by Dr. Carroll Quigley 
ISBN 0913022-14-4
Page 873
     The period 1945 to early 1963 forms a unity during which a number 
of factors interacted upon one another to present a very complicated 
and extraordinarily dangerous series of events. That mankind and 
civilized life got through the period may be attributed to a number of 
lucky chances rather than to any particular skill among the two 
opposing political blocs. 
     The Cold War is almost always described in terms which put minor 
emphasis or even neglect the role of technological rivalry because 
most historians do not feel competent to discuss it but chiefly 
because much of the evidence is secret. Because of such secrecy, the 
story of this rivalry falls into two quite distinct and even 
contradictory parts: 
1) what the real situation was; and
2) what prevalent public opinion believed the situation to be.
     For example, the Soviet Union had an H-bomb many months before we 
did when public opinion believed the opposite; the 1960 believe 
throughout the world of a so-called "missile gap" or American 
inferiority in nuclear missiles when no such inferiority existed. 
Page 875
     The balance of nuclear weapons was the central factor in the Cold 
War. Cessation on nuclear testing came close to achievement in 1950 
when both sides had atomic weapons but was destroyed at that time by 
President Truman's order to proceed with the development of the 
hydrogen bomb. By 1963, both sides had these weapons and the balance 
of terror had been achieved. 
Page 879
     The party struggle in the U.S. found the intellectuals (including 
scientists), the internationalists, the minorities and the 
cosmopolitans in the Democratic Party with the businessmen, bankers 
and clerks in the Republican Party. The Republicans had fallen into 
the control (represented by Senators Taft, Wherry, Bridges and Jenner) 
of those who were most ignorant of the real issues and were most 
remote from any conceptions of national political responsibility.
Page 880
     This group, to whom we often give the name "neo-isolationist," 
knew nothing of the world outside the U.S., and generally despised it. 
Thus, they gave no consideration to our allies or neutrals, and saw no 
reason to know or to study Russia, since it could be hated completely 
without need for accurate knowledge. All foreigners were regarded as 
unprincipled, weak, poor, ignorant and evil, with only one aim in 
life, namely, to prey on the United States. These neo-isolationists 
and unilateralists were equally filled with suspicion or hatred of any 
American intellectuals, including scientists, because they had no 
conception of any man who placed objective truth higher than 
subjective interests since such an attitude was a complete challenge 
to the American businessman's assumption that all men are and should 
be concerned with the pursuit of self-interest and profit. 
     Neo-isolationism had a series of assumptions which could not be 
held by anyone who had any knowledge of the world outside U.S. middle-
class business circles. These beliefs were seven in number:
1) Unilateralism: that the U.S. should and could act by itself without 
need to consider allies, neutrals or the Soviet Union;
2) National omnipotence: that the U.S. is so rich and powerful that no 
one else counts and that there is no need to study foreign areas, 
customs, policies;
Page 881
3) Unlimited goals (or utopianism): the belief that there are final 
solutions to the world's problems. Upholders of this view refused to 
accept that constant danger and constant problems were a perpetual 
condition of human life except in brief and unusual circumstances. 
Dulles insisted that the Truman policy of containment must be replaced 
by a policy of "liberation." These policies were not designed to win 
conclusively and did not seek to solve the problem of the Soviet Union 
but to live with it, "presumably forever." He did accept preventive 
war in the form of massive retaliation if the Communists made any 
further advances.
4) The neo-isolationist belief that continuance of the Soviet threat 
arose from internal treason within America.
Page 882
5) Since the chief "high moral principle" which motivated the neo-
isolationists insisted that Soviet Russia and Democrats were engaged 
in a joint tacit conspiracy to destroy America by high taxes by using 
the Cold War to tax America into bankruptcy
6) Since neo-isolationists rejected all partial solutions, there was 
little they could do but talk loudly and sign anti-communist pacts.
7) The unrealistic and unhistoric nature of neo-isolationism meant 
that it could not actually be pursued as a policy. It was pursued by 
John Foster Dulles with permanent injury to our allies. When Senator 
McCarthy turned his extravagant charges of subversion and treason from 
the State Department to the army, his downfall began. The neo-
isolationist forces still continue in an increasingly irresponsible 
form under a variety of names including John Birch Society members or 
more generally as the "Radical Right." 
Page 885
     Robert Oppenheimer was on a total of thirty five government 
committees. There was a shadow on Oppenheimer's past. In his younger 
and more naive days, he had been closely associated with Communists. 
Certainly never a Communist himself, and never, at any time, disloyal 
to the U.S., he had nonetheless associated with Communists. His 
brother Frank and his wife were Communist Party workers while 
Oppenheimer's own wife was an ex-Communist, widow of a Communist who 
had been killed fighting Fascism in Spain in 1937. The Oppenheimers 
continued to have friends who were Communists and contributed money 
until the end of 1941. 
Page 886
     All this derogatory information was known to General Groves and 
to Army Intelligence and used in 1953-1954 to destroy his reputation. 
It was an essential element in the neo-isolationist McCarthyite, 
Dulles interregnum of 1953-1957. 
Page 891
     IN the Soviet system, while most Russians lived in poverty, a 
privileged minority, buying in special stores with special funds and 
special ration cards, had access to luxuries undreamed of by the 
ordinary person. 
Page 900
     In 1944, Secretary of the Treasury Morgenthau took advantage of 
his close personal friendship with Roosevelt to push forward his own 
pet scheme to reduce Germany to a purely agricultural state by almost 
total destruction of her industry, the millions of surplus population 
to be, if necessary, deported to Africa. The secretary, supported by 
his assistant secretary, Harry Dexter White, was deeply disturbed by 
Germany's history of aggression. The only way to prevent it was to 
reduce Germany's industry and thus her warmaking capacity as close to 
nothing as possible. The resulting chaos, inflation, and misery would 
be but slight repayment for the horrors Germany had inflicted on 
others over many years. 
     By personal influence, Morgenthau obtained acceptance of a 
somewhat modified version of this plan by both Roosevelt and Churchill 
at the Quebec conference of September 1944. The error at Quebec was 
quickly repudiated but no real planning was done and the Morgenthau 
Plan played a considerable role in the JCS 1067, the directive set up 
to guide the American military occupation of Germany. It proposed 
reparations be obtained by dismantling Germany industry. The JCS 1067 
directive ordered that Germany be treated as a defeated enemy and not 
as a liberated country. No steps were taken to secure its economic 
Page 901
     At the Potsdam conference, it was agreed that the German economy 
should not be permitted should not be permitted to recover higher than 
the standard of living of 1932, at the bottom of the depression, the 
level, in fact, which had brought Hitler to power in 1933.
     It took more than two years of misery for Germany to secure any 
changes in these American objectives. Hunger and cold took a 
considerable toll, and the Germans, for two years, experienced some of 
the misery they had inflicted on others in the preceding dozen years. 
     The Germany currency reform of 1948 is the fiscal miracle of the 
post-war world. From it came 
(1) an explosion of industrial expansion and economic prosperity for 
West Germany; 
(2) they tying of the West Germany economy to the West; 
(3) an example for other western European in economic expansion; and
(4) a wave of prosperity for western Europe as a whole.
Page 909
     The American response to the Soviet refusal of postwar 
cooperation was confused and tentative. 
     Winston Churchill in June 1946 spoke of the "Iron Curtain" which 
Staling was lowering between the Soviet bloc and the West. 
     Lasting from 1947-1953, the chief characteristics of 
"containment" were economic and financial aid to other nations to 
eliminate the misery and ignorance which fosters communism. 
Page 910
     Americans, when goals are established as they are in war, work 
together very effectively, but political work in peacetime, with its 
ambiguous goals, is relegated to rivalry, bickering, and total 
inability to relate means to goals. As a result, the means themselves 
tend to become goals. 
Page 911
     Each service has alliances with the industrial complexes which 
supply their equipment. These complexes not only supply funds for each 
service to carry its message to the Congress but also exert every 
influence to retain equipment by dangling before the high officers who 
can influence contracts, offers of future well-paying consultant 
positions with the industrial firms concerned. Most high officers 
retired and then took consultant jobs with those firms.
Page 912
     Four-star general Somervell retired on a disability salary of 
$16,000 to join a number of firms which paid him R$125,000 a year; 
three-star general Campbell retired on a disability salary of $9,000 
and became an executive at $50,000 a year of firms from whom he had 
previously purchased $3 billion in armaments; four-star general Clay 
retired on $16,000 a year but signed up at over $100,000 a year. 
     These are but a few of more than a hundred general officers whose 
post retirement alliances with industrial firms encouraged their 
successors, still on active service, to remain on friendly terms with 
such appreciative business corporations. 
