notes are created by bankers money plates and borrowed by the government at interest to cover those same expenses. There is no difference between the fiat money created by a government Treasury and the fiat money created by a group of private bankers except that in the case of government money, taxation need only recuperate the original principal of the loan while in the case of banker money, taxation needs to recuperate both the original principal of the loan and interest to pay private bankers. I've always felt that my four minute Plates poem taken from my Poem to the Queen in the Crucial Information section of my web site best explains the disadvantages of using bankers' fiat money compared to using government fiat money:
When you were little, did you ever dream of printing cash? Of filling up your wallet with some money in a flash? Creating money accurately means TO HAVE THE PLATES, The stamping of some paper into notes best demonstrates; Or stamping metal into coins; or blips computerized, Into your bank account deposits, checks now authorized. So whether paper, metal, volts of electricity, TO HAVE THE PLATES is printing money absolutely free.
Now if you printed to spend, the others would bewail, They'd call it counterfeiting and send you off to jail. But what if Crown would let you merely print it up to lend? With only what you could collect in interest to spend? If you could print and lend a thousand out at ten percent, You'd make a hundred interest on printing that you lent. But if you could print up and lend a million out you'd get, An extra hundred thousand dollars for your fee on debt!
If Crown stops using its own money plates and comes to you, A billion printed nets a hundred million revenue!! With everybody being taxed to pay you interest, Of all the scams in history, TO HAVE THE PLATES is best!!! Though never spending, only lending, riches do await, To all who with the plates become the loan-sharks to the state. And though to join the few who thusly profit, one might dream, Wake up to see we're all the victims of their greedy scheme.
While Crowns of old had ruled that "Treasury run money plates," Without the interest to middle-men at rip-off rates, Today most governments to banking industry have lost, Control of money plates so interest is now a cost. To service debt in ninety four, Canada's request, A hundred'n eighty billion dollars paid in interest. We're taxed over five hundred dollars each per month to pay, For interest to holders of our plates they gave away!!!
We now see the unjustly cost that makes our tax inflate, And only usury is what we must eliminate. We Abolitionists would get the plates back from the banks, Have Treasury create the money for printing charge and thanks.
JCT: And there you have the difference between what Quigley calls "orthodox finance" and "unorthodox finance." Orthodox finance which is lauded by the bankers is having the bankers create the fiat money and borrowing it from them and taxing everyone to pay them interest while unorthodox finance which is decried as inflationary by bankers is having the Treasury create the fiat money and borrowing it without having to tax anyone to pay interest. Of course, bankers eternally decry the inflationary impacts of Treasury fiat money while ignoring the impact of taxation for debt service while never decrying the same impacts of bank created fiat money giving rise to taxation for debt service. A great scam for those who can get the plates and be part of it. So whenever Quigley speaks of orthodox financial methods, he's talking about government borrowing interest-bearing fiat money from private plate-holders and when he speaks of unorthodox financial methods, he's talking about government borrowing interest-free fiat money from the public plate-holder. Though history is replete with examples of such interest-free unorthodox financing to permit full employment with debt service, the most recent example of unorthodox finance was the Argentinian provinces who, instead of taking their bonds to the bankers to borrow private fiat money to spend and then tax out with interest, printed up small denomination bonds to spend and tax out without interest. See http://turmelpress.com/np2.htm
The decision to use Treasury Notes to fulfill the bankers' liabilities was made on July 25, 1915 by Sir John Bradbury. The first Treasury Notes were run off the presses at Waterloo and Sons on July 28th. It was announced that the Treasury Notes, instead of gold, would be used for bank payments. The discount rate was raised at the Bank of England from 3% to 10% to prevent inflation, a figure taken merely because the traditional rule of the bank stated that a 10% bank rate would draw gold out of the ground itself. JCT: Notice that there were never any inflationary fears while bankers created the fiat money to put into circulation at interest and such fears were only raised when the Treasury did it to put into circulation interest-free. For those of you who have a copy of Pauline's first UK Trip report, you'll find a photocopy of a "Bradbury" provided by the Christian council for Monetary Justice in 1994 which wrote:
"On the other side of this sheet is an enlarged copy of the famous BRADBURY, one of #500 million Treasury Notes issued by Lloyd George as Chancellor at the outbreak of war in 1914 in order to prevent the banks and the currency from collapse. Why has no subsequent Government made similar use of its full power to create credit instead of letting the banks exercise this as a private monopoly for which they demand punitive interest from borrowers including national and local government? We are repeatedly told that the Treasury must obtain credit for Britain's social policies by either increasing taxes or borrowing at interest; but this is not so. Treasury Minister Anthony Nelson M.P. stated in a Treasury letter 47a/2dst.vd. of 22nd Feb 1993 to the Campaign for Monetary Reform that: "the Government can and does finance itself to a small extent by the issue of non-interest-bearing money; this is the aggregate known as M.0 (i.e. Cash), the stock of which is currently some #19.5 billion. The size of this stock is limited only by the demand for this form of money." This can be done on a reasonable yet far more significant scale to meet the human demand of the people for a proper social structure. Let the nation control the City of London, and not the City the Nation. Below is a copy of a Liverpool Corporation Promissory Note of 1793 also issued when there was a run on the banks. Its existence shows that stable credit has been successfully created by local as well as national governments and it should be again. JCT: Who knows how many other examples of government interest- free notes have been erased from economists' history books too? Every single instance, as far as I can tell. Other than Quigley, which is more a history book than an Economics book, can anyone cite any Economics books which mentions any unorthodox financial system? Funny that such an economic notion as unorthodox finance is only found in a history text and no economics texts, isn't it? It's these kind of 100% omissions that convince me of the existence of an invisible conspiracy of bankers no matter who wants laugh at the notion.
