THE MONEY MASTERS: HISTORY OF CENTRAL BANKS IN AMERICA
THE CAPITALIST CONSPIRACY by G. E. Griffin 
By Professor Carroll Quigley. This is the book that blows the lid off the secret organization created by Cecil Rhodes to quietly gain control over the nations of the world and establish a global government based on the model of collectivism. Professor Quigley (President Clinton’s history professor at Georgetown University) was a trusted supporter of this organization and was given access to its private papers. When his book was released by a major New York publishing house, it was expected that it would be read only by academics who are interested in the organization’s history and sympathetic to its goals. However, when it began to be quoted by critics, the publisher withdrew the book from print. This led to the appearance of an underground version that circulated throughout the 1970s and 80s. Eventually, the publisher was pressured into authorizing this official reprint edition, which is an exact replica of the original. It is a mammoth history interspersed with startling information about the secret organization’s impact on almost every major event of modern history. 1348 pages, hardbound.
It is recommended that you also read The Anglo-American Establishment, a later book by Quigley on the same topic containing important additional information.EXCERPTS FROM THE BOOK:
Carroll Quigley, Tragedy and Hope: A History of the World in our Time, Macmillan New York 1966.
{p. 15} ... societies such as Soviet Russia which have, because of lack of the tradition of scientific method, shown little inventiveness in technology are nevertheless able to threaten Western Civilization by the use, on a gigantic scale, of a technology almost entirely imported from Western Civilization.
{p. 50} FINANCIAL CAPITALISM, 1850-1931
This third stage of capitalism is of such overwhelming significance in the history of the twentieth century, and its ramifications and influences have been so subterranean and even occult, that we may be excused if we devote considerate attention to its organization and methods. Essentially what it did was to take the old disorganized and localized methods of handling money and credit and organize them into an integrated system, on an international basis, which worked with incredible and well-oiled facility for many decades. The center of that system was in London with major offshoots in New York and Paris, and it has left, as its greatest achievement, an integrated banking system and a heavily capitalized - if now largely obsolescent - framework of heavy industry, reflected in railroads, steel mills, coal mines, and electrical utilities. This system had its center in London for four chief reasons. First
{p. 51} was the great volume of savings in England, resting on England's early successes in commercial and industrial capitalism. Second was England's oligarchic social structure (especially as reflected in its concentrated landownership and limited access to educational opportunities) which provided a very inequitable distribution of incomes with large surpluses coming to the control of a small, energetic upper class. Third was the fact that this upper class was aristocratic but not noble, and thus, based on traditions rather than birth, was quite willing to recruit both money and ability from lower levels of society and even from outside the country, welcoming American heiresses and central-European Jews to its ranks, almost as willingly as it welcomed monied, able, and conformist recruits from the lower classes of Englishmen, whose disabilities from educational deprivation, provincialism, and Nonconformist (that is non-Anglican) religious background generally excluded them from the privileged aristocracy. Fourth (and by no means last) in significance was the skill in financial manipulation, especially on the international scene, which the small group of merchant bankers of London had acquired in the period of commercial and industrial capitalism and which lay ready for use when the need for financial capitalist innovation became urgent.
The merchant bankers of London had already at hand in 1810-1850 the Stock Exchange, the Bank of England, and the London money market when the needs of advancing industrialism called all of these into the industrial world which they had hitherto ignored. In time they brought into their financial network the provincial banking centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other. The men who did this, looking backward toward the period of dynastic monarchy in which they had their own roots, aspired to establish dynasties of international bankers and were at least as successful at this as were many of the dynastic political rulers. The greatest of these dynasties, of course, were the descendants of Meyer Amschel Rothschild (1743-1812) of Frankfort, whose male descendants, for at least two generations, generally married first cousins or even nieces. Rothschild's five sons, established at branches in Vienna, London, Naples, and Paris, as well as Frankfort, cooperated together in ways which other international banking dynasties copied but rarely excelled.
In concentrating, as we must, on the financial or economic activities of international bankers, we must not totally ignore their other attributes. They were, especially in later generations, cosmopolitan rather than nationalistic; they were a constant, if weakening, influence for peace, a pattern established in 1830 and 1840 when the Rothschilds threw their
{p. 52} whole tremendous influence successfully against European wars. They were usually highly civilized, cultured gentlemen, patrons of education and of the arts, so that today colleges, professorships, opera companies, svmphonies, libraries, and museum collections still reflect their munificence. For these purposes they set a pattern of endowed foundations which still surround us today.
The names of some of these banking families are familiar to all of us and should he more so. They include Baring, Lazard, Erlanger, Warburg, Schroder, Seligman, the Speyers, Mlirabaud, Mallet, Fould, and above all Rothschild and Morgan. Even after these banking families became fully involved in domestic industry by the emergence of financial capitalism, they remained different from ordinary bankers in distinctive ways: (1) they were cosmopolitan and international; (2) they were close to governments and were particularly concerned with questions of government debts, including foreign government debts, even in areas which seemed, at first glance, poor risks, like Egypt, Persia, Ottoman Turkey, Imperial China, and Latin America; (3) their interests were almost exclusively in bonds and very rarely in goods, since they admired "liquidity" and regarded commitments in commodities or even real estate as the first step toward bankruptcy; (4) they were, accordingly, fanatical devotees of deflation (which they called "sound" money from its close associations with high interest rates and a high value of money) and of the gold standard, which, in their eyes, symbolized and ensured these values; and (5) they were almost equally devoted to secrecy and the secret use of financial influence in political life. These bankers came to be called "international bankers" and, more particularly, were known as "merchant bankers" in England, "private bankers" in France, and "investment bankers" in the United States. In all countries they carried on various kinds of banking and exchange activities, but everywhere they were sharply distinguishable from other, more obvious, kinds of banks, such as savings hanks or commercial banks.
One of their less obvious characteristics was that they remained as private unincorporated firms, usually partnerships, until relatively recently, offering no shares, no reports, and usually no advertising to thc public. This risky status, which deprived them of limited liability, was retained, in most cases, until modern inheritance taxes made it essential to surround such family wealth with the immortality of corporate status for tax-avoidance purposes. This persistence as private firms continued because it ensured the maximum of anonymity and secrecy to persons of tremendous public power who dreaded public knowledge of their activities as an evil almost as great as inflation. As a consequence, ordinary people had no way of knowing the wealth or areas of operation of such firms, and often were somewhat hazy as to their member
{p. 53} ship. Thus, people of considerable political knowledge might not associate the names Walter Burns, Clinton Dawkins, Edward Grenfell, Willard Straight, Thomas Lamont, Dwight Morrow, Nelson Perkins, Russell Leffingwell, Elihu Root, John W. Davis, John Foster Dulles, and S. Parker Gilbert with the name "Morgan," yet all these and many others were parts of the system of influence which centered on the J. P. Morgan office at 23 Wall Street. This firm, like others of the international banking fraternity, constantly operated through corporations and governments, yet remained itself an obscure private partnership until international financial capitalism was passing from its deathbed to the grave. J. P. Morgan and Company, originally founded in London as George Peabody and Company in 1838, was not incorporated until March 21, 1940, and went out of existence as a separate entity on April 24, 1959, when it merged with its most important commercial bank subsidiary, the Guaranty Trust Company. The London affiliate, Morgan Grenfell, was incorporated in 1934, and still exists.
The influence of financial capitalism and of the international bankers who created it was exercised both on business and on governments, but could have done neither if it had not been able to persuade both these to accept two "axioms" of its own ideology. Both of these were based on the assumption that politicians were too weak and too subject to temporary popular pressures to be trusted with control of the money system; accordingly, the sanctity of all values and the soundness of money must be protected in two ways: by basing the value of money on gold and by allowing bankers to control the supply of money. To do this it was necessary to conceal, or even to mislead, both governments and people about the nature of money and its methods of operation.
For example, bankers called the process of establishing a monetary system on gold "stabilization," and implied that this covered, as a single consequence, stabilization of exchanges and stabilization of prices. It really achieved only stabilization of exchanges, while its influence on prices were quite independent and incidental, and might be unstabilizing (from its usual tendency to force prices downward by limiting the supply of money). As a consequence, many persons, including financiers and even economists, were astonished to discover, in the twentieth century, that the gold standard gave stable exchanges and unstable prices. It had, however, already contributed to a similar, but less extreme, situation in much of the nineteenth century.
Exchanges were stabilized on the gold standard because by law, in various countries, the monetary unit was made equal to a fixed quantity of gold, and the two were made exchangeable at that legal ratio.