Page 919
     Pearl Harbor was a total surprise. This last point was so hard to 
believe, once the evidence was available, that the same groups who 
were howling about Soviet espionage in 1948-1955 were also claiming 
that Roosevelt expected and wanted Pearl Harbor. Both these beliefs, 
if they were believed, were based on gigantic ignorance and 
misconceptions about the nature of intelligence. 
Page 921
     A great deal of nuclear information (whether secret or not is 
unknown) as well as uranium metal, went to the Soviet Union as part of 
Lend-Lease in 1943. Major George Racey Jordan, USAAF, tried in vain to 
disrupt these shipments at the time. While most of Jordan's evidence 
is unreliable, the shipment of uranium to Russia is corroborated from 
other sources. The export licenses for such shipments were granted at 
the request of General Groves. Jordan's other evidence, most of which 
was very discreditable to the New Deal (since he testified that he, 
Groves, and others were under direct pressure from Harry Hopkins to 
allow export of nuclear materials) was subsequently shown to be false. 
Page 923
     Much of the evidence on the Communist movement came from ex-
Communists such as Elizabeth Bentley, Louis Budenz, Whittaker 
Chambers, John Lautner and others. The first three names mentioned are 
known because they dramatized, distorted and manipulated evidence for 
their own private purposes. This is particularly true of Elizabeth 
Bentley who exaggerated her role. 
Page 925 
     The House Un-American Committee was aimed more at partisan 
advantage than ascertaining the nature of the Communist conspiracy. 
the truth cannot now be ascertained. Numerous other accused 
Communists, both in government and out, whose names were given to the 
committee in the same breath as Hiss or Lattimore were almost totally 
Page 927
     Others called before the committee who refused to give evidence 
under the Fifth Amendment which protects against self-incrimination 
were in fact Communists and Bentley and Chambers knew them as such. 
Page 938
     The revelation of Communist influence in the U.S. was undoubtedly 
valuable but the cost in damage to reputations of innocent persons was 
very high. Much of this damage came from the efforts of Senator Joseph 
McCarthy, Republican, of Wisconsin to prove that the State Department 
and the army were widely infiltrated with Communists. 
Page 939
     McCarthy was not a conservative, still less a reactionary. He was 
a fragment of elemental force, a throwback to primeval chaos. He was 
the enemy of all order and all authority, with no respect, or even 
understanding, for principles, laws, regulations, or rules. As such, 
he had nothing to do with rationality or generality. Concepts, logic, 
distinctions of categories were completely outside his world. It is 
clear he did not have any idea what a Communist was, still less 
Communism itself, and he did not care. This was simply a term he used 
in his game of personal power. Most of the terms which have been 
applied to him, such as "truculent," "brutal," "ignorant," "sadistic," 
"foul-mouthed," "brash," are quite correct but not quite in the sense 
that his enemies applied them, because they assumed that these 
qualities and distinctions had meaning in his world as they did in 
their own. They did not, because his behavior was all an act, the 
things he did to gain the experience he wanted, that is, the feeling 
of power, of creating fear, of destroying the rules, and of winning 
attention and admiration for doing so. His act was that of Peck's Bad 
Boy but on a colossal scale. He sought fame and acclaim by showing an 
admiring world of schoolmates what a tough guy he was, defying all the 
rules, even the rules of decency and ordinary civilized behavior. But 
like the bad boy of the schoolyard, he had no conception of time or 
anything established, and once he had found his act, it was necessary 
to demonstrate it every day. His thirst for power, the power of mass 
acclaim and publicity, reached the public scene at the same moment as 
television, and he was the first to realize what could be done by 
using the new instrument for reaching millions. 
     His thirst for power was insatiable because like hunger, it was a 
daily need. It had nothing to do with the power of authority or 
regulated discipline, but the personal power of a sadist. All his 
destructive instincts were against anything established, the wealthy, 
the educated, the well-mannered, the rules of the Senate, the American 
party system, the rules of fair play. As such, he had no conception of 
truth or the distinction between it and falsehood, just as he had no 
conception of yesterday, today, tomorrow as distinct entities. He 
simply said whatever would satisfy, momentarily, his yearning to be 
the center of the stage surrounded by admiring, fearful, shocked, 
amazed people. He did not even care if their reaction was admiration, 
fear, shock, or amazement and he did not care if they, as persons, had 
the same reaction or a different one the next day or even a moment 
later. He was exactly like an actor in a drama, one in which he had 
made the script as he went along, full of falsehoods and 
inconsistencies, and he was genuinely surprised and hurt if a person 
whom he had abused and insulted for hours at a hearing did not walk 
out with him to a bar or even to dinner the moment the hearing session 
was over. He knew it was an act; he expected you to know it was an 
act. There was really no hypocrisy in it, no cynicism, no falsehood, 
as far as he was concerned, because he was convinced that this was the 
way the world was. Everyone he was convinced, had a racket; this just 
happened to be his, and he expected people to realize this and to 
understand it. 
Page 930
     Of course, to the observant outsider who did not share his total 
amorality, it was all false, invented as he went along, and constantly 
changed, everything substantiated by documents pulled from his 
briefcase and waved about too rapidly to be read. Mostly these 
documents had nothing to do with what he was saying; mostly he had 
never looked at them himself; they were merely props for the 
performance, and to him, it was as silly for his audience to expect 
such documents to be relevant as it would be for the audience in a 
theater to expect the food that is being eaten, the whiskey that is 
being drunk, or the documents which are read in that play to be 
relevant to what the actor is saying. 
     Every time he spoke, with each version he became a larger more 
nonchalant hero. In 1952, he intimidated the Air Force into awarding 
him the Distinguished Flying (given for twenty five combat missions) 
although he had been a grounded intelligence officer who took 
occasional rides in planes. 
     Since laws and regulations were, for McCarthy, nonexistent, his 
business and financial affairs are, like his life, a chaos of 
Page 931
     He seized upon Communism. "That's it," he said. "The government 
is full of communists. We can hammer away at them." Without any real 
conception of what he was doing, and without any research or knowledge 
of the subject, on February 9, McCarthy waved a piece of paper and 
said "I have here in my hand a list of 205 members of the Communist 
Party still working and shaping the policy of the State Department. 
Page 932
     On Feb 20th, in an incoherent speech in the Senate was six hours 
of bedlam, as case after case was presented filled with contradictions 
and irrelevancies. According to Senate Republican Leader Taft, "It was 
a perfectly reckless performance." Nevertheless, Taft and his 
colleagues determined to accept and support these charges since they 
would injure the Administration. Few people realize that in five years 
of accusations, McCarthy never turned up a Communist in the State 
Department although undoubtedly there must have been some. 
Page 933
     He claimed that "the top Russian espionage agent" in the U.S., 
Alger Hiss's boss in the State Department, "the chief architect of our 
Far Eastern policy" was Professor Owen Lattimore. The trouble was 
Lattimore was not a Communist, not a spy, and not employed by the 
State department. 
     In July, the Tydings subcommittee condemned McCarthy for a "fraud 
and a hoax." McCarthy had the power of an inflamed and misled public 
opinion. Tydings was beaten in Maryland in 1950. Benton from 
Connecticut who introduced the resolution to expel McCarthy from the 
Senate in 1951 and whose charges were fully supported by the Senate's 
investigation of McCarthy's private finances, was defeated in 1952. 
During this period, McCarthy violated more laws and regulations than 
any previous senator in history. When a reporter once said "Isn't that 
a classified document?" McCarthy said, "It was. I just declassified 
Page 934
     Eisenhower was soon boasting that 1,456 Federal workers had been 
"separated" in the first four months of the Eisenhower security 
program. 2,200 at the end of the first year. Nixon said "We're kicking 
the Communists and fellow travellers and security risks out of the 
Government by the thousands." It was soon clear that no Communists 
were kicked out and that security risks included all kinds of persons. 
     For a while, the Administration tried to outdo McCarthy by 
demonstrating in hearings that China had been "lost" to the Communists 
because of the careful planning and intrigue of Communists in the 
State Department. But they failed to prove their contention. 
Page 935
     There is considerable truth in the China Lobby's contention that 
the American experts on China were organized into a single 
interlocking group which had a general consensus of a Leftish 
character. It is also true that this group, from its control of funds, 
academic recommendations, and research of publication opportunities, 
could favor persons who accepted the established consensus and could 
injure, financial or in professional advancement, persons who did not 
accept it. It is also true that the established group, by its 
influence on book reviewing in the New York Times, the Herald Tribune 
and the Saturday Review, a few magazines including the "liberal 
weeklies" and in the professional journals, could advance or hamper 
any specialist's career. It is also true that these things were done 
in the United States by the Institute of Pacific Relations, that this 
organization had been infiltrated by Communists, and by Communist 
sympathizers, and that much of this group's influence arose from its 
access to and control over the flow of funds from financial 
foundations to scholarly activities. All these things were true, but 
they would have been true of many other areas of American scholarly 
research and academic administration.
