Chapter 28 England goes to war, Morgan pays

〖After the First World War, the political and economic power of the United States increased significantly, and the three pillars of power of the British Empire were fully threatened.In order to ensure its dominant position in the economic and political competition, Britain further intensified its competition for oil control. 〗 Britain emerged from the Versailles Peace Conference in 1919 as a world-dominating superpower in many ways.However, in the context of the First World War, an extremely inconspicuous detail is that Britain won the war by borrowing money. The US deposits totaling billions were the decisive factor for Britain to win the war.These deposits were raised by Morgan & Co. on Wall Street. During the 1919 Versailles Peace Conference, Britain owed the United States a staggering $4.7 billion in war loans.At that time, the British domestic economy was already deep in the post-war depression, and the industry was in disarray.After four years of war, domestic prices rose by 300%.Britain's national debt increased more than ninefold, by 924% from 1913 to the end of the war in 1918, to a whopping £7.4 billion.

If Great Britain emerged victorious at Versailles as a territorial conqueror, the United States, or at least certain powerful international banking and industrial interests in the United States, has replaced Great Britain as the most powerful world economic power. In the early 1920s it became more clearly defined.In order to solve this problem, in the following years, a brutal power struggle was launched between the international interest groups in the United Kingdom and the United States. By the early 1920s, there were three main pillars supporting the power building of the British Empire: control of world sea routes, control of world banking and finance, and control of strategically important raw materials.America's nascent "internationalist" faction threatens every pillar.

This once Anglophile American gang has been groomed by London for decades, and now they've decided not to be docile schoolboys.For the next decade, Britain and the United States fought bitterly against each other over common but conflicting goals.It was in this conflict that the seeds of World War II were planted. The stakes for the United States are enormous.Can the United States leverage its economic position to become a politically dominant superpower?Or, after the Versailles Peace Conference, within the framework of the British-led Anglo-American co-rule, is the United States willing to be a useful but clearly a little brother partner?In other words, will the capital of the new world empire of the post-Versailles peace remain in London, or will it move to Washington?In 1920 the answer to this question was not quite clear.

In 1921, the British ambassador to the United States expressed very clearly the tension in the economic and political competition between the United States and the United States in a dispatch to the British Foreign Office: the greatest ambition of the pragmatists among American politicians is to win the United States the status of the world's leading country, and at the same time Become a leader in the English-speaking world.To this end, they intend to build a powerful navy and form the largest merchant fleet in the world.They also intend to prevent us from sending goods to the United States to offset our debts, and they are looking for opportunities to treat us as a vassal state because our debts are not paid.

From the 1870s onwards, Britain's most important market for overseas investment had been the United States, investing in railroads and other sectors through links with carefully selected New York banks.Therefore, in October 1914, the British War Department sent a special representative to the neutral United States to arrange for the purchase of strategic materials and other important materials. At that time, it was thought that the war might not last long. In January 1915, four months after the start of World War I, the British government appointed New York private bank Morgan & Co. as its sole procurement agent for all war materiel from the United States.Morgan also acted as the sole financial agent for the British government in raising war loans from private US banks.Soon after, Britain became the guarantor of war material purchases and loans in France, Italy and Russia's war against Germany and Austria.This is a huge credit pyramid, sitting on the top of the spire is the Morgan Bank of the United States.In such a huge and risky gamble, no bank has ever dared to bet alone.

When the First World War broke out in 1914, the entire British Empire and Britain itself were effectively bankrupt.We have touched on this.British finance officials, however, were sure that the U.S. government and the Anglophile faction of New York banking circles would support Britain. Morgan Bank and the financial circles of New York played an extremely important role in the war of the Allied Powers. Through a monopoly arrangement, the purchase of all American munitions and war materials, as well as the supply of necessities such as grain and food for Britain, France, and other European allies, was handled by Morgan Bank.Morgan supplied the entire Entente through its London branch Morgan Greenfield and Paris branch Morgan Hayes.A senior partner at Morgan Greenfield was a director of the Bank of England and a close friend of Lloyd George, the chancellor of the exchequer.Given the scale of Britain's war needs, there is no precedent in history for an investment firm to wield such power.

Morgan, who holds the sole purchasing agent power of the entire Allied Powers, has become the de facto master of the future export of industrial and agricultural products of the United States.Morgan could decide who would win huge and lucrative export orders for the war against Germany in Europe. Companies like DuPont Chemicals grew into international giants thanks to their special relationship with Morgan.Remington and Winchester Arms were also good "friends" of Morgan.The Midwest Grain Trading Company also grew because it catered exclusively to Morgan's European clients.These relationships were intricate because the vast majority of the private funds Morgan raised for England and France were raised through the resources of DuPont and some friends.This in turn became a guarantee for the huge arms market in Europe.

Morgan's status as a private bank was all the more important because of President Woodrow Wilson's strict neutrality.But neutrality became a veil over the ensuing years as billions of dollars in war supplies and credit flowed to Britain.For purchasing agents alone, Morgan takes a 2% commission based on the net price of all items shipped.The business was too big, so Morgan invited Stetinius, who would later serve as Secretary of State, as Morgan's senior partner to handle the huge business of war procurement. As a neutral country, all these activities are a serious violation of international law.International law prohibits neutral countries from establishing material supply bases for belligerents.In a later US Senate inquiry, Morgan himself was charged with profiteering and purchasing directly from businesses with which Morgan's partners had an interest.By 1917, the British War Office had placed purchase orders totaling over $20 billion through Morgan Bank, not including loans raised directly by Britain, France, and other countries through Morgan and its New York-based financial syndicate.