{p. 55} Deposits on the upper level of the pyramid were called by this name, with typical bankers' ambiguity, in spite of the fact that they consisted of two utterly different kinds of relationships: (1) "lodged deposits," which were real claims left by a depositor in a bank, on which the depositor might receive interest, since such deposits were debts owed by the bank to the depositor; and (2) "created deposits," which were claims created by the bank out of nothing as loans from the bank to "depositors" who had to pay interest on them, since these represented debt from them to the bank. In both cases, of course, checks could be drawn against such deposits to make payments to third parties, which is why both were called by the same name. Both form part of the money supply. Lodged deposits as a form of savings are deflationary, while created deposits, being an addition to the money supply, are inflationary. The volume of the latter depends on a number of factors of which the chief are the rate of interest and the demand for such credit. These two play a very significant role in determining the volume of money in the community, since a large portion of that volume, in an advanced economic community, is made up of checks drawn against deposits. The volume of deposits banks can create, like the amount of notes they can issue, depends upon the volume of reserves available to pay whatever fraction of checks are cashed rather than deposited. These matters may be regulated by laws, by bankers' rules, or simply by local customs. In the United States deposits were traditionally limited to ten times reserves of notes and gold. In Britain it was usually nearer twenty times such reserves. In all countries the demand for and volume of such credit was larger in time of a boom and less in time of a depression. This to a considerable extent explains the inflationary aspect of a depression, the combination helping to form the so-called "business cycle."
In the course of the nineteenth century, with the full establishment of the gold standard and of the modern banking system, there grew up around the fluctuating inverted pyramid of the money supply a plethora of financial establishments which came to assume the configurations of a solar svstem; that is, of a central bank surrounded by satellite financial institutions. In most countries the central bank was surrounded closely by the almost invisible private investment banking firms. These, like the planet Mercury, could hardly be seen in the dazzle emitted by the central
{p. 56} bank which they, in fact, often dominated. Yet a close observer could hardly fail to notice the close private associations between these private, international bankers and the central bank itself. In France, for example, in 1936 when the Bank of France was reformed, its Board of Regents (directors) was still dominated by the names of the families who had originally set it up in 1800; to these had been added a few more recent names, such as Rothschild (added in 1819); in some cases the name might not be readily recognized because it was that of a son-in-law rather than that of a son. Otherwise, in 1914, the names, frequently those of Protestants of Swiss origin (who arrived in the eighteenth century) or of Jews of German origin (who arrived in the nineteenth century), had heen much the same for more than a century.
In England a somewhat similar situation existed, so that even in the middle of the twentieth century the Members of the Court of the Bank of England were chiefly associates of the various old "merchant banking" firms such as Baring Brothers, Morgan Grenfell, Lazard Brothers, and others.
In a secondary position, outside the central core, are the commercial banks, called in England the "joint-stock banks," and on the Continent frequently known as "deposit banks." These include such famous names as Midland Bank, Lloyd's Bank, Barclays Bank in England, the National City Bank in the United States, the Credit Lyonnais in France, and the Darmstadter Bank in Germany.
Outside this secondary ring is a third, more peripheral, assemblage of institutions that have little financial power but do have the very significant function of mobilizing funds from the public. This includes a wide variety of savings banks, insurance firms, and trust companies.
Naturally, these arrangements vary greatly from place to place, especially as the division of banking functions and powers are not the same in all countries. In France and England the private bankers exercised their powers through the central bank and had much more influence on the government and on foreign policy and much less influence on industry, because in these two countries, unlike Germany, Italy, the United States, or Russia, private savings were sufficient to allow much of industry to finance itself without recourse either to bankers or government. In the United States much industry was financed by investment bankers directly, and the power of these both on industry and on government was very great, while the central bank (the New York Federal Reserve Bank) was established late (1913) and became powerful much later (after financial capitalism was passing from the scene). In Germany industry was financed and controlled by the discount banks, while the central bank was of little power or significance before 1914. In Russia the role of the government was dominant in much of economic life, while in Italy the situation was backward and complicated.
{p. 57} We have said that two of the five factors which determined the value of money (and thus the price level of goods) are the supply and the demand for money. The supply of money in a single country was subject to no centralized, responsible control in most countries over recent centuries. Instead, there were a variety of controls of which some could be influenced by bankers, some could be influenced by the government, and some could hardly be influenced by either. Thus, the various parts of the pyramid of money were but loosely related to each other. Moreover, much of this looseness arose from the fact that the controls were compulsive in a deflationary direction and were only permissive in an inflationary direction.
... Throughout modern history the influence of the gold standard has been deflationary, because the natural output of gold each year, except in extraordinary times, has not kept pace with the increase in output of goods. Only new supplies of gold, or the suspension of the gold standard in wartime, or the development of new kinds of money (like notes and checks) which economize the use of gold, have saved our civilization from steady price deflation over the last couple of centuries.
{p. 58} Another paradox of banking practice arose from the fact that bankers, who loved deflation, often acted in an inflationary fashion from their eagerness to lend money at interest. Since they make money out of loans, they are eager to increase the amounts of bank credit on loan. But this is inflationary. The conflict between the deflationary ideas and inflationary practices of bankers had profound repercussions on business. The bankers made loans to business so that the volume of money increased faster than the increase in goods. The result was inflation. When this became clearly noticeable, the bankers would flee to notes or specie by curtailing credit and raising discount rates. This was beneficial to bankers in the short run (since it allowed them to foreclose on collateral held for loans), but it could be disastrous to them in the long run (by forcing the value of the collateral below the amount of the loans it secured). But such bankers' deflation was destructive to business and industry in the short run as well as the long run.
{p. 59} The resulting fluctuation in the supply of money, chiefly deposits, was a prominent aspect of the "business cycle." The quantity of money could be changed by changing reserve requirements or discount (interest) rates. In the United States, for example, an upper limit has been set on deposits by requiring Federal Reserve member banks to keep a certain percentage of their deposits as reserves with the local Federal Reserve Bank. The percentage (usually from 7 to 26 percent) varies with the locality and the decisions of the Board of Governors of the Federal Reserve System.
Central banks can usually vary the amount of money in circulation by "open market operations" or by influencing the discount rates of lesser banks. In open market operations, a central bank buys or sells government bonds in the open market. If it buys, it releases money into the economic system; if it sells it reduces the amount of money in the community. The change is greater than the price paid for the securities. For example, if the Federal Reserve Bank buys government securities in the open market, it pays for these by check which is soon deposited in a bank. It thus increases this bank's reserves with the Federal Reserve Bank. Since banks are permitted to issue loans for several times the value of their reserves with the Federal Reserve Bank, such a transaction permits them to issue loans for a much larger sum.
Central banks can also change the quantity of money by influencing the credit policies of other banks. This can be done by various methods, such as changing the rediscount rate or changing reserve requirements. By changing the rediscount rate we mean the interest rate which central banks charge lesser banks for loans backed by commercial paper or other security which these lesser banks have taken in return for loans. By raising the rediscount rate the central bank forces the lesser bank to raise its discount rate in order to operate at a profit; such a raise in interest rates tends to reduce the demand for credit and thus the amount of deposits (money). Lowering the rediscount rate permits an opposite result.
Changing the reserve requirements as a method by which central banks can influence the credit policies of other banks is possible only in those places (like the United States) where there is a statutory limit on reserves. Increasing reserve requirements curtails the ability of lesser banks to grant credit, while decreasing it expands that ability. It is to be noted that the control of the central bank over the credit policies of local banks are permissive in one direction and compulsive in the other. They can compel these local banks to curtail credit and can only permit them to increase credit. This means that they have control powers against inflation and not deflation - a reflection of the old banking idea that inflation was bad and deflation was good.
{p. 60} The powers of governments over the quantity of money are of various kinds, and include (a) control over a central bank, (b) control over public taxation, and (c) control over public spending. The control of governments over central banks varies greatly from one country to another, but on the whole has been increasing. Since most central banks have been (technically) private institutions, this control is frequently hased on custom rather than on law.
{p. 61} The power of investment bankers over governments rests on a number of factors, of which the most significant, perhaps, is the need of governments to issue short-term treasury bills as well as long-term government bonds. Just as businessmen go to commercial banks for current capital advances to smooth over the discrepancies between their irregular and intermittent incomes and their periodic and persistent outgoes (such as monthly rents, annual mortgage payments, and weekly wages), so a government has to go to merchant bankers (or institutions controlled by them) to tide over the shallow places caused by irregular tax receipts. As experts in government bonds, the international bankers not only handled the necessary advances but provided advice to government officials and, on many occasions, placed their own members in official posts for varied periods to deal with special problems. This is so widely accepted even today that in 1961 a Republican investment banker became Secretary of the Treasury in a Democratic Administration in Washington without significant comment from any direction.