Page 317 At the outbreak of war, most of the belligerent countries suspended gold payments and accepted their bankers' advice that the proper way to pay for the war was by a combination of bank loans and taxation of consumption. The governments paid for the war by taxation, by fiat money, by borrowing from banks (which created credit for the purpose) and by borrowing from the people by selling them war bonds. Each of these methods had a different effect upon the two consequences of the war: inflation and public debt. a) Taxation gives no inflation and no debt. b) Fiat money gives inflation and no debt. JCT: Of course, Quigley has no idea about Inflation Shift B and doesn't seem to understand that fiat chips issued in exchange for new collateral does not cause inflation. Ask any casino cashier.
c) Bank credit gives inflation and debt. JCT: Even bank credit, if issued in exchange for collateral, does not cause inflation though the interest on the debt does cause inflation Shift B. So its' true we'll get inflation from bank credit, it's not due to the increase in money, inflation shift A, it's due to the interest on the debt, inflation shift B. But of course, since inflation does occur, we can understand why he'd attribute it to the increase in money since the shift B decrease in purchasable collateral was unknown to him and to today's economists.
d) Sales of bonds give no inflation but give debt. JCT: And the interest on such debt would cause inflation shift B so here, he's off base but this is not something that he has been able to empirically show, it only makes sense to him. Since there was no inflation shift A, increased money, he concludes there won't be any inflation, such conclusion not taking into account inflation shift B from the interest.
It would appear from this table that the best way to pay for the war would be by taxation and the worst way would be by bank credit. Probably the best way to finance war is a combination of the four methods. JCT: Actually, the best way is the way they were all forced to go when orthodox methods failed. Fiat money from the Treasury. Canada's Committee On Monetary & Economic Reform, COMER, continually harps on the fact that during the war, the Treasury created half the money and the banks the other half. Today, the Treasury creates 1% and the banks 99%. They want the Treasury to create more but not necessarily 100%. I don't care if banks or the Treasury create it as long as it is positive-feedback-free.
Page 318 In the period 1914-1918, the various belligerents used a mixture of these four methods but it was a mixture dictated by expediency and false theories so that at the end of the war all countries found themselves with both public debts and inflation. While the prices in most countries rose 200 to 300 percent and public debts rose 1000%, the financial leaders tried to keep up the pretense that the money was as valuable as it had ever been. For this reason, they did not openly abandon the gold standard. Instead, they suspended certain attributes of the gold standard. In most countries, payments in gold and export of gold were suspended but every effort was made to keep gold reserves up to a respectable percentage of notes. These attributes were achieved in some cases by deceptive methods. In Britain, the gold reserves against notes fell from 52% to 18% in the month of July 1914; then the situation was concealed, partly by moving assets of local banks into the Bank of England and using them as reserves for both, partly by issuing a new kind of notes (Currency Notes) which had no real reserve and little gold backing. JCT: With little consequence since the backing by gold is not what makes money valuable, it's the labor of people that you can buy with your money that is the true backing.
Page 320 As soon as the war was over, governments began to turn their attention to restoring the prewar financial system. Since the essential element was believed to be the gold standard, this movement was called "stabilization." JCT: Remember this word. Stabilizing meant making the gold of those who had gold worth more by taking more from the people who had no gold. It often turned into out-and-out death for the poor, henceforth to be called "morting."
Productive capacity in both agriculture and industry had been increased by the artificial demand of the war period to a degree far beyond the ability of normal domestic demand to buy the products. JCT: Food production had increased far beyond the ability to buy the products but not to eat them. Thus the famous Social Credit expression "Poverty amidst plenty." Lots of food but no money to buy it with.
The backwards areas had increased their outputs of raw materials and food so greatly that the total could hardly have been sold. JCT: Again, the limitation was on the sale, not on the availability. Thus the real tragedy of the 20th century where it is admitted that early on in the century, we already had the potential for life-support to provide abundance for all yet such abundance was denied the citizenry by creating a shortage of the tokens to buy it with. Earth could have been paradise of abundance for the past hundred years and yet the bankers kept it an alley where men weep and gnash their teeth just for the fun and profit they made out of morting people with debt.
The result was as situation where all countries were eager to sell and reluctant to buy. The only sensible solution to this problem of excessive productive capacity would have been a substantial rise in domestic standards of living but this would have required a fundamental reapportionment of the national income so that claims to this product of the excess capacity would go to those masses eager to consume, rather than continue to go to the minority desiring to save. Such reform was rejected by the ruling groups in both "advanced" and "backwards" countries so that this solution was reached only to a small degree in a relatively few countries (chiefly US and Germany in 1925-1929). JCT: I think this would make a great part of the indictment of the moneylenders who kept heaven away from earthlings over the past century. Ruling groups, and we know that that has always been those who finance the politicians, decided that the abundance would be kept unbuyable bought by the masses, such ruling groups having thereby morted many of those masses by insufficiency in a land of plenty. We should start a topic where we assume that we're finally all in Heaven and we get to be the prosecutors of the Rothschilds and Rockefellers before God who draw up the indictment. It would have great therapeutic value for those of us who feel the heartache of knowing that it didn't have to be this way. I'm sure that those of us who understand how the bankers have done it to us feel a special pain that the sheeple who think it's just nature's way will never understand. So why don't we pretend that we're finally at he Judgment day and let's lay out the indictment for genocide of the poor against the bankers. Now that I think of it, I'm probably the only person on Earth who has already had that soul-satisfying moment of accusing the bankers of genocide of the poor in the public eye before my nation's highest court. Three times personally and three times having made the arguments for others. So, I've had the thrill of making the case against the bankers of genocide to their faces. I really enjoyed it. We'd simply have to pick various examples of where bankers' policies resulted in death. I can pick up my newspaper and come up with half a dozen in only a few moments. Bankers committed genocide when their funding cuts reduced the number of ambulances and someone died. Bankers committed genocide when their funding cuts reduced the number of hospital beds and someone died. Bankers committed genocide when their funding cuts reduced welfare and someone died of a malnutrition disease. Bankers committed genocide when their funding cuts reduced welfare and someone died of attempted robbery or trying to stop one. Bankers committed genocide when their funding cuts caused a gang of kids to kill another for his sneakers despite stores full of sneakers. The ways that bankers' funding cuts have killed people are just too numerous to count. Virtually every crime on every crime drama on television can be laid to the poverty motive: "I did it for the money." Other than a few insanities, 90% of the death on the planet, assuming 10% die calmly and naturally, can be laid on the banking conspiracy. And believe me, to call these pillars of the community "morters" in public affords a great feeling to anyone who has been frustrated by the knowledge that we've always been a short step away from heaven and have been kept in hell by these men nevertheless. And I wouldn't worry too much about Rothschild and Rockefeller sending their henchmen to get you. The LETS computer revolution changing the face of banking is just too big to be stopped and once LETS is global, they, like the lowliest torturer, will be forgiven, allowed to change their names and fade from the scene knowing they will eventually get their promised judgment day on the other side. But not on this side. So contemplate how you'd indict them for their usury "mort-gage." Make your case and enjoy the therapeutic feeling arguing for such justice gives. Because, as Quigley explains, the needless agonies they have inflicted will get clearer and clearer as we go on.