     On the other hand, the charges of the China Lobby that China was 
"lost" because of this group is not true. Yet the whole subject is of 
major importance in understanding the twentieth century.
Page 936
     Lattimore, because he knew Mongolian, tended to become 
everybody's expert. Many of these experts which were favored by the 
Far East "establishment" in the Institute of Pacific RElations were 
captured by Communist ideology. Under its influence, they 
propagandized, as experts, erroneous ideas and sought to influence 
policy in mistaken directions. 
     Behind this unfortunate situation lies another, more profound, 
relationship, which influences matters much broader than Far Eastern 
policy. It involves the organization of tax-exempt fortunes of 
international financiers into foundations to be used for educational, 
scientific, and "other public purposes." Sixty or more years ago, 
public life in the East was dominated by the influence of "Wall 
Street" referring to international financial capitalism deeply 
involved in the gold standard, foreign exchange fluctuations,floating 
of fixed-interest securities and shares for stock-exchange markets. 
Page 937
     This group, which in the United States, was completely dominated 
by J.P. Morgan and Company from the 1880s to the 1930s was 
cosmopolitan, Anglophile, internationalist, Ivy League, eastern 
seaboard, high Episcopalian and European-culture conscious. Their 
connection with the Ivy League colleges rested on the fact that large 
endowments of these institutions required constant consultation with 
the financiers of Wall Street and was reflected in the fact that these 
endowments were largely in bonds rather than in real estate or common 
stocks. As a consequence of these influences, J.P. Morgan and his 
associates were the most significant figures in policy making at 
Harvard, Columbia and Yale while the Whitneys and Prudential Insurance 
Company dominated Princeton. The chief officials of these universities 
were beholden to these financial powers and usually owed their jobs to 
     The significant influence of "Wall Street" (meaning Morgan) both 
in the Ivy League and in Washington explains the constant interchange 
between the Ivy League and the Federal Government, and interchange 
which undoubtedly aroused a good deal of resentment in less-favored 
circles who were more than satiated with the accents, tweeds, and High 
Episcopal Anglophilia of these peoples. Poor Dean Acheson, in spite of 
(or perhaps because of) his remarkable qualities of intellect and 
character, took the full brunt of this resentment from McCarthy and 
his allies. The same feeling did no good to pseudo-Ivy League figures 
like Alger Hiss.
Page 938
     In spite of the great influence of this "Wall Street" alignment, 
an influence great enough to merit the name of the "American 
Establishment," this group could not control the Federal Government 
and, in consequence, had to adjust to a good many government actions 
thoroughly distasteful to the group. The chief of these were in 
taxation law, beginning with the graduated income tax in 1913, but 
culminating above all else with the inheritance tax. These tax laws 
drove the great private fortunes dominated by Wall Street into tax-
exempt foundations which became the major link in the Establishment 
network between Wall Street, the Ivy League and the Federal 
government. Dean Rusk, Secretary of State after 1961, formerly 
president of the Rockefeller Foundations, is as much a member of this 
nexus as Alger Hiss, the Dulles brothers, Jerome Green, etc. 
     More than fifty years ago, the Morgan firm decided to infiltrate 
the Left-wing political movements of the United States. This was 
relatively easy to do since these groups were starved for funds and 
eager for a voice to reach the people. Wall Street supplied both. The 
purpose was not to destroy, dominate, or take over but was really 
1) to keep informed about the Left-wing or liberal groups;
2) to provide them with a mouthpiece so they could blow off steam;
3) to have a final "veto" on their actions if they ever went radical. 
     There was nothing really new about this decision, since other 
financiers had talked about it and even attempted it earlier. 
     The best example of the alliance of Wall Street and Left-wing 
publication was "The New Republic" a magazine founded in 1914 by 
Willard Straight using Payne Whitney money. The original purpose for 
establishing the paper was to provide an outlet for the progressive 
Left and to guide it in an Anglophile direction. This latter task was 
entrusted to Walter Lippmann. 
     Willard Straight, like many Morgan agents, was present at the 
Paris Peace Conference in 1919. 
Page 940
     The first New Republic editor,Herbert Croly wrote, "Of course, 
the Straights could always withdraw their financial support if they 
ceased to approve of the policy of the paper;and in that event, it 
would go out of existence as a consequence of their disapproval." The 
chief achievement of The New Republic in 1914-1918 and again in 1938-
1948 was for interventionism in Europe. 
Page 942
     Straight allowed the Communists to come into the New Republic. 
The first to arrive was Lew Frank. 
Page 944
     Frank joined a "Communist Research Group" which met in the 
Manhattan home of the wealthy "Wall Street Red," Frederick Vanderbilt 
Page 945
     To Morgan, all political parties were simply organizations to be 
used, and the firm always was careful to keep a foot in all camps. 
     Like the Morgan interest libraries, museums and art, its 
recognition of the need for social work among the poor went back to 
the original founder of the firm, George Peabody. To this same figure 
may be attributed the use of tax-exempt foundations for controlling 
these activities as in the use of Peabody foundations to support 
Peabody libraries and museums. Unfortunately, we do not have space 
here for this great and untold story, but it must be remembered that 
what we do say is part of a much larger picture. 
     Our concern at the moment is with the links between Wall Street 
and the Left, especially the Communists. Here the chief link was the 
Thomas W. Lamont family. Tom Lamont was brought into the Morgan firm, 
as Straight several years later, by Henry P. Davison, a Morgan 
partner. Each had a wife who became a patroness of Leftish causes and 
two sons, of which the elder was a conventional banker, and the 
youngest was a Left-wing sympathizer and sponsor. 
     HUAC files show Tom Lamont, his wife Flora, and his son Corliss 
as sponsors and financial angels to almost twenty extreme Left 
organizations, including the Communist Party itself. 
Page 946
     In 1951, the McCarran Committee sought to show that China had not 
been lost to the Communists by the deliberate actions of a group of 
academic experts on the Far East and Communist fellow travellers whose 
work in that direction was controlled and coordinated by the Institute 
of Pacific Relations (IPR). The influence of the Communists in the IPR 
is well established but the patronage of Wall Street is less well 
     The IPR was a private association of ten independent national 
councils in ten countries concerned with affairs in the Pacific. Money 
for the American Council of the IPR came from the Carnegie Foundation 
and the Rockefeller Foundation. The financial deficits which occurred 
each year were picked up by financial angels, almost all with close 
Wall Street connections. There can be little doubt that the IPR line 
had many points in common both with the Kremlin's party line on the 
Far East and with the State Department's police line in the same area. 
Clearly there were some Communists, even party members, involved but 
it is much less clear that there was any disloyalty to the U.S. There 
was a great deal of intrigue both to help those who agreed with the 
IPR line and to influence U.S. government policy in this direction, 
but there is no evidence of which I am aware of any explicit plot or 
conspiracy to direct American policy in a direction favorable either 
to the Soviet Union or to international Communism. 
Page 948
     It must be confessed that the IPR had many of the marks of a 
fellow traveller or Communist "captive" organization. But this does 
not mean that the Radical Right version of these events is accurate. 
For example, Elizabeth Bentley testified on the IPR and identified 
almost every person associated with the organization as a Communist. 
Page 949
     This Radical Right fairy tale, which is not an accepted folk myth 
in many groups in America, pictured the recent history of the United 
States as a well-organized plot of extreme Left-wing elements, 
operating from the White House itself and controlling all the chief 
avenues of publicity in the United States. This plot, if we are to 
believe the myth, worked through such avenues as the New York Times, 
Herald Tribute, Christian Science Monitor, Washington Post, Atlantic 
Monthly, and Harper's Magazine and had at its core the wild-eyed and 
bushy-haired theoreticians of Socialist Harvard and the London School 
of Economics. It was determined to bring the U.S. into World War II on 
the side of England (Roosevelt's first love) and Soviet Russia (his 
second love) and, as part of this consciously planned scheme, invited 
Japan to attack Pearl Harbor all the while undermining America's real 
strength by excessive spending and unbalanced budgets. 
Page 950
     This myth, like all fables, does in fact have a modicum of truth. 
There does exist and has existed for a generation, an international 
Anglophile network which operates to some extent in the way the 
Radical Right believes the Communists act. In fact, this network, 
which we may identify as the Round Table Groups, has no aversion to 
cooperating with the Communists, or any other groups, and frequently 
does so. I know of the operations of this network because I have 
studied it for twenty years and was permitted for two years, in the 
early 1960s, 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 have objected, both 
in the past and recently, to a few of its policies but in general my 
chief difference of opinion is that it wishes to remain unknown, and I 
believe its role in history is significant enough to be known. 
     The Round Table Groups have already been mentioned several times. 