Naturally, the influence of bankers over governments during the age of financial capitalism (roughly 1850-1931) was not something about which anyone talked freely, but it has been admitted frequently enough by those on the inside, especially in England. In 1852 Gladstone, chancellor of the Exchequer, declared, "The hinge of the whole situation was this: the government itself was not to be a substantive power in matters of Finance, but was to leave the Money Power supreme and unquestioned." On September 26, 1921, The Financial Times wrote, "Half a dozen men at the top of the Big Five Banks could upset the whole fabric of government finance by refraining from renewing Treasury Bills." In 1924 Sir Drummond Fraser, vice-president of the Institute of Bankers, stated, "The Governor of the Bank of England
{p. 62} must be the autocrat who dictates the terms upon which alone the Government can obtain borrowed money."
In addition to their power over government based on government financing and personal influence, bankers could steer governments in ways they wished them to go by other pressures. Since most government officials felt ignorant of finance, they sought advice from bankers whom they considered to be experts in the field. The history of the last century shows, as we shall see later, that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally. Such advice could be enforced if necessary by manipulation of exchanges, gold flows, discount rates, and even levels of business activity. Thus Morgan dominated Cleveland's second administration by gold withdrawals, and in 1936-1938 French foreign exchange manipulators paralyzed the Popular Front governments. As we shall see, the powers of these international bankers reached their peak in the last decade of their supremacy, 19l9-1931, when Montagu Norman and J. P. Morgan dominated not only the financial world but international relations and other matters as well. On November 1 927, the Wall Street Journal called Mr. Norman "the currency dictator of Europe." This was admitted by Mr. Norman himself before the Court of the Bank on March 21, 1930, and before the Macmillan Committee of the House of Commons five days later. On one occasion, just before international financial capitalism ran, at full speed, on the rocks which sank it, Mr. Norman is reported to have said, "I hold the hegemony of the world." At the time, some Englishmen spoke of "the second Norman Conquest of England" in reference to the fact that Norman's brother was head of the British Broadcasting Corporation. It might be added that Governor Norman rarely acted in major world problems without consulting with J. P. Morgan's representatives, and as a consequence he was one of the most widely traveled men of his day.
This conflict of interests between bankers and industrialists has resulted in most European countries in the subordination of the former either to the latter or to the government (after 193l). This subordination was accomplished by the adoption of "unorthodox financial policies" - that is, financial policies not in accordance with the short-run interests of bankers. This shift by which bankers were made subordinate reflected a fundamental development in modern economic history - a development which can be described as the growth from financial capitalism to monopoly capitalism. This took place in Germany earlier than in any other country and was well under way by 1926. It came in Britain only after 193l and in Italy only in 1934. It did not occur in France to a comparable extent at all, and this explains the economic weakness of France in 1938-1940 to a considerable degree.
{p. 63} International Financial Practices
The financial principals {sic} which apply to the relationships between different countries are an expansion of those which apply within a single country. When goods are exchanged between countries, they must be paid for by commodities or gold. They cannot be paid for by the notes, certificates, and checks of the purchaser's country, since these are of value only in the country of issue. To avoid shipment of gold with every purchase, bills of exchange are used. These are claims against a person in another country which are sold to a person in the same country. The latter will buy such a claim if he wants to satisfy a claim against himself held by a person in the other country. He can satisfy such a claim by sending to his creditor in the other country the claim which he has bought against another person in that other country, and let his creditor use that claim to satisfy his own claim. Thus, instead of importers in one country sending money to exporters in another country, importers in one country pay their debts to exporters in their own country, and their creditors in the other country receive payment for the goods they have exported from importers in their own country. Thus, payment for goods in an international trade is made by merging single transactions involving two persons into double transactions involving four persons. In many cases, payment is made by involving a multitude of transactions, frequently in several different countries. These transactions were carried on in the so-called foreign-exchange market. An exporter of goods sold bills of exchange into that market and thus drew out of it money in his own countrv's units. An importer bought such bills of exchange to send to his creditor, and thus he put his own country's monetary units into the market. Since the bills available in any market were drawn in the monetary units of many different foreign countries, there arose exchange relationships between the amounts of money available in the country's own units (put there by importers) and the variety of bills drawn in foreign moneys and put into the market by exporters. The supply and demand for bills (or money) of any country in terms of the supply and demand of the country's own money available in the foreign-exchange market determined the value of the other countries' moneys in relation to domestic money.
{p. 5l4} The capitalists of France, Britain, and the United States, on the other hand, frequently experienced conflicting motives. Bolshevism presented itself as an economic threat to themselves at the same time that Nazism presented itself as a political threat to their countries. Many persons were willing to neglect or even increase the latter threat in order to use it against the former danger.
This difference in attitude between German and other capitalists arose from many causes. Among these were (a) the contrast between the German tradition of a national economy and the Western tradition of laissez-faire, (b) the fact that world depression caused the threat of social revolution to appear before Nazism rose as a political danger to the West, (c) the fact that cosmopolitan financial capitalism was replaced more rapidly by nationalist monopoly capitalism in Germany than in the West, and (d) the fact that many wealthy and influential persons like Montagu Norman, Ivar Kreuger, Basil Zaharoff, and Henri Deterding directed public attention to the danger of Bolshevism while maintaining a neutral, or favorable, attitude toward Nazism.
The impact of the war on Germany was quite different from its effects on most other countries. In France, Britain, and the United States, the war played a significant role in demonstrating conclusively that economic stagnation and underemployment of resources were not necessary and could be avoided if the financial system were subordinated to the economic system. In Germany this was not necessary, since the Nazis had already made this discovery in the 1930's. On the other hand, the destruction of the war left Germany with a large task to do, the rebuilding of the German industrial plant. But, since Germany could not get to that task until it had its own government, the masses of Germans suffered great hardships in the five years 1945-1950, so that, by the time the proper political conditions arrived to allow the task of rebuilding, these masses of German labor were eager for almost any job and were more concerned with making a living wage than they were with seeking to raise their standards of living. This readiness to accept low wages, which is one of the essential features of the German economic revival, was increased by the influx of surging millions of poverty-stricken refugees from the Soviet-occupied East. Thus a surplus of labor, low wages, experience in unorthodox financial operations, and an immense task to be done all contributed to the German revival.
{p. 548} Any program of public spending at once runs into the problems of inflation and public debt. These are the same two problems which were mentioned in an earlier chapter in connection with the efforts of governments to pay for the First World War. The methods of paying for a depression are exactly the same as the methods of paying for a war except that the combination of methods used may be somewhat different because the goals are somewhat different. In financing a war, we should seek to achieve a method which will provide a maximum of output with a minimum of inflation and public debt. In dealing with a depression, since a chief aim is to close the deflationary gap, the goal will be to provide a maximum of output with a necessary degree of inflation and a minimum of public debt. Thus, the use of fiat money is more justifiable in financing a depression than in financing a war. Moreover, the selling of bonds to private-persons in wartime might well be aimed at the lower-income groups in order to reduce consumption and release facilities for war production, while in a depression (where low consumption is the chief problem) such sales of bonds to finance public spending would have to be aimed at the savings of the upper-income groups.
These ideas on the role of government spending in combating depression have been formally organized into the "theory of the compensatory economy." This theory advocates that government spending and fiscal policies be organized so that they work exactly contrary to the business cycle, with lower taxes and larger spending in a deflationary period and higher taxes with reduced spending in a boom period, the fiscal deficits of the down cycle being counterbalanced in the national budget by the surpluses of the up cycle. This compensatory economy has not been applied with much success in any European country except Sweden. In a democratic country, it would take the control of taxing and spending away from the elected representatives of the people and place this precious "power of the purse" at the control of the automatic processes of the business cycle as interpreted by bureaucratic (and unrepresentative) experts. Moreover, all these programs of deficit spending are in jeopardy in a country with a private banking system. In such a system, the creation of money (or credit) is usually reserved for the private banking institutions, and is deprecated as a government action. The argument that the creation of funds by the government is bad while creation of funds by the banks is salutary is very persusasive in a system based on traditional laissez faire and in which the usual avenues of communications (such as newspapers and radio) are under private, or even banker, control.