Page 324 The powers of financial capitalism had another 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. JCT: Remember that Quigley is one of them. He's one of their professors. He's one of the slave-drivers, not one of the slaves.
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 in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. JCT: And they've pulled it off.
In each country, the power of the central bank rested largely on its control of credit and money supply. In the world as a whole the power of the central bankers rested very largely on their control of loans and the gold flows. They made agreements on all the major financial problems of the world, as well as on many of the economic and political problems, especially in reference to loans, payments, and the economic future of the chief areas of the globe. JCT: So it's fair to say that the state of the world is their responsibility.
The Bank of International Settlements, B.I.S. is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694. JCT: Only as far as Quigley sees. Astle points out that they had an international banking cartel, a Bank of International Settlements, several millennia ago and it's difficult to believe given our continual history of agony and war that they took a break from control for a millennium or two. No, it's just that this historian couldn't have known what history had been erased from his books to know. That's why we have such a great debt of gratitude to Astle for having dug up and processed so much almost-erased information.
Page 325 It was set up to be the world cartel of every-growing national financial powers by assembling the nominal heads of these national financial centers. The commander in Chief of the world system of banking control was Montagu Norman, Governor of the Bank of England, who was built up by the private bankers to a position where he was regarded as an oracle in all matters of government and business. In government, the power of the Bank of England was a considerable restriction on political action as early as 1819 but an effort to break this power by a modification of the bank's charter in 1844 failed. In 1852, Gladstone, then chancellor of the Exchequer and later Prime Minister, declared, "The hinge of the whole situation was this: the government itself was not to be a substantive power in matters of Finance, but was to leave the Money Power supreme and unquestioned." JCT: This is the Prime Minister saying that the most important function of an economy was to be left to the profitable control of private elements. Sure, many economists will argue that there is government control because the President gets to nominate which bankers serve on the Federal Reserve Board but it fails to note that they're still all bankers and that picking one or two of them to their 14 year term is about the only control at all.
This power of the Bank of England was admitted in 1924 by Reginald McKenna, who had been Chancellor of the Exchequer, when he, as Chairman, told the stockholders of the Midland bank, "I am afraid the ordinary citizen will not like to be told that the banks can, and do, create money. And they who control the credit of a nation direct the policy if Governments and hold in the hollow of their hands the destiny of the people." In that same year, Sir Drummond Fraser, vice- president of the Institute of Bankers stated, "The Governor must be the autocrat who dictates the terms upon which alone the Government can obtain borrowed money." On Sep. 26, 1921, Vincent Vickers, director of the bank, the Financial Times wrote, "Half a dozen meant the top of the Big Five Banks could upset the whole fabric of government by refraining from renewing Treasury Bills." JCT: These quotes have been cited by most monetary reformers and the fact that Quigley does too is testament to the honesty with which he is dealing with these issues.
Page 326 Norman had no use for governments and feared democracy. Both of these seemed to him to be threats to private banking and thus to all that was proper and precious to human life. He viewed his life as a kind of cloak-and-dagger struggle with the forces of unsound money which were in league with anarchy and Communism. When he rebuilt the Bank of England, he constructed it as a fortress prepared to defend itself against any popular revolt. For much of his life, he rushed about the world under the assumed name of "Professor Skinner." JCT: Interesting that he worried that people would someday blame the bankers and not the government but as long as most people thought that the government ran the central bank and not the other way around, he didn't have too much to worry. The the Bank of England was picketed by some Social Credit Greenshirts during the Depression and me in 1997 but other than those protests, it's been pretty successful at having the blame for its policies laid at the doorstep of the government.
Norman had a devoted colleague in Benjamin Strong, the first governor of the Federal Reserve Bank of New York. Strong owed his career to the favor of the Morgan bank. In the 1920s, they were determined to use the financial power of Britain and the US to force 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 by agreements by such central banks without interference from governments. JCT: I consider the money system as the brain of the economic machinery. Money decides what will be produced. Bankers have decided that funds to farm production will be kept to a minimum and funds to war production will be kept to a maximum and that's what gets done. The engineers who would be just as happy building tractors find that the only paychecks available are for building tanks and guess what engineers end up building? Those who control the allocation of funds control what gets done no matter what governments or people want. Is it any wonder that bankers want no interference from governments in their running of the world? But having had no such interference, we can now safely lay the results at their feet for explanation.