At the risk of some repetition, the story will be summarized here 
because the American branch of this organization (sometimes called the 
"Eastern Establishment) has played a very significant role in the 
history of the United States in the last generation. 
     The Round Table Groups were semi-secret discussion and lobbying 
groups whose original purpose was to federate the English-speaking 
world along lines laid down by Cecil Rhodes. By 1915, Round Table 
groups existed in seven countries including England, South Africa, 
Canada, Australia, New Zealand, India and the United States. 
Page 951
     Money for their activities originally came from Cecil Rhodes, 
J.P. Morgan, the Rockefeller and Whitney families and associates of 
bankers Lazard Brothers and Morgan, Grenfell and Company. 
     The chief backbone of this organization grew up along the already 
existing financial cooperation running from the Morgan Bank in New 
York to a group of international financiers in London led by Lazard 
     Lionel Curtis established in England and each dominion a front 
organization to the existing local Round Table Group. This front 
organization called the Royal Institute of Public Affairs, had as its 
nucleus in each area the existing submerged Round Table Group. 
Page 952
     In New York, it was known as the Council on Foreign Relations and 
was a front for J.P. Morgan and Company in association with the very 
small American Round Table Group. The American organizers were 
dominated by the large number of Morgan "experts" including Lamont and 
Beer, who had gone to the Paris Peace Conference and there became 
close friends with the similar group of English "experts" which had 
been recruited by the Milner group. In fact, the original plans for 
the Royal Institute and the Council on Foreign Relations.
     In 1928, the Council on Foreign Relations was dominated by the 
associates of the Morgan bank. Closely allied with this Morgan 
influence were a small group of Wall Street lawyers whose chief 
figures were Elihu Root, John W. Davis, the Dulles Brothers, John J. 
Page 953
     On this basis, there grew up in the 20th century a power 
structure between London and New York which penetrated deeply into 
university life, the press, and the practice of foreign policy. 
     The American branch of this "English Establishment" exerted much 
of its influence through five American newspapers (New York Times and 
Herald Tribune, Christian Science Monitor, Washington Post, Boston 
Evening Transcript). It might be pointed out that the existence of 
this Wall Street Anglo-American axis is quite obvious once it is 
pointed out. It is reflected by the fact that such Wall Street 
luminaries such as John W. Davis, Lewis Douglas, Jock Whitney and 
Douglas Dillon were appointed to be American ambassadors in London. 
     This double international network in which the Round Table groups 
formed the semi-secret or secret nuclei of the Institutes of 
International Affairs was extended into a third network for Pacific 
Affairs in 1925 by the same people for the same motives. 
Page 954
     The chief aims of this elaborate, semi-secret organization were 
largely commendable: to coordinate the international activities and 
outlooks of all the English-speaking world into one; to work to 
maintain peace; to help backward, colonial, and underdeveloped areas 
toward prosperity along the lines somewhat similar to those taught at 
Oxford and the University of London. 
     These organizations and their financial backers were in no sense 
reactionary or Fascistic persons, as Communist propaganda would like 
to depict them. Quite the contrary, they were gracious and cultured 
gentlemen who were much concerned with the freedom of expression of 
minorities and the rule of law for all and who were convinced that 
they could forcefully civilize the Boers, the Irish, the Arabs, and 
the Hindus, and who are largely responsible for the partitions of 
Ireland, Palestine, and India. If their failures now loom larger than 
their successes, this should not be allowed to conceal the high 
motives with which they attempted both. 
     It was this group of people, whose wealth and influence so 
exceeded their experience and understanding, who provided much of the 
framework of influence which the Communist sympathizers and fellow 
travellers took over in the United States in the 1930s. It must be 
recognized that the power of these energetic Left-wingers exercised 
was never their own power or Communist power but was ultimately the 
power of the international financial coterie, and, once the anger and 
suspicions of the American people were aroused as they were in the 
1950s, it was a fairly simple matter to get rid of the Red 
sympathizers. Before this could be done, however, a congressional 
committee, following backward to their source the threads which led 
from the admitted Communists like Whittaker Chambers, through Alger 
Hiss, and the Carnegie Endowment to Thomas Lamont and the Morgan Bank, 
fell into the whole complicated network of the interlocking tax-exempt 
foundations. The Eighty-third Congress set up in 1953 a Special Reece 
Committee to investigate Tax-Exempt Foundations. It soon became clear 
that people of immense wealth would be unhappy if the investigation 
went too far and that the "most respected" newspapers in the country, 
closely allied with these men of wealth, would not get excited enough 
about any revelations to make the publicity worthwhile. An interesting 
report showing the Left-wing associations of interlocking nexus of 
tax-exempt foundations was issued in 1954 rather quietly.. Four years 
later, the Reece Committee's general counsel, Rene A Wormser, wrote a 
shocked, but not shocking, book on the subject called "Foundations: 
Their Power and Influence."
Page 956
     Jerome Green is a symbol of much more than the Wall Street 
influence in the IPR. He is also a symbol of the relationship between 
the financial circles of London and those of the eastern U.S. which 
reflects one of the most powerful influences in 20th century American 
and world history. The two ends of this English-speaking axis have 
sometimes been called, perhaps facetiously, the English and American 
Establishments. There is, however, a considerable degree of truth 
behind the joke, a truth which reflects a very real power structure. 
It is this power structure which the Radical Right in the U.S. has 
been attacking for years in the belief they are attacking the 
Communists. These misdirected attacks did much to confuse the American 
people in 1948-1955. By 1953 most of these attacks had run their 
course. The American people, thoroughly bewildered at the widespread 
charges of twenty years of treason and subversion, had rejected the 
Democrats and put into the White House a war hero, Eisenhower. At the 
time,two events, one public and one secret, were still in process. The 
public one was the Korean War; the secret one was the race for the 
thermonuclear bomb. 
Page 965
     On March 1, 1954, we exploded our first real thermonuclear bomb 
at Bikini atoll. It was a horrifying device which spread death-dealing 
radioactive contamination over more than 8,000 square miles and 
injurious radiation over much of the world. 
Page 968
     To prepare public opinion to accept use of the H-bomb, if it 
became necessary, Strauss sponsored a study of radioactive fallout 
whose conclusion was prejudged by calling it "Project Sunshine." By 
selective release of some evidence and strict secrecy of other 
information, they tried to establish in public opinion that there was 
no real danger to anyone from nuclear fallout even in all-out nuclear 
war. This gave rise to controversy between the scientists and the 
Administration on the danger of fallout. 
     The Eisenhower through the Dulles doctrine of "massive 
retaliation" was so deeply committed to nuclear war that it could not 
permit the growth of public opinion which would refuse to accept the 
use of nuclear weapons because of objections to the danger of fallout 
to neutrals and non-combatants. By 1953, this struggle became so 
intense that supporters of massive retaliation decided they must 
destroy the public image and public career of Oppenheimer. 
Page 970
     The emphasis on nuclear retaliation to Communist aggression 
anywhere in the world made it necessary to draw a defence perimeter 
over which such aggression would trigger retaliation. At the 
insistence of MacArthur, that perimeter was drawn to exclude Korea, 
Formosa and Mainland China; accordingly, all American forces had been 
evacuated from South Korea in June 1949.
Page 971
     The Soviet Union interpreted this to mean that the U.S. would 
allow South Korea to be conquered by the North. Instead, when Russia, 
through its satellite North Korea, sought to take Korea, this game 
rise to an American counteraction. 
Page 972
     For forty-eight hours after the Korean attack, the world 
hesitated, awaiting America's reaction. Truman immediately committed 
American air and sea forces in the area south of 38 degrees and 
demanded a UN condemnation of the aggression. Thus, for the first time 
in history, a world organization voted to use collective force to stop 
armed aggression. This was possible because the North Korean attack 
occurred at a time when the Soviet delegation was absent from the UN 
Security Council, boycotting it as a protest at the presence of the 
delegation from Nationalist China. Accordingly, the much-used Soviet 
veto was unavailable. 
Page 974
     The frontier was reached by UN forces as the month ended. The Red 
Chinese decision to intervene was made nine days after American troops 
crossed the 38th parallel into North Korea. It was inevitable as Red 
China could hardly be expected to allow the buffer North Korean state 
to be destroyed and American troops to occupy the line of the Yalu. As 
soon as it became clear that American forces would continue past the 
38th parallel to the Yalu, the Chinese intervened, not to restore the 
38th parallel frontier but to clear the U.N. forces from Asia 
Page 975
     The Truman Administration, after the victory at Inchon, did not 
intend to stop at the 38th parallel and hoped to reunite the country 
under the Seoul government. It is probable that this alone triggered 
the Chinese intervention. 
     On October 9, 1950, two of MacArthur's planes attacked a Russian 
air base sixty-two miles inside Russian territory.