{p. 662} Hitler's economic revolution in Germany had reduced financial considerations to a point where they played no role in economic or political decisions. When decisions were made, on other grounds, money was provided, through completely unorthodox methods of finance, to carry them out. {ed. comment: in this, Hitler was following Lenin, and Lincoln's practice during the American Civil War.} In France and England, on the other hand, orthodox financial principles, especially balanced budgets and stable exchange rates, played a major role in all decisions and was one of the chief reasons why these countries did not mobilize in March 1936 or in September 1938 or why, having mobilized in 1939 and 1940, they had totally inadequate numbers of airplanes, tanks, antitank guns, and motorized transportation.
{p. 890} These disputes over Germany and eastern Europe, which were regarded in the West as Soviet violations of their earlier agreements at Yalta and Potsdam, were regarded in Moscow as evidence for Stalin's conviction of the secret aggressive designs of the West. By the winter of 1945-1946, the Russian peoples were being warned of the dangers from the West. This began in 1945 with attacks on "cosmopolitanism" and prohibitions of Soviet soldiers "fraternizing" with aliens, especially soldiers of the United States or Britain, in the course of their occupation duties. Early in November 1945, Molotov warned the Moscow Soviet that Fascism and imperialist aggression were still loose in the world. Similar speeches were made by other Soviet leaders, including Stalin. By the spring of 1946, xenophobia, one of the oldest of Russian culture traits, was rampant again. In September 1946, and again in September 1947, Andrei Zhdanov, the Kremlin's leader of the international Communist movement, made speeches which were simply declarations of ideological war on the West. They presented the Soviet Union as the last best hope of man, surrounded by prowling, capitalist beasts of prey seeking to destroy it.
{Quigley fails to mention, in this context, the American plan for World Government, put to Stalin in 1946, the Baruch Plan: baruch-plan.html}
On this basis the Soviet Union found it impossible to cooperate with the West or to accept the American economic assistance in reconstruction which was offered.
{p. 892} ... the American aims of multilateral trade free of artificial restraints except tariffs, like the American insistence on free elections, were regarded in Moscow as clear evidence of America's aggressive aims. ... {perhaps because Freedom for the Rich is Slavery for the Poor?}
On the whole, if blame must be allotted, it may well be placed at the door of Stalin's office in the Kremlin. American willingness to cooperate continued until 1947, as is evident from the fact that the Marshall Plan offer of American aid for a cooperative European recovery effort was opened to the Soviet Union, but it now seems clear that Stalin had decided to close the door on cooperation and adopted a unilateral policy of limited aggression about February or March of 1946. The beginning of the Cold War may be placed at the date of this inferred decision or may be placed at the later and more obvious date of the Soviet refusal to accept Marshall Plan aid in July 1947.
{or, more likely, at the time of Stalin's rejection of the Baruch Plan for World Government. Stalin was warned by Burgess or Maclean that Marshall Plan aid would be a Trojan Horse. Membership would require allowing East Europe to trade freely with the West.}
{p. 893} The most critical example of the Soviet refusal to cooperate and of its insistence on relapsing into isolation, secrecy, and terrorism is to be found in its refusal to join in American efforts to harness the dangerous powers of nuclear fission. {ed. comment: this is what the Baruch Plan was about, as described above; Quigley, in what follows, omits to mention that it also functioned as a plan for World Government, as discussed in the pages of the Bulletin of the Atomic Scientists, and as described by Bertrand Russell in his book, cited above.} Long before the test at Alamogordo, some of the nuclear scientists, spurred on once again by Szilard, were trying to warn American political leaders of the unique character of the dangers from this source. Centered in the Chicago Argonne Laboratories, this group wished to prevent the use of the bomb on Japan, slow up bomb (but not general nuclear) research, establish some kind of international control of the bomb, and reduce secrecy to a minimum. Early in April 1945, Szilard wrote to President Roosevelt to this effect, and, on the latter's death, sought out Byrnes and repeated his views verbally. The future secretary of state found difficulty in grasping Szilard's arguments, especially as they were delivered in a Hungarian accent, but the new President Truman soon set up an "Interim" Committee to give advice on nuclear problems. This committee, led by Secretary of War Stimson, was dependent on its scientific members, Bush, Conant, and Karl T. Compton, for relevant facts or could call on its "scientific panel" of Oppenheimer, Fermi, Arthur H. Compton, and E. O. Lawrence for advice. All these scientists except Fermi were "official" scientists, deeply involved in governmental administrative problems involving large budgets and possible grants to their pet projects and universities, and were regarded with some suspicion by the agitated, largely refugee, scientists in the Manhattan District laboratories. These suspicions deepened as the "official" scientists recommended use of the bomb on Japan "near workers' houses."
At Chicago seven of the agitated scientists, led by James Franck of Gottingen (Nobel Prize, 1925) and including Szilard and Eugene Rabinowitch, sent another warning letter to Washington. They forecast the terror of a nuclear arms race which would follow use of the bomb against Japan. Later, in July 1945, they presented a petition seeking an international demonstration and international control of the new weapon. Szilard obtained sixty-seven signatures to this petition before it was blocked by General Groves and Arthur Compton, using military secrecy as an excuse. After Hiroshima this group formed the Association of Atomic Scientists, later reorganized as the Federation of Atomic Scientists, whose Bulletin (BAS) has been the greatest influence and source of information on all matters concerned with the political and social impact of nuclear weapons. The editor of this amazing new periodical was Eugene Rabinowitch.
The energetic lobbying of this group of atomic scientists had a considerable influence on subsequent atomic history. When the "official
{p. 894} scientists," late in 1945, supported the administration's May-Johnson bill, which would have shared domestic control of atomic matters with the armed services, the BAS group mobilized public opinion behind the junior senator from Connecticut, Brian McMahon, and pushed through the McMahon bill to presidential signature in August 1946. The McMahon bill set up an Atomic Energy Commission (AEC) of five full-time civilian commissioners, named by the President, with David Lilienthal, former TVA czar, as chairman. This commission, from August 1946, had ownership and control of all fissionable materials (uranium and thorium) from the mine to the final disposal of atomic wastes, including control of all plants and process patents, with the right to license private nuclear enterprises free of danger to society.
The AEC as it functioned was a disappointment to the BAS scientists. They had sought freedom from military influence and reduced emphasis on the military uses of nuclear fission, free dissemination of theoretical research, and a diminution of the influence of the official scientists. They failed on all these points, as the AEC operated largely in terms of weapons research and production, remained extravagantly secretive even on purely theoretical matters, and was, because of the scientific ignorance of most of the commissioners, inevitably dominated by its scientific advisory committee of "official" scientists led by Oppenheimer.
To the BAS group and to a wider circle of nonscientists, the AEC was a more or less temporary organization within the United States, whose work would be taken over eventually by a somewhat similar international organization. As a first step in this direction, the United Nations, at the suggestion of Bush and Conant and on the joint invitation of three heads of English-speaking governments (President Truman, Prime Minister Attlee, and Prime Minister Mackenzie King of Canada), set up a United Nations Atomic Energy Commission (UNAEC) of all members of the Security Council plus Canada (January 1946). A State Department committee led by Undersecretary Dean Acheson and David Lilienthal and a second committee of citizens led by Bernard Baruch spent much of 1946 in the monstrous task of trying to work out some system of international control of nuclear energy {ed. comment: but as an instrument of World Government, as described by many articles in the Bulletin of the Atomic Scientists.} The task of educating the nonscientists generally fell on Oppenheimer, who gave dozens of his brilliant, extemporaneous, chalk-dusted lectures on nuclear physics. The final plan, presented to the UN by Baruch on June 14, 1946, provided an international control body similar to the AEC. It would own, control, or license all uranium from the mine through processing and use, with operation of its own nuclear facilities throughout the world, inspection of all other such facilities, absolute prohibition of nuclear bombs or diversion of nuclear materials to nonpeaceful purposes, and punishment for evasion or violation of its regulations free from the Great Power veto which normally operated in the Security Council of UN {ed.comment: this would mean that the USSR lost its veto power, which the much stronger Americans - the only nuclear power at the time - could dictate terms.} The vital point in Baruch's plan
{p. 895} was that it would go into effect by stages so that inspection and monopoly of nuclear materials would be operative before the American atomic plants were handed over to the new international agency and before the American stockpile of nuclear bombs was dismantled. This extraordinary offer, an offer to give up the American nuclear monopoly, technical secrets, and weapons to an international agency, in return for a possibly ineffective system of international inspection, was brusquely rejected by Andrei Gromyko on behalf of the Soviet Union within five days. The Soviet spokesman demanded instead a reverse sequence of stages covering (1) immediate outlawing and destruction of all nuclear weapons, with prohibition of their manufacture, possession, or use; (2) a subsequent agreement for exchange of information, peaceful use of atomic energy, and enforcement of regulations; and (3) no tampering whatever with the Great Power veto in the UN. Since only the United States had the atom bomb at the time, the adoption of this sequence could require the United States to give up the bomb without any assurance that anyone else would do anything, least of all adopt any subsequent control methods, methods which might allow the Soviet Union to make its own bombs in secret after the United States had destroyed its in publie. The nature of this Soviet suggestion shows elearly that the Soviet Union had no real desire for international eontrol, probably beeause it was unwilling to open the secret life of the Soviet Union, including bomb-making, to international inspection.