Page 327 It must not be felt that these heads of the world's chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of investment bankers (also called "international" or "merchant" bankers) who remained largely behind the scenes in their own unincorporated private banks. JCT: These are the Rothschilds, Rockefellers, Warburgs, et al, whose psychological profiles will be of such interest to future historians and students. Finding out what made the kind of person who could condemn hundreds of millions to agonizing lives and deaths tick will surely occupy more time than any other interest. I'd like to know how they rationalize what they've done and how they live with themselves. Of course, if they really are just evil aliens who consider themselves superior to the human race and feed off us as nonchalantly as we feed off cattle, then I'll understand. But if it's found that these great banking families, the parasite royalty, are actually human, then I'd bet that the study of what made them do and think what they did will most fascinate future generations. I wonder sometimes wonder if they'll find that they had a malevolent gene or was it all the inbreeding to keep their fortunes in the same small group over millennia? I hope these questions get answered in my lifetime. But I'd be most pleased to find out that they were actually aliens and no real human could sink as low as a Rothschild or Rockefeller could.
These formed a system of international cooperation and national dominance which was 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 and investment funds in their own countries and throughout the world. They could dominate the financial and industrial systems of their own countries by their influence over the flow of current funds through bank loans,the discount rate,the rediscounting of commercial debts; they could dominate governments by their control over current government loans and the play of the international exchanges. Almost all of this power was exercised by the personal influence and prestige men who had demonstrated their ability in the past to bring off successful financial coups, to keep their word, to remain cool in a crisis, and to share their winning opportunities with their associates. In this system, the Rothschilds had been pre-eminent during much of the nineteenth century, but, at the end of that century, they were being replaced by J.P. Morgan in New York. JCT: J.P. Morgan was nothing but a stooge for Rothschild and Rockefeller. He died leaving no appreciable estate so any power he wielded as front man was really the power of the men behind the scenes who had the money Morgan did not.
CHAPTER VII: FINANCE, COMMERCIAL POLICY, AND BUSINESS POLICY 1897-1947
Page 327 At the present stage, we must follow the efforts of the central bankers to compel the world to return to the gold standard of 1914. JCT: And count up the corpses as this group compels the world.
Page 328 The problem of public debts arose from the fact that as money (credit) was created, it was usually made in such a way that it was not in the control of the state but was in the control of private financial institutions which demanded real wealth at some future date for the creation of claims on wealth in the present. The problem of public debt could have been met in one or more of several fashions: a) by increasing the amount of real wealth... b) by devaluation... c) by repudiation... d) by taxation... e) by the issuance of fiat money and the payment of the debt by such money. JCT: I don't like a) because the bankers end up with all the profits of production; b) is unnecessary; c) is only proper for the repudiation of the interest component of the debt but never the original principal for which value was received unless they'd like to make the case they shouldn't have to pay for the weapons and chains bought by their dictator to keep them enslaved; d) taxation is silly since the problem is already not enough money; I like e) which converts interesting-bearing debt whose principal grows and grows exponentially into interest-free debt so the principal can be reduced with each payment.
Page 329 Efforts to pay the public debt by fiat money would have made the inflation problem worse. Orthodox theory rejected fiat money as solutions to the problem. JCT: Unfortunately, this would seem so to someone who doesn't understand that replacing interest-bearing debt money with interest- free debt money changes nothing but the debt service. No new money is added for which old money is not erased. If a hundred billion old interest-bearing dollars are replaced by a hundred billion interest- free dollars, why should there be inflation? So the fact he believes in inflation shift A and has not conceived of inflation shift B isn't even key here. It's a straight replacement. No inflation shift A.
Page 332 In Britain, the currency notes which had been used to supplement bank notes were retired and credit was curtailed by raising the discount rate to panic level. The results were horrible. Business activity fell drastically and unemployment rose to well over a million and a half. The outcome was a great wave of strikes and industrial unrest. JCT: So what was good to make the bankers richer made everyone else poorer. To safety the value of their gold, ordinary people had to suffer wage and service cuts. Upping the value of bankers' gold was necessarily laid on the backs of the working classes. Bradburys that worked to finance war-time production were not going to be able to finance peace-time production.
Page 333 To maintain the gold reserve at all, it was necessary to keep the discount rate at a level so high (4.5% or more) that business activity was discouraged. As a result of this financial policy, Britain found herself faced with deflation and depression for the whole period of 1920-1923. The number of unemployed averaged about 1.75 millions for each of the thirteen years of 1921-1932 and reached 3 million in 1931. Belgium, France and Italy, accepted orthodox financial ideas and tried to deflate in 1920-1921 but after the depression which resulted, they gave up the task. JCT: So orthodox financial methods to deflate the money supply and make gold-holders richer always cause depression for the workers. So governments that pursue deflationary policies have gold-holders' and not workers' interests at heart. Of course, considering that most politicians came from the gold-holding classes and few from the non- gold-holding classes, what would one expect? Of course the politicians were in favor of their gold being more valuable no matter how many ordinary people went sick and hungry. What's amazing is that they knew first-hand the Bradburys had saved their nation and boosted production and were still willing to cut production and murder their nation in the name of making their gold worth more.
Page 334 The Dawes Plan provided the gold reserves which served to protect Germany from the accepted principles of orthodox finance. JCT: Otherwise, without gold as a base, they wouldn't have been allowed to have any money according to orthodox financial policies. And since the only people profiting from the war debts were the bankers who received their payments, they were keenly supportive of their governments lending Germany gold so she could pay the bankers their interest.