In 1915, U.S. Treasury Secretary McAdoo convinced the helpless President Wilson that private U.S. loans were necessary to maintain U.S. exports.Capital and material resources continued to flow to Europe.By 1915, U.S. exports to Great Britain had increased by 68 percent on a 1913 basis.Before the United States entered the war to support Britain in 1917, the Allied Powers had raised about $1.25 billion through Morgan Bank, Citibank and other large New York investment institutions, which was almost an astronomical figure at the time.For a private financial institution to mobilize funds on such a large scale, it must have a good relationship with the Federal Reserve Bank of New York.Coincidentally, the head of this newly established financial regulatory agency was Benjamin Strong, the former president of Morgan Bank. Even so, the huge risks of this business have almost led to disaster on several occasions.

In January 1917, Russia, exhausted by the war, finally withdrew from the war, and Britain and France faced the threat of collapse, which gave Morgan and his New York financial syndicate the impetus to launch a greater propaganda offensive and use more resources.When it became clear that only American troops could turn the tables on Europe and the plight of Morgan and his European agency clients, they moved.There was strong support for their actions at the top of the British Secret Service and the American press.The American press believes that the United States should join the European war on the side of "justice" and support Britain.If Morgan & Co. and the British failed in their efforts, they would have faced total financial collapse in the first half of 1917.

Fortunately for Morgan & Co. and London, German general Erik Ludendorff averted a financial collapse for the Anglo-Morgan interests. In February 1917, Germany announced a full-scale submarine warfare with the intention of cutting off the oil supply of the United States to the Allies.The successive sinkings of American oil tankers provided a good excuse for the Morgan-controlled American press to trumpet the end of neutrality. On April 2, 1917, when the U.S. Congress declared war on Germany, the New York financial community, with the support of New York Federal Reserve Bank President Strong, launched the most ambitious financial operation in history. On December 23, 1913, if President Woodrow Wilson had not been persuaded to sign the Federal Reserve Act, it is unclear whether the United States would have devoted such vast resources to the war in Europe. It is also doubtful whether, without this new law, Britain would have conceived such a bold plan against the continental empire in August 1914.Just a few months before the outbreak of war in Europe, the United States Federal Reserve System was established, in which Morgan & Co. and the international financial giants of the City of London played key roles. The situation in Germany is in stark contrast to this. In the 1890s, the German Reichstag imposed strict restrictions on financial speculation, and the interest group that participated in the formulation of the Federal Reserve Act of 1913 was completely controlled by the Morgan family elite. Their pursuit was to turn New York into an international capital center. From then on, New York bankers began to adopt the fiscal style of the British Empire. In August 1917, the Federal Reserve launched the sale of "Liberty Bonds" and other bonds to raise war funds for the U.S. government.In this great "patriotism" event, US Treasury bills, mainly sold to individuals, were sold through Morgan and other large New York investment institutions.The size of these bonds is huge and the number is astonishing, reaching 2,147.8 billion U.S. dollars on June 30, 1919.Never in history has such a huge amount of money been mobilized in such a short period of time.Of course, Morgan's commission from this business is also considerable. By 1920, of the four years of war and global catastrophe, Morgan partner Thomas Lamont wrote with satisfaction: "The national debt of the world has risen to $210 billion, more than it has in the past six years." 475% of the previous year. Naturally, the scale of various public bonds and the number of investors participating in them have multiplied countless times.” Lamont also said, “The impact of issuing such huge bonds is very obvious in all investment markets in the world. But especially in America." Once the Morgans and the New York investment bankers have tasted the benefits of being the world's financial leaders, they will join forces and stop at nothing to consolidate their power. Those in charge of the Morgan family, including Thomas Lamont, and their close friend on Wall Street, Bernard Baruch, etc., drew up the "bill" for World War I reparations at the secret meeting of the Versailles Peace Conference. ". Together, they established a special reparations committee, a permanent body that set the exact amount and method for Germany to pay war damage compensation to the Allied Powers. Although Balfour and some British government officials believe that after the end of the war, debt forgiveness is often followed, reflecting the magnanimity of the victorious country.However, as shrewd and conservative bankers, Morgan and his friends, while enjoying the peace and prosperity, did not forget the huge war loans owed by the Allied Powers.As soon as the United States announced its official participation in the war, Morgan & Co. quietly exchanged all the British government loans they held in their hands for ordinary bonds of U.S. treasury bills, and the process of changing hands was invisible.As a result, after the war, British debt became a heavy burden on American taxpayers.In this way, the Morgan interest group has definitely obtained the bulk of the Versailles reparations after the war.As the U.S. government's war debt reached unprecedented levels, the lines between Morgan's interests and those of the U.S. government became blurred.Gradually, the U.S. government became a useful tool for New York's international bankers to expand their newfound power.