The Soviet refusal of the American efforts at international nuclear control, like their refusal of American loans and eeonomie cooperation, provides some of the evidence of the Kremlin's state of mind in 1946. This evidence became overwhelming in 1947 and 1948, when Soviet aggression appeared along the whole crescent from Germany, across Asia, to the Far East.
{p. 934} For a while, the new Administration tried to outdo McCarthy, chiefly by demonstrating in committee hearings that China had been "lost" to the Communists because of the careful planning and intrigue of Communists in the State Department. The chief effort in this direction was done by a well-organized and well-financed "China Lobby" radiating from the activities of Alfred Kohlberg, a wealthy exporter who had had business interests in China. This group, with its allies, such as McCarthy, mobilized a good deal of evidence that Communists had infiltrated into various academic, journalistic, and research groups concerned with the Far East. But they failed to prove their contention that a conspiracy of these
{p. 935} Communists and fellow travelers, acting through the State Department, had given China to Mao. Mao won out in China because of the incompetence and corruption of the Chiang Kai-shek regime, and he won out in spite of any aid the United States gave, or could give, to Chiang, because the latter's regime was incapable of holding out against Mao, without drastic reforms, whatever the scale of American aid (without American military intervention to make war on Mao, which very few desired). The China Lobby's version was based on two contentions: (1) that there were Communists in significant positions close to the agencies which helped to form American academic and public opinion on the Far East and (2) that there were frequent agreements between known Communists and known formulators of American policy and opinion on China. This whole subject is too complex for adequate discussion here, but the situation must be outlined.
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 or publication opportunities, could favor persons who accepted the established consensus and could injure, financially 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, 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 in regard to the Far East 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 in the United States, such as Near East studies or anthropology or educational theory or political science. They were more obvious in regard to the Far East because of the few persons and the bigger issues involved in that area.
On the other hand, the charges of the China Lobby, accepted and proliferated by the neo-isolationists in the 1950'S and by the radical Right in the 1960'S, that China was "lost" because of this group, or that the members of this group were disloyal to the United States, or engaged in espionage, or were participants in a conscious plot, or that the whole group was controlled by Soviet agents or even by Communists, is not true. Yet the whole subject is of major importance in understanding the twentieth century.
{p. 936} Moreover, many of these experts, and those the ones 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. For example, they sought to establish, in 1943-1950, that the Chinese Communists were simple agrarian reformers, rather like the third-party groups of the American Mid-west; or that Japan was evil and must be totally crushed, the monarchy removed, and (later) that American policy in Japan, under General MacArthur, was a failure; they even accepted, on occasion, the Stalinist line that Communist regimes were "democratic and peace-loving," while capitalist ones were "warlike and aggressive." For example, as late as 1951 the John Day Company (Richard J. Walsh, president) published an indictment of MacArthur's policies in Japan by Robert Textor. The book, called Failure in Japan, had an introduction by Lattimore and sought to show that our occupation policy led to "failure for democratic values in Japan and a situation of strategic weakness for the West." This childish libel was propagated by the IPR, which mailed out 2,300 postcards advertising the book.
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 West was dominated by the influence of "Wall Street." This term has nothing to do with its use by the Communists to mean monopolistic industrialism,
{p. 937} but, on the contrary, refers to international financial capitalism deeply involved in the gold standard, foreign-exchange fluctuations, floating of fixed-interest securities and, to a lesser extent, flotation of industrial shares for stock-exchange markets. This group, which in the United States, was completely dominated by J. P. Morgan and Company from the 1880's to the 1930's 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 the large endowments of these institutions required constant consultation with the financiers of Wall Street (or its lesser branches on State Street, Boston, and elsewhere) and was reflected in the fact that these endowments, even in 1930, were largely in bonds rather than in real estate or common stocks. As a consequence of these influences, as late as the 1930's, J. P. Morgan and his associates were the most significant figures in policy making at Harvard, Columbia, and to a lesser extent Yale, while the Whitneys were significant at Yale, and the Prudential Insurance Company (through Edward D. Dufmeld) dominated Princeton.
The names of these Wall Street luminaries still adorn these Ivy League campuses, with Harkness colleges and a Payne Whitney gymnasium at Yale, a Pyne dormitory at Princeton, a Dillon Field House and Lamont Library at Harvard. The chief officials of these universities were beholden to these financial powers and usually owed their jobs to them. Morgan himself helped make Nicholas Murray Butler president of Columbia; his chief Boston agent, Thomas Nelson Perkins of the First National Bank of that city, gave Conant his boost from the chemical laboratory to University Hall at Harvard; Duffield of Prudential, caught unprepared when the incumbent president of Princeton was killed in an automobile in 1932, made himself president for a year before he chose Harold Dodds for the post in 1933. At Yale, Thomas Lamont, managing partner of the Morgan firm, was able to swing Charles Seymour into the presidency of that university in 1937. The significant influence of "Wall Street" (meaning Morgan) both in the Ivy League and in Washington, in the period of sixty or more years following 1880, explains the constant interchange between the Ivy League and the Federal government, an 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 in 1948-1954. The same feeling did no good to pseudo-Ivy League figures like Alger Hiss. Because of its dominant position in Wall Street, the Morgan firm
{p. 938} came also to dominate other Wall Street powers, such as Carnegie, Whitney, Vanderbilt, Brown-Harriman, or Dillon-Reed. Close alliances were made with Rockefeller, Mellon, and Duke interests but not nearly so intimate ones with the great industrial powers like du Pont and Ford. 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, in the inheritance tax. These tax laws drove the great private fortunes dominated by Wall Street into tax-exempt foundations, which became a 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 Foundation and Rhodes Scholar at Oxford (1931-1933), is as much a member of this nexus as Alger Hiss, the Dulles brothers, Jerome Greene, James T. Shotwell, John W. Davis, Elihu Root, or Philip Jessup.
More than fifty years ago the Morgan firm decided to infiltrate the Left-wing political movements in 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 threefold: (1) to keep informed about the thinking of Left-wing or liberal groups; (2) to provide them with a mouthpiece so that they could "blow off steam," and (3) to have a final veto on their publicity and possibly 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. What made it decisively important this time was the combination of its adoption by the dominant Wall Street financier, at a time when tax policy was driving all financiers to seek tax-exempt refuges for their fortunes, and at a time when the ultimate in Left-wing radicalism was about to appear under the banner of the Third International.
The best example of this alliance of Wall Street and Left-wing publication was The New Republic, a magazine founded by Willard Straight, using Payne Whitney money, in 1914. Straight, who had been assistant to Sir Robert Hart (Director of the Chinese Imperial Customs Service and the head of the European imperialist penetration of China) and had remained in the Far East from 1901 to 1912, became a Morgan partner and the firm's chief expert on the Far East. He married Dorothy Payne Whitney whose names indicate the family alliance of two of America's greatest fortunes. She was the daughter of William C. Whitney, New York utility millionaire and the sister and co-heiress of Oliver
{p. 939} Payne, of the Standard Oil "trust." One of her brothers married Gertrude Vanderbilt, while the other, Payne Whimey, married the daughter of Secretary of State John Hay, who enunciated the American policy of the "Open Door" in China. In the next generation, three first cousins, John Hay ("Jock") Whitney, Cornelius Vanderbilt ("Sonny") Whitney, and Michael Whitney ("Mike") Straight, were allied in numerous public policy enterprises of a propagandist nature, and all three served in varied roles in the late New Deal and Truman administrations. In these they were closely allied with other "Wall Street liberals," such as Nelson Rockefeller.