Page 336 Financial capitalism had little interest in goods at all, but was concerned entirely with claims on wealth - stocks, bonds, mortgages, insurance, proxies, interest rates, and such. It built railroads in order to sell securities, not to transport goods. Corporations were built upon corporations in the form of holding companies so that securities were issued in huge quantities bringing profitable fees and commissions to financial capitalists without any increase in economic production whatever. Indeed, these financial capitalists discovered that they could not only make killings out of the issuing of such securities, they could also make killings out of the bankruptcy of such corporations through the fees and commissions of reorganization. A very pleasant cycle of flotation, bankruptcy, flotation, bankruptcy began to be practiced by these financial capitalists. The more excessive the flotation, the greater the profits and the more imminent the bankruptcy. The more frequent the bankruptcy, the greater the profits of reorganization and the sooner the opportunity of another excessive flotation. JCT: Of course, the lives of those thrust into unemployment and need by their cycle of flotation, bankruptcy, etc. wasn't taken into consideration.
Page 337 The growth of financial capitalism made possible a centralization of world economic control and a use of this power for the direct benefit of financiers and the indirect injury of all other economic groups. Financial control could be exercised only imperfectly through credit control and interlocking directorates. JCT: And of course, many in the booboisie argue vehemently that this power for the direct benefit of financiers to the indirect injury of all other economic groups was never used on purpose. Only conspiracy nuts would think that.
Page 338 The real key rested on the control of money flows which were held by investment bankers in 1900.
THE PERIOD OF DEFLATION, 1927-1936
Page 339 After 1929, deflation reached a degree which could be called acute. JCT: By this he must mean that people were dying in the streets and things looked bad.
In the first part of this period (1921-1925), the dangerous economic implications of deflation were concealed by a structure of self-deception which pretended that a great period of economic progress would be inaugurated as soon as the task of stabilization had been accomplished. JCT: As soon as the value of their gold had stabilized to a lot more, things would be better for everyone.
This psychological optimism was completely unwarranted by the economic facts. After 1925, when deflation became more deep-rooted and economic conditions worsened, the danger from these conditions was concealed by a continuation of unwarranted optimism. JCT: I'm sure it wasn't optimism being stated by the people themselves and more a lying media owned by the gold-holders telling the people that everything was getting better.
THE CRASH OF 1929 Page 342 When France stabilized the franc at a level at which it was devalued, the Bank of France sold francs in return for foreign exchange. The francs were created as credit in France thus giving an inflationary effect. JCT: Maybe, maybe not. It all depends on whether equivalent collateral was created with the new money issued. Remember Edgie the economist who played Poker at my table and would scream "inflation" any time a new player entered the with a new rack of poker chips. Even though we had to take him to the cage every time to reassure him that the new chips were backed up with new collateral in the cage, his conditioning prompted to forget how the cage worked and scream "inflation" every time he saw new chips enter the game. Flaherty like most economists in the world was never taught cage accounting and suffers from this same conditioning to believe that any increase in the chips causes the value of the other chips to go down. Page 343 The financial results of the stock market boom in the US was credit diverted from production to speculation and increasing amounts of funds being drained from the economic system into the stock market where they circulated around and around, building up prices of securities. JCT: A lot similar to today where trillions move in stock market transactions so they can make 1% commissions and only billions move in productive purchases.
Page 344 Early in 1929, the board of governors of the Federal Reserve System became alarmed at the stock market speculations draining credit from industrial production. To curtail this, they called upon member banks to reduce their loans on stock collateral to reduce the amount of credit available for speculation. Instead, the available credit went more and more to speculation and decreasingly to productive business. Call money rates in New York which had reached 7% at the end of 1928 were at 13% by June 1929. JCT: So just before the stock market crash, the FED started jacking up the loanshark rate. This is the true cause of the crash because as credit tightened, more and more people needed to dump their securities to get money to pay their debts and this "panic" or credit crunch set the stage where the loans were called in precipitating the crash. How many people knew that Winston Churchill had been invited over to Wall Street to witness the crash? It certainly let him know who ruled the real world.
Page 346 To restore confidence among the wealthy (who were causing the panic) an effort was made to balance the budget by cutting public expenditures drastically. This, by reducing purchasing power, had injurious effects on business activity and increased unrest among the masses of the people. JCT: Count up the children who got sick and died because daddy had no job to buy medicine, count up all the desperadoes who turned to crime, count up all the people who were morted in this bid to restore the confidence among the wealthy and lay the blame on the Rothschilds and Rockefellers where it belongs.
Page 350 Washington left gold in 1933 voluntarily in order to follow an unorthodox financial program of inflation. JCT: It's not fair to call this unorthodox finance. It wasn't.
Page 351 The Thomas Amendment to the Agricultural Adjustment Act (1933) gave the president the power to devaluate the dollar up to 50%, to issue up to $3 billion fiat money, and to engage on an extensive program of public spending.
Page 352 The economies of the different countries were so intertwined with one another that any policy of self-interest on the part of one would be sure to injure others in the short run and the country in the long run. The international and domestic economic systems had developed to the point where the customary methods of thought and procedure in regard to them were obsolete.
page 353 As a result of the crisis, regardless of the nature of its primary impact, all countries began to pursue policies of economic nationalism. This spread rapidly as a result of imitation and retaliation. JCT: Pursuant to the Miracle Equation, all countries borrow Principal to produce their goods and try to sell them at Principal+Interest. Since no country can purchase with the P issued at home the prices of P+I, the unpurchasable portion must be exported in order to survive. This accounts for the trade wars where every country tries to capture with foreign sales enough to pay their home interest while at the same time preventing any home Principal from buying foreign goods and leaving. This explains "dumping" whereby a nation will overcharge its own citizens to that even more is left unpurchased which can then be offered at an even cheaper rate to obtain the foreign funds. Example: Country borrows $100 billion at 10% to produce 10 widgets for sale at $11 billion each. The home country buys $100 billion worth of widgets and successfully exports the other $10 billion it could not buy at home and pays off its debt. If it can't successfully export and sell the excess it couldn't sell at home, the banks will foreclose and generate unemployment and inflation. So what some countries do is to charge $12 billion per widget to the home market and selling only 8 widgets so that they can try to gain the outside $10 billion necessary to pay their interest by offering two widgets to get the necessary $10 billion. This is called dumping. Otherwise, why would anyone object to countries wishing to sell us products at a loss unless the removal of that currency causes us problems. So it's the eternal struggle of mortgage that forces countries to try to export what they don't have sufficient money to buy at home.
