Chapter 29 New York bankers challenge City of London

In the course of the Versailles peace talks, a new institution, the Royal Institute of International Affairs, was established to coordinate strategic affairs between Britain and the United States.Lionel Curtis is the initiator of the formation of this research institute.Lionel Curtis has long been an active participant in a secretive 'round table' (also known as the 'New Empire' circle) that includes Balfour, Milner and others.This proposal was made on May 30, 1919, during the Versailles peace talks, at a private meeting place at the Margas Hotel.Philip Kerr, Lord Lothian, Lord Robert Cecil and other members of the round table attended the important gathering.The first nominal task of this new institution was to write the "official" history of the Versailles Peace Conference.The Royal Institute's first donation was £2,000 from Thomas Lamont of the Morgan Group.Historian Arnold Toynby was the first paid full member of the institution.

At Versailles, the men also decided to establish an American branch of the London Institute, which they named the New York Council on Foreign Relations in order to conceal the connection with the London Institute.The initial members of the New York Council were almost all from the Morgan Group, and all the funds were borne by Morgan.Through this close link, they hoped, after Versailles, American interests could be aligned with British interests.However, after many years, this goal has not been achieved. For a full decade in the 1920s, Britain and the United States were penny-pinching over everything from war reparations terms, rubber agreements, naval agreements, a new gold standard parity, and above all, control over untapped world oil regions After going through this difficult process, the joint management of the world by the United Kingdom and the United States has emerged in the current situation, and the policy coordination between the Morgan Group's Council on Foreign Relations and the Royal Institute of London has produced results.

In 1922, Wall Street lawyer John Foster Dulles—a key figure in the Versailles peace talks and the main drafter of Article 231 of the peace agreement (the infamous German "war crime" clause)—founded at the Council on Foreign Relations Morgan and his fellow New York bankers wrote in his magazine Foreign Affairs.The idea is very simple, that is, "where there is war, there must be losses. The losses caused by wars are measured by debts. Debts take many different forms: internal, reparations, between allies... usually in bonds or paper money." According to Dulles' calculations, the total debt owed by Britain and other Allies to the United States was $12.5 billion at an interest rate of 5%.According to the Treaty of Versailles, Germany owed the United Kingdom, France, and other Allies $33 billion.This figure was unimaginable at the time. The figure finalized in May 1921 was 132 billion gold marks.Germany had only six days to decide whether to accept the above terms; if it refused, the Allies would impose a military occupation of the Ruhr industrial area.Against the backdrop of the pivotal role of the global oil scramble, the question of military occupation will soon resurface.

Germany was the main target of the Versailles Peace Conference, where all of Germany's colonies were partitioned and, as a result, she also lost her valuable resource of raw materials.Germany's 25% stake in Turkish Petroleum was stripped and eventually passed from Britain to France. The U.S. Congress refused to ratify the Treaty of Versailles, including the institution that implemented the agreement—the League of Nations. However, the interest groups centered on the Morgan Group and the Federal Reserve in New York did not stop their pace of controlling the post-war European financial lifeline.After the Versailles Peace Conference, during the Wall Street Crash period from 1919 to October 1929, Germany’s war reparations and the “triangular debt” between the Allies, such as the money owed by France, Italy, and Belgium to the United Kingdom, and the money owed by the United Kingdom to the United States, To make matters worse, it affects the world's financial and fiscal policies.During this period, the entire international financial pyramid was completely supported by the edifice of punitive war debts.On the debt issue, Morgan and the New York bank upstarts refused to compromise.

In the 1920s, the total debt of European countries was so huge that the annual international financial system's debt processing volume even exceeded the annual foreign trade volume of the United States.The international banking community in New York redirected the flow of world capital to deal with this enormous amount of debt.Dealing with the debt business has come at the expense of the investments that have helped rebuild and modernize a war-torn European economy. With the European economy devastated, Morgan & Co. had gained a competitive advantage, and New York credit ruled everything.Rather than investing in postwar economic expansion in the United States, it was much more profitable to lend money to postwar Europe.Centralized by the New York Federal Reserve Bank under the leadership of Morgan and Morgan Group member Benjamin Strong, the New York financial community spared no effort to keep interest rates low in the United States.The result was a flood of American loans into postwar Europe and the rest of the world, where capital earned far more risk-reward than at home, while London and the new Bank of England Governor Montague · Norman can only watch helplessly as the US financial encroachment on their traditional markets.

In 1924, the battle between Britain and the United States reached post-war intensity in the crucial field of banking.At the time, the United States was threatening to gain access to the gold and raw materials center of the British Empire, which the British had just seized two decades earlier in the bloody Hill War. In the second half of 1924, the South African government initiated the establishment of an international committee chaired by Edwin Kemmler, an American financial expert and professor at Princeton University, to provide advice on whether to return to the international gold standard regardless of Britain.

Until 1924, Britain was still mired in the disaster of war and could not return to the gold standard. If it returned to the gold standard, the British economy would suffer a serious setback, because nearly 1.5 million British people were still unemployed at that time. Kemmler told South Africans they should have direct financial links with New York banks, bypassing their traditional reliance on London.The financiers in the City of London knew very well that this would open the door for the United States to economically occupy the areas that the United Kingdom had acquired with military force. If it acquired South Africa, it would gain the dominance of the world's gold supply, and then gain the world's gold supply. credit dominance.London acted swiftly and adopted a pre-emptive strategy, but the scars of the war were far from healed.

During the Versailles peace conference, the United States retreated to neo-isolationism (which has been very controversial), and Britain benefited from it.At that time the U.S. Congress reversed course and did not support the British idea of ​​a League of Nations, although President Wilson supported it.Most of the features of the New World Order were formed after the full consultation at the Versailles Peace Conference.With the United States in the background, Britain was able to rampage across Europe, Africa and the Middle East, establishing its long-term key hegemony. But it is becoming increasingly clear that the powerful US banking and oil interests are in no way willing to be isolationists.Britain could either defeat this threat or effectively integrate it into a new Atlantic alliance.