Page 977
     After Truman removed MacArthur, Republican leaders spoke publicly 
of impeaching the President. Senator William Jenner said: This country 
today is in the hands of a secret inner coterie which is directed by 
agents of the Soviet Union. We must cut this whole cancerous 
conspiracy out at once. Our only choice is to impeach the president 
and find out who is the secret invisible government which has so 
cleverly led our country down the road to destruction."
Page 979
     On the whole, neo-isolationist discontent was a revolt of the 
ignorant against the informed or educated, of the nineteenth century 
against the insoluble problems of the twentieth, of the Midwest of Tom 
Sawyer against the cosmopolitan East of J.P. Morgan and Company, of 
old Siwash against Harvard, of the Chicago Tribune against the 
Washington Post or New York Times, of simple absolutes against complex 
relativisms, of immediate final solutions against long-range partial 
alleviations, of frontier activism against European though, a 
rejection, out of hand, of all the complexities of life which had 
arisen since 1915 in favor of a nostalgic return to the simplicities 
of 1905, and above all a desire to get back to the inexpensive, 
thoughtless, and irresponsible international security of 1880. 
Page 980 
     This neurotic impulse swept over the U.S. in a great wave in the 
years 1948-1955, supported by hundreds of thousands of self-seeking 
individuals, especially peddlers of publicity and propaganda, and 
financed no longer by the relatively tied-up funds of declining Wall 
Street international finance, but by its successors, the freely 
available winnings of self-financing industrial profits from such new 
industrial activities as air power, electronics, chemicals, which 
pretended to themselves that their affluence was entirely due to their 
own cleverness. At the head of this list were the new millionaires led 
by the Texas oil pluggers whose fortunes were based on tricky tax 
provisions and government-subsidized transportation systems. 
Page 982
     The Kremlin was quite wiling to keep America's men, money, and 
attention tied down in Korea. 
Page 985
     During Truman's last four budgets, expenditures on national 
security increased from $13 billion in 1950 to $50 billion in 1953. 
Page 986
     The Korean War disrupted the pleasures of the postwar economic 
boom with military service, shortages, restrictions and cost-of-living 
inflation which could not help but breed discontent. And through it, 
all the mobilized wealth of the country, in alliance with most of the 
press, kept up a constant barrage of "Communists in Washington," 
"twenty years of treason." In creating this picture, the leaders of 
the Republican Party totally committed themselves to the myths of the 
neo-isolationists and of the Radical Right. 
     In June 1951, Senator McCarthy delivered a speech in the Senate 
of 60,000 words attacking General Marshall as a man "steeped in 
falsehood" who has "recourse to the lie whenever it suits his 
convenience," one of the architects of America's foreign policy made 
by "men high in Government who are concerting to deliver us to 
disaster, a conspiracy so black that when it is finally exposed, its 
principals shall be forever deserving of the maledictions of all 
honest men."
Page 987
     Eisenhower had no particular assets except a bland and amiable 
disposition combined with his reputation as a victorious general. He 
also had a weakness, one which is frequently found in his profession, 
the conviction that anyone who has become a millionaire, even by 
inheritance, is an authoritative person on almost any subject. 
Page 988 
     If elected, he would go to Korea to make peace. Although himself 
not a neo-isolationist or a reactionary, Eisenhower had few deep 
personal convictions and was eager to be president. When his advisers 
told him that he must collaborate with the Radical Right, he went all 
the way, even to the extent of condoning McCarthy's attack on General 
Marshall when he, under McCarthy's pressure, removed a favorable 
reference to Marshall from a Wisconsin speech. 
     Eisenhower allotted the functions of government to his Cabinet 
members ("eight millionaires and a plumber"). 
Page 991
     Attorney General Herbert Brownell confided to a businessmen's 
luncheon in Chicago that President Truman, knowing that Harry Dexter 
White was a Russian spy, had promoted him from assistant secretary of 
the treasury to executive director of the U.S. Mission to the 
International Monetary Fund in 1946. The House Committee on Un-
American activities at once issued a subpoena to the ex-President to 
testify which was ignored. 
     McCarthy's attacks on the U.S. Information Agency overseas 
libraries led to burning of books like Tom Sawyer and Robin Hood as 
subversive (Robin Hood stole from the rich and gave to the poor, 
clearly a Communist tactic). 
Page 992
     Dulles publicly announced the conception of "massive retaliation" 
before the Council on Foreign Relations on January 12, 1954. 
Page 995
     W.L. Borden wrote a letter to J. Edgar Hoover stating that "J. 
Robert Oppenheimer is an agent of the Soviet Union." This charge was 
supported by a biased rehash of all the derogatory stories about 
Oppenheimer and was made up of wild charges which no responsible 
person has ever been willing to defend." On the basis of this letter 
and at the direct order of President Eisenhower, Chairman Strauss 
suspended Oppenheimer's security clearance. 
Page 998
     Broadest of the three narrowing circles of outlook was a violent 
neurotic rebellion of harassed middle-class persons against a long-
time challenge to middle-class values arising from depression, war, 
insecurity, science, foreigners, and minority groups of all kinds. 
     Public opinion always supported large defence forces.
     Public opinion gave much less support to foreign aid.
     These statements based on public opinion polls. 
Page 1009
     Immediately after Stalin's death, the "collective leadership" was 
headed by Malenkov, Beria and Molotov. Malenkov supported a policy of 
relaxation with increased emphasis on production of consumers goods 
and rising standards of living, as well as increased efforts to avoid 
any international crises which might lead to war; Beria supported a 
"thaw" in internal matters, with large-scale amnesties for political 
prisoners as well as rehabilitation of those already liquidated; 
Molotov continued to insist on the "hard" policies of Stalin with no 
relaxation of domestic tyranny. 
Page 1010
     Wild rumors and and some relaxation, at Beria's behest, in East 
Germany, gave rise to false hopes and on June 16, 1953, these workers 
rose up against the Communist government. These uprising were crushed 
with the full power of the Soviet occupation armored divisions. Using 
this as an excuse, the Kremlin leaders suddenly arrested Beria and 
shot him. 
     The overthrow of the master of terror was followed by an 
extensive curtailment of the secret police and its powers. Secret 
courts were abolished. 
Page 1011
     The gradual elimination of Molotov found Khrushchev as the 
champion of "thaw" in the Cold War.
Page 1012
     Khrushchev's six-day visit to Tito is of great importance because 
it showed Russia in an apologetic role for a major past error and 
because it reversed Stalin's rule that all Communist parties 
everywhere must follow the Kremlin's leadership such that "differences 
in the concrete application of Socialism are the exclusive concern of 
individual countries." En route home, he stopped in Sofia and place 
the fuse in another, even larger, stick of dynamite, by a secret 
denunciation of Stalin personally as a bloodthirsty tyrant. Back in 
Moscow, Khrushchev won over the majority by arguing that the loyalty 
of the satellites, and especially their vital economic cooperation, 
could be ensured better by a loose leash than by a club. 
Page 1013
     The Russians spoke favorably about disarmament which, to them, 
meant total renunciation of nuclear weapons and drastic cuts in ground 
forces, a combination which would make the United States very weak 
against Russia while leaving Russia still dominant in Europe. 
Page 1012
     The Geneva Conference discussions were conducted in an 
unprecedented atmosphere of friendly cooperation which came to be 
known as the "Geneva spirit" and continued for several years and was 
never completely overcome even when matters were at their worst 
following the U-2 incident of 1960 and the Cuban crisis of 1962.
Page 1016
     At the Twentieth Party Congress in February 1956, the first 
speech of 50,000 words delivered by Khrushchev over seven hours urged 
the need for coexistence with the West and references to the 
possibility of peaceful rather than revolutionary change from 
capitalism to Socialism. 
     The real explosion came at a secret all-night session on July 24 
in a 30,000 word speech where Khrushchev made a horrifying attack on 
Stalin as a bloodthirsty and demented tyrant who had destroyed tens of 
thousands of loyal party members on falsified evidence. The full 
nightmare of the Soviet system was revealed. 
Page 1017
     A few passages from this speech: 
     "This concept "enemy of the people" eliminated any possibility of 
rebuttal. Usually, the only evidence used, against all the rules of 
modern legal science, was the confession of the accused, and as 
subsequent investigation showed, such "confessions" were obtained by 
physical pressure on the accused. The formula "enemy of the people" 
was specifically introduced for the purpose of physically annihilating 
these persons. 
     How is it that a person confesses to crimes that he has not 
committed? Only in one way - by application of physical pressure, 
tortures, taking away of his human dignity.