Page 355 The Bank of France raised its discount rate from 2.5% to 6% in 1935 with depressing economic results. In this way, the strain on gold was relieved at the cost of increased depression. The Right discovered that it could veto any actions of the Left government merely by exporting capital from France. JCT: Once again, protection of gold leads to misery for the people.
Page 356 The franc passed through a series of depreciations and partial devaluations which benefited no one except the speculators and left France torn for years by industrial unrest and class struggles. The government was subjected to systematic blackmail by the well-to-do of the country because of the ability of these persons to prevent social reform, public spending, arming, or any policy of decision by selling francs. JCT: And of course, the rich were led by the French branch of the Rothschild family in tearing France apart with industrial unrest and class struggles. Like I say, I can't imagine any of them choosing to keep their name in the new world where everyone will be aware of what they did.
Page 357 The historical importance of the banker-engendered deflationary crisis of 1927-1940 can hardly be overestimated. It gave a blow to democracy and to the parliamentary system and thus became a chief cause of World War II. It so hampered the Powers which remained democratic by its orthodox economic theories that these were unable to rearm for defence. It gave rise to a conflict between the theorists of orthodox and unorthodox financial methods. JCT: So the bankers caused the Great Depression, hurt democracy and caused World War II with another 50 million casualties. R&R always made the biggest money with the biggest flows of blood.
The bankers' formula for treating a depression was by clinging to the gold standard, by raising interest rates and seeking deflation, and by insisting on a reduction in public spending, a fiscal surplus or at least a balanced budget. JCT: Clinging to the gold standard did no good for those who had no gold, raising interest hurt everyone but those who had money, seeking deflation benefited only those who had money, reducing public spending hurt those without money. The pattern is consistent. Everything good for those with money, everything bad for those without.
These ideas were rejected totally, on a point by point basis, by the unorthodox economists, (somewhat mistakenly called Keynesian). The bankers' formula sought to encourage economic recovery by "restoring confidence in the value of money," that is, their own confidence in what was the primary concern of bankers. The unorthodox theorists sought to restore purchasing power by increasing, instead of reducing, the money supply and by placing it in the hands of potential consumers rather than in the banks or in the hands of investors. JCT: Increasing the money supply helps everyone, not just rich, and placing it in the hands of all consumers, not just the bankers, again helps everyone, not just the rich.
page 358 The whole relationship of money and resources remained a puzzle to many and was still a subject of debate in the 1950s but at least a great victory had been won by man in his control of his own destiny when the myths of orthodox financial theory were finally challenged in the 1930s. JCT: They may have been challenged but certainly never defeated. They're still called unorthodox because the orthodox way is still always to the advantage of those with the money and never of those without.
REFLATION AND INFLATION 1933-1947
Page 360 Except for Germany and Russia, most countries in the latter half of 1937 experienced sharp recession. JCT: Why this was so has to do with their not following the orthodox advice of the bankers interested only in increasing their own wealth.
Page 361 As a result of the failure of most countries (excepting Germany and Russia) to achieve full utilization of resources, it was possible to devote increasing percentages of resources to armaments without suffering any decline in the standards of living. JCT: In other words, they had plenty of unemployed to shift to armaments without taking anyone away from productive enterprise where they couldn't find enough money to be paid anyway.
Page 366 It was discovered by Germany in 1932, by Italy in 1934, by Japan in 1936 and by the United States in 1938 that deflation could be prevented by rearming. JCT: This is a confusing way of putting it. It should actually say that it was discovered that deflation caused by bankers refusing to fund production could be prevented by bankers agreeing to fund destruction. As long as they wanted to produce peace-time production, the bankers would not create money and only when they were ready to produce war-time production were the bankers ready to create money to fund it. So since the bankers would only fund war and not peace, Quigley concluded that war production fought deflation.
Page 368 Britain made barter agreements with various countries, including one direct swap of rubber for wheat with the US. JCT: This is definitely unorthodox finance. Too had they didn't keep trading using a central barter system. Then we'd have a global LETS as I've been advocating for so many years.
Page 369 The period of reflation after 1933 was caused by increases in public spending on armaments. In most countries,the transition from reflation to inflation did not occur until after they had entered the war. Germany was the chief exception and possibly also Italy and Russia, since all of these were making fairly full utilization of their resources. In France and the other countries overrun by Germany, such full mobilization of resources was not achieved before they were defeated. JCT: You'd have to wonder why economists aren't more interested in how Germany managed full employment while the rest of the world were suffering high unemployment of depression. And they still aren't interested in how they did it.
Page 370 The use of orthodox financing in the First World War had left a terrible burden of intergovernmental debts and ill-feeling. JCT: Not ill-feeling for the bankers even if it was deathly- feeling for everyone else.
Page 371 The post Second World War economy was entirely different in character from that of the 1920s following the First World War. This was most notable in the absence of a post-war depression which was widely expected but which did not arrive because there was no effort to stabilize on a gold standard. The major difference was the eclipse of the bankers who have been largely reduced in status from the masters to the servants of the economic system. This has been brought about by the new concern with real economic factors instead of with financial counters, as previously. As part of this program, there has been a great reduction in the economic role of gold.
CHAPTER VIII: INTERNATIONAL SOCIALISM AND THE SOVIET CHALLENGE
Page 375 Industrialism, especially in its early years, brought with it social and economic conditions which were admittedly horrible. Human beings were brought together around factories to form great new cities which were sordid and unsanitary. In many cases, these persons were reduced to conditions of animality, which shock the imagination. JCT: What shocks the imagination is that human (?) bankers planned it to be that way.