The New Republic was founded by Willard and Dorothy Straight, using her money, in 1914, and continued to be supported by her financial contributions until March 23, 1953. The original purpose for establishing the paper was to provide an outlet for the progressive Left and to guide it quietly in an Anglophile direction. This latter task was entrusted to a young man, only four years out of Harvard, but already a member of the mysterious Round Table group, which has played a major role in directing England's foreign policy since its formal establishment in 1909. This new recruit, Walter Lippmann, has been, from 1914 to the present, the authentic spokesman in American journalism for the Establishments on both sides of the Atlantic in international affairs. His biweekly columns, which appear in hundreds of American papers, are copyrighted by the New York Herald Tribune which is now owned by J. H. Whitney. It was these connections, as a link between Wall Street and the Round Table Group, which gave Lippmann the opportunity in 1918, while still in his twenties, to be the official interpreter of the meaning of Woodrow Wilson's Fourteen Points to the British government.
Willard Straight, like many Morgan agents, was present at the Paris Peace Conference but died there of pneumonia before it began. Six years later, in 192S, when his widow married a second time and became Lady Elmhirst of Dartington Hall, she took her three small children from America to England, where they were brought up as English. She herself renounced her American citizenship in 1935. Shortly afterward her younger son, "Mike," unsuccessfully "stood" for Parliament on the Labour Party ticket for the constituency of Cambridge University, an act which required, under the law, that he be a British subject. This proved no obstacle, in 1938, when Mike, age twenty-two, returned to the United States, after thirteen years in England, and was at once appointed to the State Department as Adviser on International Economic Affairs. In 1937, apparently in preparation for her son's return to America, Lady Elmhirst, sole owner of The New Republic, shifted this ownership to Westrim, Ltd., a dummy corporation created for the purpose in Montreal, Canada, and set up in New York, with a grant of $1.5 million, the William C. Whitney Foundation of which Mike be-
{p. 940} came president. This helped finance the family's interest in modern art and dramatic theater, including sister Beatrix's tours as a Shakespearean actress.
Mike Straight served in the Air Force in 1943-1945, but this did not in any way hamper his career with The New Republic. He became Washington correspondent in May 1941; editor in June 1943; and publisher in December 1946 (when he made Henry Wallace editor). During these shifts he changed completely the control of The New Republic, and its companion magazine Asia, removing known liberals (such as Robert Morss Lovett, Malcolm Cowley, and George Soule), centralizing the control, and taking it into his own hands. This control by Whitney money had, of course, always existed, but it had been in abeyance for the twenty-five years following Willard Straight's death.
The first editor of The New Republic, the well-known "liberal" Herbert Croly, was always aware of the situation. After ten years in the job, he explained the relationship in the "official" biography of Willard Straight which he wrote for a payment of S25,000. "Of course they [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." Croly's biography of Straight, published in 1924, makes perfectly clear that Straight was in no sense a liberal or a progressive, but was, indeed, a typical international banker and that The New Republic was simply a medium for advancing certain designs of such international bankers, notably to blunt the isolationism and anti-British sentiment so prevalent among many America progressives, while providing them with a vehicle for expression of their progressive views in literature, art, music, social reform, and even domestic politics. In 1916, when the editorial board wanted to support Wilson for a second term in the Presidency, Willard Straight took two pages of the magazine to express his own support for Hughes. The chief achievement of The New Republic, however, in 1914-1918 and again in 1938-1948, was for interventionism in Europe and support of Great Britain.
The role of "Mike" Straight in this situation in 1938-1948 is clear. He took charge of this family fief, abolished the editorial board, and carried on his father's aims, in close cooperation with labor and Leftwing groups in American politics. In these efforts he was in close contact with his inherited Wall Street connections, especially his Whitney cousins and certain family agents like Bruce Bliven, Milton C. Rose, and Richard J. Walsh. They handled a variety of enterprises, including publications, corporations, and foundations, which operated out of the law office of Baldwin, Todd, and Lefferts of 120 Broadway, New York City. In this nexus were The New Republic, Asia, Theatre Arts, the Museum of Modern Art, and others, all supported by a handful of foun-
{p. 941} dations, including the William C. Whitney Foundation, the Gertrude Vanderbilt Whitney Foundation, the J. H. Whitney Foundation, and others. An interesting addition was made to these enterprises in 1947 when Straight founded a new magazine, the United Nations World, to be devoted to the support of the UN. Its owners of record were The New Republic itself (under its corporate name), Nelson Rockefeller, J. H. Whitney, Max Ascoli (an anti-Fascist Italian who had married American wealth and used it to support a magazine of his own, The Reporter), and Beatrice S. Dolivet. The last lady, Mike Straight's sister, made her husband, Louis Dolivet, "International Editor" of the new magazine.
An important element in this nexus was Asia magazine, which had been established by Morgan's associates as the journal of the American Asiatic Society in 1898, had been closely associated with Willard Straight during his lifetime, and was owned outright by him from January 1917. In the 1930's it was operated for the Whitneys by Richard J. Walsh and his wife, known to the world as Pearl Buck. Walsh, who acted as editor of Asia, was also president of the holding corporation of The New Republic for several years and president of the John Day publishing company. In 1942, after Nelson Rockefeller and Jock Whitney joined the government to take charge of American propaganda in Latin America in the Office of the Coordinator of Inter-American Affairs, Asia magazine changed its name to Asia and the Americas. In 1947, when Mike Straight began a drive to "sell" the United Nations, it was completely reorganized into United Nations World.
Mike Straight was deeply anti-Communist, but he frequently was found associated with them, sometimes as a collaborator, frequently as an opponent. The opposition was seen most clearly in his efforts as one of the founders of the American Veterans Committee (AVC) and its political sequel, the Americans for Democratic Action (ADA). The collaboration may be seen in Straight's fundamental role in Henry VVallace's third-party campaign for the Presidency in 1948.
The relationship between Straight and the Communists in pushing Wallace into his 1948 adventure may be misjudged very easily. The anti-Communist Right had a very simple explanation of it: Wallace and Straight were Communists and hoped to elect Wallace President. Nothing could be further from the truth. All three - Straight, Wallace, and the Communists, joined in the attempt merely as a means of defeating Truman. Straight was the chief force in getting the campaign started in 1947 and was largely instrumental in bringing some of the Communists into it, but when he had them all aboard the Wallace train, he jumped off himself, leaving both Wallace and the Communists gliding swiftly, without guidance or hope, on the downhill track to oblivion. It was a brilliantly done piece of work.
{p. 945} The associations between Wall Street and the Left, of which Mike Straight is a fair example, are really survivals of the associations between the Morgan Bank and the Left. To Morgan all political parties were simply organizations to be used, and the firm always was careful to keep a foot in all camps. Morgan himself, Dwight Morrow, and other partners were allied with Republicans; Russell C. Leffingwell was allied with the Democrats; Grayson Murphy was allied with the extreme Right; and Thomas W. Lamont was allied with the Left. Like the Morgan interest in libraries, museums, and art, its inability to distinguish between loyalty to the United States and loyalty to England, its recognition of the need for social work among the poor, the multipartisan political views of the Morgan firm in domestic politics went back to the original founder of the firm, George Peabody (1795-1869). To this same seminal figure may be attributed the use of tax-exempt foundations for controlling these activities, as may be observed in many parts of America to this day, 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. This family was in many ways parallel to the Straight family. Tom Lamont had been brought into the Morgan firm, as Straight was several years later, by Henry P. Davison, a Morgan partner from 1909. Lamont became a partner in 1910, as Straight did in 1913. Each had a wife who became a patroness of Leftish causes, and two sons, of which the elder was a conventional banker, and the younger was a Left-wing sympathizer and sponsor. In fact, all the evidence would indicate that Tom Lamont was simply Morgan's apostle to the Left in succession to Straight, a change made necessary by the latter's premature death in 1918. Both were financial supporters of liberal publications, in Lamont's caseThe Saturday Review of Literature, which he supported throughout the 1920's and 1930's, and the New York Post, which he owned from 1918 to 1924.
The chief evidence, however, can be found in the files of the HUAC which show Tom Lamont, his wife Flora, and his son Corliss as sponsors and financial angels to almost a score of extreme Left organizations, including the Communist Party itself. Among these we need mention only
{p. 946} two. One of these was a Communist-front organization. the Trade Union Services, Incorporated, of New York City, which in 1947 published fifteen trade-union papers for various CIO unions. Among its officers were Corliss Lamont and Frederick Vanderbilt Field (another link between Wall Street and the Communists). The latter was on the editorial boards of the official Communist newspaper in New York, the Daily Worker, as well as its magazine, The New Masses, and was the chief link between the Communists and the Institute of Pacific Relations in 1928-1947. Corliss Lamont was the leading light in another Communist organization, which started life in the 1920's as the Friends of the Soviet Union, but in 1943 was reorganized, w ith Lamont as chairman of the board and chief incorporator, as the National Council of American-Soviet Friendship.