Page 1019
     The "secret speech" also destroyed Stalin's reputation as a 
military genius:
     "Stalin said that the tragedy of the war resulted from the 
unexpected attack by the Germans. This is completely untrue. Churchill 
warned Stalin that the Germans were going to attack. Stalin took no 
had and warned that no credence be given to information of this sort 
not to provoke a German invasion. Had our industry been mobilized 
properly and in time to supply the army, our wartime losses would have 
been decidedly smaller. 
     Very grievous consequences followed Stalin's destruction of many 
military commanders during 1937-1941 because of his suspiciousness and 
false accusations. During that time, leaders who had gained military 
experience in Spain and the Far East were almost completely 
Page 1021
     Stalin's 1948 "Short Biography" is an expression of most 
dissolute flattery, making a man into a god, transforming him into an 
infallible sage, "the greatest leader and most sublime strategist of 
all times and nations." We need not give examples of the loathsome 
adulation filling this book. They were all approved and edited by 
Stalin personally. He added "Although he performed his task of leader 
of the people with consummate skill and enjoyed the unreserved support 
of the whole Soviet people, Stalin never allowed his work to be marred 
by the slightest hint of vanity, conceit, or self-adulation." I'll 
cite one more insertion by Stalin: "Comrade Stalin's genius enabled 
him to divine the enemy's plans and defeat them. The battles in which 
Comrade Stalin directed the Soviet armies are brilliant examples of 
operational military skill." "
Page 1022
     By directing all the criticism of Stalin personally, he 
exculpated himself and the other Bolshevik survivors who were fully as 
guilty as Stalin was - guilty not merely because they acquiesced in 
Stalin's atrocities from fear, as admitted in Khrushchev's speech, but 
because they fully cooperated with him. 
     A study of Khrushchev's life shows that he defended Stalin's acts 
which caused the deaths of millions. The fault was not merely with 
Stalin; it was with the system, it was with Russia. 
     The more completely total and irresponsible power is concentrated 
in one man's hands, the more frequently will a monster of sadism be 
     The very structure of Russian life drove Khrushchev, as it had 
driven Stalin, to concentrate all power in his own hands. Neither man 
could relax halfway to power for fear that someone else would continue 
on, seeking the peak of power. The basis of the whole system was fear 
and like all neurotic drives in a neurotic system, such fear could not 
be overcome even by achievement of total power. That is why it grows 
into paranoia as it did with Ivan the Terrible, Peter the Great, Paul 
I, Stalin and others. 
Page 1031
     Having failed to block Khrushchev's economic plans, his rivals in 
the Presidium were reduced to a last resort, they had to get rid of 
the man himself. At a Presidium meeting on June 18, 1957, the motion 
was made to remove Khrushchev as the first party secretary. The 
discussion grew violent with Malenkov and Molotov attaching and 
Khrushchev defending himself. He was accused of practicing a "cult of 
personality" and of economic mismanagement. The vote was 7-4 against 
him with Mikoyan, Kirichenko and Suslov his only supporters. He was 
offered the reduced position of minister of agriculture. 
Page 1032
     Khrushchev refused to accept the result, denying that the 
Presidium had the authority to remove a first secretary, and appealing 
to the Central Committee. The members of this larger group joined in 
the discussions as they arrived while Khrushchev's supporters sought 
to delay the vote until his men could come in from the provinces. 
Marshall Zhukov provided planes to bring in the more distant ones. The 
discussion became bitter when Zhukov threatened to produce evidence 
that Malenkov and Molotov had been deeply involved in the bloody 
purges of 1937. Madame Furtseva, an alternate member of the Presidium, 
filibustered with a speech for six hours. Eventually, there were 309 
members present. When the vote was finally taken, Khrushchev's 
supporters voted for him solidly and his removal, already voted by the 
Presidium, was reversed. Khrushchev at once counterattacked. He moved 
and carried the expulsion from the Presidium of Malenkov, Molotov, 
Kaganovich and Shepilov for "anti-party" activities. Then came the 
election of a new Presidium with fifteen full members instead than the 
previous eleven, and nine alternates instead of the previous six. 
     This change was Khrushchev's most smashing personal victory and 
the most significant event in Russia's internal history. It led 
Khrushchev to a position of political power more complete than 
Stalin's had been although it was clear that Khrushchev would never be 
allowed to abuse his power the way Stalin had done. 
Page 1033
     Khrushchev did not rest on his oars. During the summer of 1957, 
he made notable concessions to the peasants (ending compulsory 
deliveries from products of their personal plots), slammed down the 
lid on freedom of writers and artists, pushed vigorously both the 
"virgin lands" scheme and the decentralization of industry, and worked 
to curtail the growing autonomy of the armed forces and revived trade 
unions into the new regional economic councils. 
Page 1034
     Russian objection to city-bombing or to strategic terror of the 
V-2 kind as ineffective and a waste of resources was undoubtedly 
     The Soviet Union has no idea of being able to achieve military 
victory over the United States simply because they have no method of 
occupying the territory of the United States at any stage in a war. 
Page 1035
     They are unlikely to use nuclear weapons first although fully 
prepared to resort to them once they are used by an enemy. 
Page 1036
     However such a war is regarded by the Soviet leaders as highly 
undesirable while they, in a period of almost endless cold war, can 
seek to destroy capitalist society by nonviolent means. This theory of 
"nibbling" the capitalist world to death is combined with a tactic 
which would resist "capitalist imperialism" by encouraging "anti-
     Stalin and Dulles saw the world largely in black-and-white terms: 
who was not with them was obviously against them.
Page 1037
     Stalin did not see the possibility of colonial areas becoming 
non-Communist and non-colonial independent states and rebuffed the 
local native groups. Khrushchev did the opposite. 
Page 1038
     This shift in the Soviet attitude toward neutralism was helped by 
Dulles' refusal to accept the existence of neutralism. His rebuffs 
tended to drive those areas which wanted to be neutral into the arms 
of Russian because the new nations of the developing Buffer Fringe 
valued their independence above all else. The Russian acceptance of 
neutralism may be dated about 1954 while Dulles still felt strongly 
adverse to neutralism four or five years later. This gave the Soviet 
Union a chronological advantage to compensate for its many 
disadvantages in the basic struggle to win the favor of the neutrals. 
Page 1039
     By 1939, there was only one independent state in southeast Asia: 
Siam. Thus all southeast Asia, except Thailand, was under the colonial 
domination of five Western states in 1939. 
     French Indochina emerged from Japanese occupation as the three 
states of Vietnam, Laos, and Cambodia, each claiming independence. 
Efforts by the European Powers to restore their prewar rule led to 
violent clashes with the supporters of independence. These struggles 
were brief and successful in Burma and Indonesia but were very 
protracted in Indochina.
Page 1042
     In all these areas, native nationalists were inclined to the 
political Left, if for no other reason than the fact that the 
difficulties of capital accumulation and investment to finance 
economic improvements could be achieved only under state control. In 
some cases, such Communism may have been ideological but inmost cases, 
it involved little more than the desire to play off the Soviet Union 
and China against the Western imperialist Powers. 
Page 1042
     A communist revolt in the Philippines had already begun and was 
joined by similar uprisings in Burma, Indonesia, and Malaya. Most of 
these revolts took the form of agrarian agitations and armed raids by 
Communist guerrilla jungle fighters. Since the operated on a hit-and-
run basis and had to live off the local peasantry, their exploitation 
of peasant life eventually made them decreasingly welcome to this very 
group for whom they pretended to be fighting.
     In the Philippines, the rebels were smashed in 1953. In 
Indonesia, Sukarno repressed the insurrection and executed its 
leaders. In Malaya, the Communists were systematically hunted down and 
destroyed by British troops. In Burma, they weren't eliminated until 
     The real problem was Indochina. There, the French Army was 
uncompromising and Communist leadership was skillful. As a result, the 
struggle became part of the Cold War. The Malay peninsula is dominated 
by a series of mountain ranges with their intervening rivers running 
southward from Chinese Yunnan. These rivers fan out into fertile 
alluvial deltas which produce surplus foods for undemanding peoples. 
Page 1043
     Indochina brought considerable wealth to France. After the 
Japanese withdrawal, the Paris government was reluctant to see this 
wealth, chiefly from the tin mines, fall into native groups and by 
1949, decided to use force to recover the area. 
     Opposed to the French effort was Ho Chi Minh, a member of the 
French Communist Party. Ho had set up a coalition government under his 
Viet Minh Party and proclaimed independence for Vietnam (chiefly 
Tonkin and Annam) in 1945, while French troops, in a surprise coup, 
seized Saigon in the south. Ho received no support from the Kremlin. 
     At first, Ho sought support from the United States but after the 
establishment of Red China in 1949, he turned to that new Communist 
state for help. Mao's government was the first state to give Vietnam 
diplomatic recognition (January 1950) and at once began to send 
military supplies and guidance. Since the U.S. was granting extensive 
aid to France, the struggle in Vietnam became, through surrogates, a 
struggle between the United States and China. In world opinion, this 
made the U.S. the defender of European imperialism against anti-
colonial native nationalism. 