Crowded together in want and disease, with no leisure and no security, completely dependent on weekly wage which was less than a pittance, they worked twelve to fifteen hours a day for six days in the week among dusty and dangerous machines with no protection against inevitable accidents, disease, or old age, and returned at night to crowded rooms without adequate food and lacking light, fresh air, heat, pure water, or sanitation. These conditions have been described for us in the writings of novelists such as Dickens in England, Hugo or Zola in France. JCT: Rothschild's and Rockefeller's planet described in literature.
Page 376 The Socialist movement was a reaction against these deplorable conditions to the working masses. It has been customary to divide this movement into two parts at the year 1848, the publication of the Communist Manifesto of Karl Marx. This work began with the ominous sentence, "A specter is haunting Europe - the specter of Communism," and ended with the trumpet blast "Workers of the world, unite." In general, the former division believed that man was innately good and that all coercive power was bad, with public authority the worst form of such coercive power. All the world's evils, according to the anarchists, arose because man's innate goodness was corrupted and distorted by coercive power. The remedy, they felt, was to destroy the state. The simplest way to destroy the state would be to assassinate the chief of the state to ignite a wholesale uprising of oppressed humanity. JCT: The we have a bunch of guys who want to blame the idiot politicians who got hooked into the loansharks rather than the loansharks themselves. Getting rid of the chief of state would have absolutely no effect with a ready replacement idiot waiting in the wings.
Page 377 Syndicalism was a somewhat more realistic and later version of anarchism. It was equally determined to abolish all public authority. The state would be destroyed by a general strike and replaced by a flexible federation of free associations of workers. JCT: Syndicalism was just another group again blaming the wrong guys. A free association of workers ready to get hooked into the same loansharks wouldn't be much of an improvement.
The second group of radical social theorists wished to widen the power and scope of governments by giving them a dominant role in economic life. The group divided into two chief schools: The Socialists and the Communists. JCT: Government needs only not be subservient to the money creators but do the creating itself for it to take its proper dominant place in the scheme of things. But as long as they let the bankers create the money and then loanshark it to the government, they will forever be subservient. the only problem with these suggestions is that they never mention the role of money creator in their plans.
Page 378 From Ricardo, Marx derived the theory that the value of economic goods was based on the amount of labor put into them. JCT: That's a good theory and would work fine if people could finally accept that money does not do work and does not to deserve to be paid on an equivalent basis with human labor.
Page 379 Marx built up a complicated theory which believed that all history is the history of class struggles. JCT: True, all history is the struggle between the debt slave masters and the debt slaves.
The money which the bourgeoisie took from the proletariat in the economic system made it possible for them to dominate the political system, including the police and the army. From such exploitation, the bourgeoisie would become richer and richer and fewer and fewer in numbers and acquire ownership of all property in the society while the proletariat would become poorer and poorer and more and more numerous and be driven closer and closer to desperation. Eventually, the latter would rise up and take over. JCT: Call the loansharks the "bourgeoisie" and the proletariat the "debt slaves" and it's a good explanation of how interest makes the rich become richer and the poor become poorer.
Page 381 In fact, what occurred could be pictured as cooperative effort by unionized workers and monopolized industry to exploit unorganized consumers by raising prices higher and higher, quite contrary to the expectations of Marx. Where he had expected impoverishment of the masses and concentration of ownership with gradual elimination of the middle classes, there occurred instead rising standards of living, dispersal of ownership, a relative decrease in the numbers of laborers, and a great increase in the middle classes. Due to income and inheritance taxes, the rich became poorer and poorer, relatively speaking. JCT: What a joke. Just because they put their money into trust funds and foundations which they still control is not to say that the rich have become poorer and poorer at all. And a better-fed group of slaves was still just a group of slaves nevertheless. No matter their standard of living, they were still in hock up their necks.
THE BOLSHEVIK REVOLUTION TO 1924 Page 385 The new government forced the abdication of the czar. The more radical Socialists had been released from prison or had been returned from exile (in some cases, such as Lenin, by German assistance) JCT: And Rockefeller and Mackenzie King helped Lenin get to Russia too. Some Canadians were quite upset that Lenin's return pulled Russia out of the war which freed up Germans on the Eastern Front to go and kill Americans and Canadians on the Western Front. But having the bankers help the Bolsheviks take over Russia was far more important to them than the lives of their own countrymen. It's this kind of banker's treason that we keep running into over and over. Selling arms to the enemy, helping the enemy defeat our allies, quite treasonous and never published, let alone punished.
Page 386 Lenin campaigned to replace the Provisional Government with a system of Soviets and to adopt an immediate program of peace and land distribution. The Bolshevik group seized the centers of government in St. Petersburg and within 24 hours, issued a series of decrees which abolished the Provisional government, ordered the end of the war with Germany and the distribution of large land holdings to the peasants. JCT: Though the land may have been distributed to the peasants, they had no intention of letting them keep it for long. And didn't.
Page 387 By 1920 industrial production in general was about 13% of the 1913 figure. At the same time, paper money was printed so freely to pay for the costs of war, civil war, and the operation of the government that prices rose rapidly and the ruble became almost worthless. JCT: Maybe but at least they had money to pay their agents with while their opponents did not.
The secret police (Cheka) systematically murdered all real or potential opponents.
Page 388 Various outsider Powers also intervened in the Russian chaos. An allied expeditionary force invaded northern Russia from Murmansk and Archangel, while a force of Japanese and another of Americans landed at Vladivostok and pushed westward for hundreds of miles. The British seized the oil fields of the Caspian region (late 1918) while the French occupied parts of the Ukraine about Odessa (March 1919). By 1920, Russia was in complete confusion. Poland invaded Russia occupying much of the Ukraine. JCT: This invasion of parts of Russia is almost unreported in most histories. Since the Bolshevik Communists were supported by Wall Street money, despite all my historical researches, I'm still mystified about why this invasion took place. Any suggestions?