During this whole period of over two decades, Corliss Lamont, with the full support of his parents, was one of the chief figures in "fellow traveler" circles and one of the chief spokesmen for the Soviet point of view both in these organizations and also in connections which came to him either as son of the most influential man in Wall Street or as professor of philosophy at Columbia University. His relationship with his parents may be reflected in a few events of this period.
In January 1946, Corliss Lamont was called before HUAC to give testimonv on the National Council of American-Soviet Friendship. He refused to produce records, was suhpoenaed, refused, was charged with contempt of Congress, and was so cited hv the House of Representatives on June 26, 1946. In the midst of this controversy, in Mav, Corliss Lamont and his mother, Mrs. Thomas Lamont, presented their valuable collection of the works of Spinoza to Columbia University. The adverse publicitv continued, yet when Thomas Lamont rewrote his will, on January 6, 1948, Corliss Lamont remained in it as co-heir to his father's fortune of scores of millions of dollars.
In 1951 the Subcommittee on Internal Security of the Senate Judiciary Committee, the so-called McCarran Committee, sought to show that China had been lost to the Communists by the deliberate actions of a group of academic experts on the Far East and Communist fellow travelers whose work in that direction was controlled and coordinated by the Institute of Pacific Relations (IPR). The influence of the Communists in IPR is well established, but the patronage of Wall Street is less well known.
The IPR was a private association of ten independent national councils in ten countries concerned with affairs in the Pacific. The headquarters of the IPR and of the American Council of IPR were both in New York and were closely associated on an interlocking basis. Each spent about $2.5 million dollars over the quarter-century from 1925 to 1950, of which about half, in each case, came from the Carnegie Foundation and
{p. 947} the Rockefeller Foundation (which were themselves interlocking groups controlled by an alliance of Morgan and Rockefeller interests in Wall Street). Much of the rest, especially of the American Council, came from firms closely allied to these two Wall Street interests, such as Standard Oil, International Telephone and Telegraph, International General Electric, the National City Bank, and the Chase National Bank. In each case, about 10 percent of income came from sales of publications and, of course, a certain amount came from ordinary members who paid $15 a year and received the periodicals of the IPR and its American Council, Pacific Affairs and Far Eastern Survey.
The financial deficits which occurred each year were picked up by financial angels, almost all with close Wall Street connections. The chief identifiable contributions here were about $60,ooo from Frederick Vanderbilt Field over eighteen years, $14,700 from Thomas Lamont over fourteen years, $800 from Corliss Lamont (only after 1947), and $18,000 from a member of Lee, Higginson in Boston who seems to have been Jerome D. Greene. In addition, large sums of money each year were directed to private individuals for research and travel expenses from similar sources, chiefly the great financial foundations.
Most of these awards for work in the Far Eastern area required approval or recommendation from members of IPR. Moreover, access to publication and recommendations to academic positions in the handful of great American universities concerned with the Far East required similar sponsorship. And, finally, there can he little doubt that consultant jobs on Far Eastern matters in the State Department or other government agencies were largely restricted to IPR-approved people. The individuals who published, who had money, found jobs, were consulted, and who were appointed intermittently to government missions were those who were tolerant of the IPR line. The fact that all these lines of communication passed through the Ivy League universities or their scattered equivalents west of the Appalachians, such as Chicago, Stanford, or California, unquestionably went back to Morgan's influence in handling large academic endowments.
There can be little doubt that the more active academic members of IPR, the professors and publicists who became members of its governing board (such as Owen Lattimore, Joseph P. Chamberlain, and Philip C. Jessup of Columbia, William W. Lockwood of Princeton, John K. Fairbank of Harvard, and others) and the administrative staff (which became, in time, the most significant influence in its policies) developed an IPR party line. It is, furthermore, fairly clear that this IPR line had many points in common both with the Kremlin's party line on the Far East and with the State Department's policy line in the same area. The interrelations among these, or the influence of one on another, is highly disputed. Certainly no final conclusions can be drawn.
{p. 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 1960's, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments. I have objected, both in the past and recently, to a few of its policies (notably to its belief that England was an Atlantic rather than a European Power and must be allied, or even federated, with the United States and must remain isolated from Europe), 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 in this book several times, notably in connection with the formation of the British Commonwealth in chapter 4 and in the discussion of appeasement in chapter 12 ("the Cliveden Set"). 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 organized by Lionel Curtis, Philip H. Kerr (Lord Lothian), and (Sir) William S. Marris in 1908-1911. This was done on behalf of Lord Milner, the dominant Trustee of the Rhodes Trust in the two decades 1905-1925. The original purpose of these groups was to seek to federate the English-speaking world along lines laid down by Cecil Rhodes (1853-1902) and William T. Stead (1849-1912), and the money for the organizational work came originally from the Rhodes Trust. By 1915 Round Table groups existed in seven countries, including England, South Africa, Canada, Australia, New Zealand, India, and a rather loosely organized group in the United States (George Louis Beer, Walter Lippmann, Frank Aydelotte, Whitney Shepardson, Thomas W. Lamont, Jerome D. Greene, Erwin D. Canham of the Christian Science Monitor, and others). The attitudes of the various groups were coordinated by frequent visits and discussions and by a well-informed and totally anonymous quarterly magazine, The Round Table, whose first issue, largely written by Philip Kerr, appeared in November 1910.
The leaders of this group were: Milner, until his death in 1925, followed by Curtis (1872-1955), Robert H. (Lord) Brand (brother-in-law of Lady Astor) until his death in 1963, and now Adam D. Marris, son of Sir William and Brand's successor as managing director of Lazard
{p. 951} Brothers bank. The original intention had been to have collegial leadership, but Milner was too secretive and headstrong to share the role. He did so only in the period 1913-1919 when he held regular meetings with some of his closest friends to coordinate their activities as a pressure group in the struggle with Wilhelmine Germany. This they called their "Ginger Group." After Milner's death in 1925, the leadership was largely shared by the survivors of Milner's "Kindergarten," that is, the group of young Oxford men whom he used as civil servants in his reconstruction of South Africa in 1901-1910. Brand was the last survivor of the "Kindergarten"; since his death, the greatly reduced activities of the organization have been exercised largely through the Editorial Committee of The Round Table magazine under Adam Marris.
Money for the widely ramified activities of this organization came originally from the associates and followers of Cecil Rhodes, chiefly from the Rhodes Trust itself, and from wealthv associates such as the Beit brothers, from Sir Abe Bailey, and (after 1915) from the Astor family. Since 1925 there have been substantial contributions from wealthy individuals and from foundations and firms associated with the international banking fraternity, especially the Carnegie United Kingdom Trust, and other organizations associated with J. P. Morgan, the Rockefeller and Whitney families, and the associates of Lazard Brothers and of 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 bv Lazard Brothers. Milner himself in 1901 had refused a fabulous offer, worth up to $100,000 a year, to become one of the three partners of the Morgan Bank in London, in succession to the younger J. P. Morgan who moved from London to join his father in New York (eventually the vacancy went to E. C. Grenfell, so that the London affiliate of Morgan became known as Morgan, Grenfell, and Company). Instead, Milner became director of a number of public banks, chiefly the London Joint Stock Bank, corporate precursor of the Midland Bank. He became one of the greatest political and financial powers in England, with his disciples strategically placed throughout England in significant places, such as the editorship of The Times, the editorship of The Observer, the managing directorship of Lazard Brothers, various administrative posts, and even Cabinet positions. Ramifications were established in politics, high finance, Oxford and London universities, periodicals, the civil service, and tax-exempt foundations.
At the end of the war of 1914, it became clear that the organization of this system had to be greatly extended. Once again the task was entrusted to Lionel Curtis who established, in England and each dominion, a front organization to the existing local Round Table Group. This front or
{p. 952} ganization, called the Royal Institute of International Affairs, had as its nucleus in each area the existing submerged Round Table Group. 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 of International Affairs and the Council on Foreign Relations were drawn up at Paris. The Council of the RIIA (which, by Curtis's energy came to be housed in Chatham House, across St. James's Square from the Astors, and was soon known by the name of this headquarters) and the board of the Council on Foreign Relations have carried ever since the marks of their origin. Until 1960 the council at Chatham House was dominated by the dwindling group of Milner's associates, while the paid staff members were largely the agents of Lionel Curtis. The Round Table for years (until 1961) was edited from the back door of Chatham House grounds in Ormond Yard, and its telephone came through the Chatham House switchboard.