     During this turmoil, independent neutralist governments came into 
existence in Laos and Cambodia. Both states accepted aid from whoever 
would give it and both were ruled by an unstable balance of pro-
Communists, neutralists, and pro-Westerners, all with armed 
supporters. On the whole, the neutralist group was largest and the 
pro-Western was the smallest but could obtain support from America's 
wealth. The decisive influence was that the Communists were prepared 
to accept and support neutralism years before Dulles would condone it. 
Page 1044
     The readiness of Dulles and the French Army to force a showdown 
in Vietnam was unacceptable to the British and many in France. Out of 
this came a Soviet suggestion for a conference on Indochina in Geneva. 
     By early 1954, the Communist guerrillas were in control of most 
of northern Indochina, were threatening Laos, and were plaguing 
villages as far south as Saigon. About 200,000 French troops and 
300,000 Vietnamese militia were tied in knots by about 335,000 Viet 
Minh guerrillas. France was being bled to death with nothing to show 
for it. 
     By the end of March 1953, the outer defences of the French strong 
point at Dien Bien Phu were crumbling. The French chief of staff found 
Dulles ready to risk all-out war with Red China by authorizing direct 
American intervention in Indochina. As usual, Dulles thought that 
wonders could be achieved by air strikes alone against the besiegers 
of Dien Bien Phu and for a few day, at Dulles' prodding, the United 
States tottered "on the brink of war." Dulles proposed "a united 
action policy:" "If Britain would join the United States and France 
would agree to stand firm, the three Western states could combine with 
friendly asian nations to oppose communist forces. 
Page 1045
     President Eisenhower agreed but his calls to Churchill and Eden 
found the British government opposed to the adventure because the 
Sino-Soviet Treaty of 1950 bound Russia to come to the assistance of 
China if it were attacked by the United States as Dulles contemplated. 
     During the 1954 Far Eastern Geneva Conference, two American 
aircraft carriers, loaded with atomic weapons, were cruising the South 
China Sea, awaiting orders from Washington to hurl their deadly bombs 
at the Communist forces besieging the 15,000 exhausted troops trapped 
at Dien Bien Phu. In Washington, Admiral Radford was vigorously 
advocating such aggressive action on a generally reluctant government. 
In Paris, public outrage was rising over Indochina where the French 
had expended 19,000 lives and $8 billion without improving matters a 
particle. The fall of Dien Bien Phy on May 7th led to the fall of the 
French government. The new prime minister promised a cease-fire or his 
own retirement within 30 days. He barely met the deadline. 
     The Indochinese settlement of July 20, 1954 was basically a 
compromise, some of whose elements did not appear in the agreement 
itself. A Communist North Vietnam state was recognized north of the 
17th parallel and the rest was left in three states: Laos, Cambodia 
and South Vietnam. 
     The new state system was brought within the Dulles network of 
trip-wire pacts on September 8, 1954 when Britain, France, Australia, 
New Zealand, Pakistan, Thailand, Philippines and the U.S. formed the 
South-East Asia Treaty Organization (SEATO) and extended their 
protection to Laos, Cambodia and South Vietnam.
     The Geneva agreement was to neutralize the Indochina states but 
was apparently not acceptable to the Dulles brothers and any possible 
stability in the area was soon destroyed by their activities, 
especially through the Central Intelligence Agency (CIA) seeking to 
subvert the neutrality of Laos and South Vietnam by channeling 
millions in American funds to Right-wing army officers, building up 
large military forces, rigging elections, and backing reactionary 
coups d'etat.
Page 1046
     These techniques might have been justified in the eyes of the CIA 
if they had been successful but, on the contrary, they alienated the 
mass of the natives in the area, brought numerous recruits to the 
Left, gave justification for Communist intervention from North 
Vietnam, disgusted our allies in Britain, France, Burma, India and 
elsewhere, and by 1962 had almost destroyed the American image and 
position in the area. 
     In Laos, the chief political figure was Prince Phouma, leader of 
the neutralist group, who tried to keep a balance between the 
Communist Pathet Lao on his Left and the American-subsidized 
politicians and militarists led by General Nosavan on his Right. 
American aid was about $40 million a year of which about $36 million 
went to the army. This was used, under American influence, as an anti-
neutralist rather than an anti-Leftist influence culminating in a 
bungled army attack on two Pathet Lao battalions in 1959 and openly 
rigged elections in which all the Assembly seats were won by Right-
wing candidates in 1960. In August 1960, an open revolt in behalf of 
the neutralist Phouma game rise to a Right-wing revolution led by 
General Nosavan. This drove the neutralists in the arms of the Pathet 
     The SEATO Council refused to support the American position, the 
Laotian army was reluctant to fight, and the American military mission 
was soon involved in the confused fighting directly. 
     The American bungle in Laos was repeated, with variations, 
elsewhere in southern and southeastern Asia. In South Vietnam, 
American aid, largely military, amounted to about two thirds of the 
country's budget, and by 1962, it had reached $2 billion. Such aid, 
which provided little benefit for the people, corrupted the 
government, weakened the swollen defense forces, and set up a chasm 
between the rulers and people which drove the best of the latter 
Leftward, in spite of the exploitative violence of the Communist 
guerrillas. A plebiscite in 1955 was so rigged that the American-
supported candidate won over 98% of the vote. The election of 1960 was 
similarly managed, except in Saigon, the capital, where many people 
refused to vote. As might have been expected, denial of a fair ballot 
led to efforts to assassinate the American-sponsored President, Diem, 
and gave rise to widespread discontent which made it possible for the 
Communist guerrillas to operate throughout the country. The American-
sponsored military response drove casualties to a high sustained 
figure by 1962 and was uprooting peasantry throughout the country in 
an effort to establish fortified villages which the British had 
introduced with success in Malaya. 
Page 1047
     These errors of American policy, which were repeated in other 
places, arose very largely from two factors:
1) American ignorance of local conditions which were passed over in 
animosity against Russia and China;
2) American insistence on using military force to overcome local 
neutralism which the mass of Asiatic people wanted.
     The American militarization of both Thailand and South Vietnam 
was used to increase pressure on Cambodia which was driven to seek 
support for its independence from China and Russia. 
     North Vietnam had a deficiency of food while South Vietnam, like 
all delta areas, is a zone of rice surplus and thus a shining target 
for North Vietnamese aggression. 
     The collapse of the world price of rice at the end of the Korean 
War left Burma with an unsellable surplus of almost two million tons. 
Within the next three years, Burma signed barter agreements with Red 
China and Soviet Europe by which Burma got rid of a third of its 
surplus each year in return for Communist goods and technical 
assistance. These returns were so poor in quality, high in price and 
poorly shipped that Burma refused to renew the agreements in 1958. 
     Farther west, in southern Asia (correctly called the Middle East 
from the Persian Gulf to Burma) American bungling also opened may 
opportunities for Soviet penetration which the Soviets failed to 
Page 1048
     India was determined to be neutral; Pakistan was willing to be an 
ally of the United States. 
Page 1049
     The partition of India before independence in 1947, as in 
Palestine and earlier in Ireland, received strong impetus from the 
Round Table Group, and in all three cases, it led to horrors of 
violence. In India's case, the partition was a butchery rather than a 
surgical process. Imposed by the British, it cut off two areas in 
northwestern and northeastern India to form a new Muslim state of 
Pakistan (cutting right through the Sikhs in the process). The two new 
nations began under two new leaders. In the post-partition confusion, 
minorities on the wrong sides of the lines sought to flee, as 
refugees, to India or Pakistan, while the Sikhs sought to establish a 
new homeland by exterminating Muslims in East Punjab. In a few weeks, 
almost 200,000 were killed and twelve million were forced to flee as 
     The two sections of Pakistan were separated from each other by 
1,100 miles of India territory, its boundaries irrational, its 
economic foundations torn to shreds by the partition. 
Page 1050
     In 1958, martial law was established and General Khan became 
president. Under military rule, a sweeping land-reform program 
restricted owners to 500 irrigated or 1000 non-irrigated acres with 
the surplus distributed to existing tenants or other peasants. Former 
landlords received compensation in long-term bonds. 
Page 1052
     The American insistence on the non-committed nations adopting 
anti-Soviet lines opened the way for the Soviet to pose as the friend 
of such nations by supporting their neutralism. 
Page 1053
     At the end of World War II, about 80 percent of Iran's population 
were peasants. Four fifths of the land was almost entirely useless, 
being either mountainous or arid. Moreover, the peasants who tilled 
the land were much oppressed by heavy rents to absentee landlords who 
also controlled, as separate rights, essential access to water. Only 
about a seventh of the land was owned by peasants who worked it. 