Page 389 As part of this system, not only were all agricultural crops considered to be government property but all private trade and commerce were also forbidden; the banks were nationalized while all industrial plants of over five workers and all craft enterprises of over ten workers were nationalized. This culminated in peasant uprisings and urban riots. Within a week, peasant requisitioning was abandoned in favor of a "New Economic Policy" of free commercial activity in agriculture and other commodities, with the re-establishment of the profit motive and of private ownership in small industries and in small landholding. JCT: So they learned in no time that they had to keep the profit motive of private ownership alive for maximum production. Seems they soon forgot that lesson though.
Page 395 The Bolsheviks insisted that the distribution of income in a capitalistic society would become so inequitable that the masses of the people would not obtain sufficient income to buy the goods being produced by the industrial plants. JCT: That's certainly happened.
As such unsold goods accumulated with decreasing profits and deepening depression, there would be a shift toward the production of armaments to provide profits and produce goods which could be sold and there would be an increasingly aggressive foreign policy in order to obtain markets for unsold goods in backward and undeveloped countries. JCT: I've already described the eternal search to sell goods that can't be sold at home to foreign markets and as the Social Credit engineer, Major Douglas said, economic war always leads to real war.
Such aggressive imperialism would inevitably make Russia a target of aggression in order to prevent a successful Communist system there from becoming an attractive model for the discontented proletariat in capitalistic countries. JCT: That's certainly the reason why the United States invaded Vietnam and other smaller countries that tried to make their own economic way. They certainly feared the "good example."
Page 396 Communism in Russia alone required that the country must be industrialized with breakneck speed and must emphasize heavy industry and armaments rather than rising standards of living. This meant that goods produced by the peasants must be taken from them by political duress, without any economic return, and that the ultimate in authoritarian terror must be used to prevent the peasants from reducing their level of production. It was necessary to crush all kinds of foreign espionage, resistance to the Bolshevik state, independent thought, or public discontent. JCT: Of course, when you realize that the Bolsheviks were simply serving the international bankers, the reasons for this seem silly. The alternate reason is that bankers always love it best when the population are on their knees so any action to bring the population to its knees needs no other explanation.
Page 397 Stalin forced the peasants off their land. In the space of six weeks, (Feb-Mar 1930) collective farms increased from 59,400 with 4.4 million families to 110,200 farms with 14.3 million families. All peasants who resisted were treated with violence; their property was confiscated, they were beaten or sent into exile in remote areas; many were killed. This process, known as "the liquidation of the kulaks" affected five million kulak families. Rather than give up their animals, many peasants killed them. The number of cattle was reduced from 30.7 million in 1928 to 19.6 million in 1933. The planting season of 1930 was entirely disrupted. Three million peasants starved in 1931-1933. Stalin told Churchill that 12 million died in this reorganization of agriculture. JCT: Realizing that Stalin was working for the international bankers, what they did to the Russian peasants seems little different than what they did to the North American peasants during the Great Depression. Just more heavy handed.
Page 401 The privileged rulers and their favorites had the best of everything obtained, however at a terrible price, at the cost of complete insecurity for even the highest party officials were under constant surveillance and would be inevitably purged to exile or death. The growth of inequality was embodied in law. All restrictions on maximum salaries were removed. Special stores were established where the privileged could obtain scarce goods at low prices; restaurants with different menus were set up in industrial plants for different levels of employees; housing discrimination became steadily wider. JCT: This is the ugliest part of the whole system, that privileged elites got special stores that the average people couldn't access. This is so hypocritical for a group of workers that it is indicative that the system really wasn't by the workers for the workers but rather by the bankers for the bankers.
Page 402 As public discontent and social tensions grew, the use of spying, purges, torture and murder increased out of all proportion. Every wave of discontent resulted in new waves of police activity. Hundreds of thousands were killed while millions were arrested and exiled to Siberia or put into huge slave-labor camps. Estimates vary from two million as high as twenty million. JCT: I'd really like to find out how Rothschild and Rockefellers gained by all these dead people. I can understand their profiting from war but simply killing millions doesn't seem all that profitable for them. But I'd certainly bet that they did profit from this misery as they profit from all other misery.
Page 403 For every leader who was publicly eliminated, thousands were eliminated in secret. By 1939, all the leaders of Bolshevism had been driven from public life and most had died violent deaths. There were two networks of secret-police spies, unknown to each other, one serving the special department of the factory while the other reported to a high level of the secret police outside. JCT: Of course, there's always the chance that this was the test of the prototype civilization the bankers have in mind for us. A few millionaires, lots of police and lots of slaves. We must always keep in mind that the Bolshevik Revolution's financing was Wall Street money directed by Jacob Shiff of the famous usury company Kuhn Loeb who quite proudly took credit for it. Unfortunately, most people have been suckered into believing that Wall Street feared the Russian workers' revolution when in reality, they and their privileged elites, really owned it.
Page 404 Whenever the secret police needed more money it could sweep large numbers of persons, without trial or notice, into its wage deduction system or into its labor camps to be hired out. It would seem that the secret police were the real rulers of Russia. JCT: What a joke. The real rulers of Russia were the guys who paid the secret police, not the secret police themselves.
This was true except at the very top where Stalin could always liquidate the head by having him arrested by his second in command in return for Stalin's promise to promote the arrester to the top position. In this way, the chiefs of the secret police were successively eliminated. JCT: Again, the real rulers were never the guys doing the slave- driving or running the slave labor camps. The real rulers were the owners of the runners of the slave labor camps.
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