Peasants retained little more than a fifth of what they produced. 
     The shah has shifted the basis of his support from the elite 
landed group to this growing middle class.
     Before 1914, the shah sought to raise funds for his personal use 
by selling concessions and monopolies to foreign groups. Most of these 
were exploitive of the Iranian peoples. Of these, the most important 
was the concession for petroleum which came into possession of the new 
Anglo-Persian Oil Company which came to be controlled, through secret 
stock ownership, by the British government. 
Page 1054
     At the end of World War I, Iran was a battleground between 
Russian and British armed forces. By 1920, the withdrawal of British 
forces left the anti-Bolshevik Russian Cossack Brigade as the only 
significant military force in the country. The chief Iranian officer 
in that force, Reza Pahlavi, in the course of 1921-1925 gradually took 
over control of the government and eventually deposed the incompetent 
28-year-old Shah Ahmad. 
     Pahlavi's chief aim was to break down tribalism and localism. To 
this end, he defeated the autonomous tribes, settled nomadic groups in 
villages, shifted provincial boundaries to break up local loyalties, 
created a national civil service and police force, established 
national registration with identity cards for all, and used universal 
conscription to mingle various groups in a national army.
     All these projects needed money and the chief resource, oil, was 
tied up completely in the concession held by the AIOC with the 
inevitable result that it became the target of the Iranian nationalist 
desire for traditional development funds. The older Iranian elite 
would have been satisfied with a renegotiated deal but the newer urban 
groups demanded the complete removal of foreign economic influence by 
nationalization of the petroleum industry. 
Page 1056
     By 1950, the Shah put his prime minister in to force through the 
supplemental agreement. Opposing groups introduced nationalization 
bills. Gradually, the nationalization forces began to coalesce about a 
strange figure, Mr. Muhammad Mossadegh, with a doctorate in Economics. 
Politically, he was a moderate but his strong emotional appeal to 
Iranian nationalism encouraged extreme reactions among his followers. 
     The company insisted that its status was based on a contractual 
agreement which could not be modified without its consent. The British 
government maintained the agreement was a matter of international 
public law which it had a right to enforce. The Iranian government 
declared it had the right to nationalize an Iranian corporation 
operating under its law on its territory, subject only to adequate 
     The nationalist arguments against the company were numerous:
1) It had promised to train Iranians for all positions possible but 
had only used them in menial tasks, trained few natives and employed 
many foreigners.
2) The company had reduced its payments to Iran, which were based on 
profits, by reducing the amount of its profits by bookkeeping tricks. 
It sold oil at very low prices to wholly-owned subsidiaries outside 
Iran or to the British Navy, allowing the former to resell at world 
prices so that AIOC made small profits, while the subsidiaries made 
large profits not subject to the Iranian royalty obligations. Iran 
believe that all profits should fall under the obligations. but as 
late as 1950, AIOC admitted that the accounts of 59 such dummy 
corporations were not included in AIOC accounts. 
3) AIOC generally refused to pay Iranian taxes, especially income tax 
but paid such taxes to Britain; at the same time, it calculated the 
Iranian profit royalties after such taxes so that the higher British 
taxes went, the less the Iranian payment became. Thus, Iran paid 
income tax to Britain. In 1933, AIOC paid #305,000 in British taxation 
and #274,000 in Iranian taxes. In 1948, the two figures were #28.3 
million to Britain and #1.4 million to Iran. 
Page 1057
4) The payment to Iran was also reduced by putting profits into 
reserves or into company investments outside Iran, often in 
subsidiaries, and calculating the Iranian share only on the profits 
distributed as dividends. Thus in 1947, when profits were really #40.5 
million, almost #15 million went to British income taxes, over #7 
million to stockholders, and only #7 million to Iran. If the payment 
to Iran had been calculated before taxes and reserves, it would have 
received at least #6 million more that year. 
5) AIOC's exemption from Iranian customs deprived Iran of about #6 
million a year. 
6) The company drew many persons to arid and uninhabited areas and 
then provided very little of the costs of housing, education, or 
7) AIOC as a member of the international oil cartel reduced its oil 
production and thus reduced Iran's royalties. 
8) AIOC continued to calculate its payments to Iran in gold at #8.1 
per ounce for years after the world gold price had risen to #13 an 
ounce while the American Aramco in Saudi Arabia raised its gold price 
on demand.
9) AIOC's monopoly prevented Iran developing other Iranian oil fields.
     As a consequence of all these activities, the Iranian 
nationalists of 1952 felt angered to think that Iran had given up 300 
million tons of oil over fifty years and obtained about #800 million 
in profits. 
     The Iranian opposition to nationalization was broken in 1951 when 
the prime minister was assassinated. The nationalization bill was 
passed and at the request of the Majlis, the shah appointed Mossadegh 
prime minister to carry it out. This was done with considerable 
turmoil which included strikes by AIOC workers against mistimed 
British wage cuts, anti-British street riots and the arrival of 
British gun-boats at the head of the Persian Gulf. Rather than give up 
the enterprise or operate it for the Iranian government, AIOC began to 
curtail operations and ship home its engineers. In May 1951, it 
appealed to the International Court of Justice in spite of Iranian 
protests that the case was a domestic one, not international. Only in 
July, 1952, did the court's decision uphold Iran's contention by 
refusing jurisdiction.
Page 1058
     At first, the U.S. supported Iran's position fearing British 
recalcitrance would push Iran toward Russia. However it soon became 
apparent that the Soviet Union, while supporting Iran's position, was 
not going to interfere. The American position then became increasingly 
pro-British and anti-Mossadegh. This was intensified by pressure from 
the international petroleum cartel comprising the seven greatest oil 
companies in the world. 
     As soon as Britain lost its case in the International Court of 
Justice, it put into effect a series of reprisals against Iran which 
rapidly crippled the country. Iranian funds were blocked; its 
purchases in British controlled markets were interrupted; its efforts 
to sell oil abroad were frustrated by a combination of the British 
Navy and the world oil cartel (which closed sales and distribution 
facilities to Iranian oil). These cut off a substantial portion of the 
Iranian government's revenues and forced a drastic curtailment of 
government expenditures. 
Page 1059
     Mossadegh broke off diplomatic relations with the British, 
deported various economic and cultural groups, and dismissed both the 
Senate and the Iranian Supreme Court which were beginning to question 
his actions. 
     By that time, almost irresistible forces were building up against 
Mossadegh, since lack of Soviet interference gave the West full 
freedom of action. The British, the AIOC, the world petroleum cartel, 
the American government and the older Iranian elite led by the shah 
combined to crush Mossadegh. The chief effort came from the CIA under 
the personal direction of Allen Dulles, brother of the Secretary of 
State. Dulles, a former director of the Schroeder Bank in New York. It 
will be remembered that the Schroeder Bank in Cologne helped to 
arrange Hitler's accession to power as chancellor in January 1933. 
     In the Near East, the mobs are easily roused and directed by 
those who are willing to pay and Dulles had the unlimited secret funds 
of the CIA. From these he gave $10 million to Colonel H. Norman 
Schwartzkopf who was in charge of training the Imperial Iranian 
Gendarmerie and this was judiciously applied in ways which changed the 
mobs tune. The whole operation was directed personally by Dulles from 
     In August Mossadegh held a plebiscite to approve his policies. 
The official vote was about two million approvals against twelve 
hundred disapprovals but his days were numbered. On August 13th, the 
Shah precipitated the planned anti-Mossadegh coup by naming General 
Zahedi as prime minister and sent a messenger dismissing Mossadegh. 
The latter refused to yield and called his supporters into the streets 
where they rioted against the Shah who fled with his family to Rome. 
Two days later, anti-Mossadegh mobs, supported by the army, defeated 
Mossadegh supporters. He was forced out of office and replaced by 
General Sahedi. The shah returned from Italy on August 22nd. 
Page 1060
     The fall of Mossadegh ended the period of confusion. From 1953 
on, the shah and the army, backed by the conservative elite, 
controlled the country and the docile Majlis. Two weeks after the 
shah's countercoup, the U.S. gave Iran an emergency grant of $45 
million, increased its economic aid payment to $23 million and began 
to pay $5 million a month in Mutual Security funds. In return, Iran 
became a firm member of the Western bloc. The Communist Tudeh Party 
was relentlessly pursued after 1953. 
     By 1960, the shah tried a program of agrarian reform which sought 
to restrict each landlord's holdings to a single village, taking all 
excess lands for payments spread over 10 years and granting the lands 
to the peasants who worked them for payments over 15 years. The shah's 
own estates were among the first to be distributed but by the end of 
1962 over 5000 villages had been granted to their peasants. 
     In the meantime, the oil dispute was settled and the incomes to 
Iran were considerably increased averaging about $250 million or more 
a year. 

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