The New York branch was dominated by the associates of the Morgan Bank. For example, in 1928 the Council on Foreign Relations had John W. Davis as president, Paul Cravath as vice-president, and a council of thirteen others, which included Owen D. Young, Russell C. Leffingwell, Norman Davis, Allen Dulles, George W. Wickersham, Frank L. Polk, Whitney Shepardson, Isaiah Bowman, Stephen P. Duggan, and Otto Kahn. Throughout its history the council has been associated with the American Round Tablers, such as Beer, Lippmann, Shepardson, and Jerome Greene.
The academic figures have been those linked to Morgan, such as James T. Shotwell, Charles Seymour, Joseph P. Chamberlain, Philip Jessup, Isaiah Bowman and, more recently, Philip Moseley, Grayson L. Kirk, and Henry M. Wriston. The Wall Street contacts with these were created originally from Morgan's influence in handling large academic endowments. In the case of the largest of these endowments, that at Harvard, the influence was usually exercised indirectly through "State Street," Boston, which, for much of the twentieth century, came through the Boston banker Thomas Nelson Perkins.
Closely allied with this Morgan influence were a small group of Wall Street law firms, whose chief figures were Elihu Root, John W. Davis, Paul D. Cravath, Russell Leffingwell, the Dulles brothers and, rnore recently, Arthur H. Dean, Philip D. Reed, and John J. McCloy. Other nonle~al agents of l\lorgan included men like Owen D. Young and Norman H. Davis.
{p. 953} On this basis, which was originally financial and goes back to George Peabody, there grew up in the twentieth century a power structure between London and New York which penetrated deeply into university life, the press, and the practice of foreign policy. In England the center was the Round Table Group, while in the United States it was J. P. Morgan and Company or its local branches in Boston, Philadelphia, and Cleveland. Some rather incidental examples of the operations of this structure are very revealing, just because they are incidental. For example, it set up in Princeton a reasonable copy of the Round Table Group's chief Oxford headquarters, All Souls College. This copy, called the Institute for Advanced Study {ed. comment: the Australian National University in Canberra also has an Institute for Advanced Study. It's the leading research institute in Australia, and is staffed by Far Left academics in the Humanities, and by Economic Rationalists}, and best known, perhaps, as the refuge of Einstein, Oppenheimer, John von Neumann, and George F. Kennan, was organized by Abraham Flexner of the Carnegie Foundation and Rockefeller's General Education Board after he had experienced the delights of All Souls while serving as Rhodes Memorial Lecturer at Oxford. The plans were largely drawn by Tom Jones, one of the Round Table's most active intriguers and foundation administrators.
The American branch of this "English Establishment" exerted much of its influence through five American newspapers (The New York Times, New York Herald Tribune, Christian Science Monitor, the The Washington Post, and the lamented Boston Evening Transcript). In fact, the editor of the Christian Science Monitor was the chief American correspondent (anonymously) of The Round Table, and Lord Lothian, the original editor of The Round Table and later secretary of the Rhodes Trust (1925-1939) and ambassador to Washington, was a frequent writer in the Monitor. It might be mentioned that the existence of this Wall Street, Anglo-American axis is quite obvious once it is pointed out. It is reflected in the fact that such Wall Street luminaries 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 semisecret or secret nuclei of the Institutes of International Affairs was extended into a third network in l925, organized by the same people for the same motives. Once again the mastermind was Lionel Curtis, and the earlier Round Table Groups and Institutes of International Affairs were used as nuclei for the new network. However, this new organization for Pacific affairs was extended to ten countries, while the Round Table Groups existed only in seven. The new additions, ultimately China, Japan, France, the Netherlands, and Soviet Russia, had Pacific councils set up from scratch. In Canada, Australia, and New Zealand, Pacific councils, interlocked and dominated by the Institutes of International Affairs, were set up. In England, Chatham House served as the English center for both nets, while in the United States the two were parallel creations (not subordinate) of the Wall Street allies of the Morgan
{p. 954} Bank. The financing came from the same international banking groups and their subsidiary commercial and industrial firms. In England, Chatham House was financed for both networks by the contributions of Sir Abe Bailey, the Astor family, and additional funds largely acquired by the persuasive powers of Lionel Curtis. The financial difficulties of the IPR Councils in the British Dominions in the depression of 1929-1935 resulted in a very revealing effort to save money, when the local Institute of International Affairs absorbed the local Pacific Council, both of which were, in a way, expensive and needless fronts for the local Round Table groups.
The chief aims of this elaborate, semisecret organization were largely commendable: to coordinate the international activities and outlooks of all the English-speaking world into one (which would largely, it is true, be that of the London group); to work to maintain the peace; to help backward, colonial, and underdeveloped areas to advance toward stability, law and order, and prosperity along lines somewhat similar to those taught at Oxford and the University of London (especially the School of Economics and the Schools of African and Oriental Studies).
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 of somewhat limited social experience who were much concerned with the freedom of expression of minorities and the rule of law for all, who constantly thought in terms of Anglo-American solidarity, of political partition and federation, and who were convinced that they could gracefully civilize the Boers of South Africa, the Irish, the Arabs, and the Hindus, and who are largely responsible for the partitions of Ireland, Palestine, and India, as well as the federations of South Africa, Central Africa, and the West Indies. Their desire to win over the opposition by cooperation worked with Smuts but failed with Hertzog, worked with Gandhi but failed with Menon, worked with Stresemann but failed with Hitler, and has shown little chance of working with any Soviet leader. 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 travelers took over in the United States in the 1930's. It must be recognized that the power that 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 by 1950, 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 admitted Communists like Whittaker
{p. 955} 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 in July 1953 set up a Special Committee to Investigate Tax-Exempt Foundations with Representative B. Carroll Reece, of Tennessee, as chairman. 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 relevations to make the publicity worth while, in terms of votes or campaign contributions. An interesting report showing the Left-wing associations of the 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.
One of the most interesting members of this Anglo-American power structure was Jerome D. Greene (1874-1959). Born in Japan of missionary parents, Greene graduated from Harvard's college and law school by 1899 and became secretary to Harvard s president and corporation in 1901-1910. This gave him contacts with Wall Street which made him general manager of the Rockefeller Institute (1910-l912), assistant to John D. Rockefeller in philanthropic work for two years, then trustee to the Rockefeller Institute, to the Rockefeller Foundation, and to the Rockefeller General Education Board until 1939. For fifteen years (1917-1932) he was with the Boston investment banking firm of Lee, Higginson, and Company, most of the period as its chief officer, as well as with its London hranch. As executive secretary of the American section of the Allied Maritime Transport Council, stationed in London in 1918, he lived in Toynbee Hall, the world's first settlement house, which had been founded by Alfred Milner and his friends in 1884. This brought him in contact with the Round Table Group in England, a contact which was strengthened in 1919 when he was secretary to the Reparations Commission at the Paris Peace Conference. Accordingly, on his return to the United States he was one of the early figures in the establishment of the Council on Foreign Relations, which served as the New York branch of Lionel Curtis's Institute of International Affairs.
{p. 1114} The Latin American economy is largely a colonial one (like Australia, New Zealand, West Africa, or Montana). In fact, in Latin America, in recent years, at least half the value of American aid has been wiped away by the worsening of Latin America's terms of trade, which made it necessary for it to pay more and more foreign moneys for its imports at the same time that it got less and less foreign moneys for its exports. But the fact remains that this reduction in the supply of foreign exchange available for Latin America's purchases of advanced equipment overseas has been made much worse by the fact that wealthy Latin Americans buy up much of the available supply of such foreign exchange for self-indulgent and nonconstructive spending abroad or simply to hoard their incomes in politically safer areas in New York, London, or Switzerland. Estimates of the total of such Latin American hoards abroad range between one billion and two billion dollars.
The solution to this problem must be found in more responsible, more public-spirited, and more constructive patterns of outlook, of money flows, and of political and social security. A similar solution must be found for some of the social deficiencies of Latin America, such as inadequate education, housing, and social stability. Widespread tax evasion by the rich; bribery and corruption in public life; and brutality and selfishness in social life can be reduced and largely eliminated in Latin America by changing patterns in Latin American life and utilization of resources without much need for funds, sermons, or demonstrations from foreigners (least of all Americans). ...
{p. 1115} We have already indicated the nature of Asiatic despotism in connection with traditional China, the old Ottoman Empire, and czarist Russia. It goes back to the archaic Bronze Age empires, which first appeared in Mesopotamia, Egypt, the Indus Valley, and northern China before 1000 B.C. {ed. comment: Quigley, like the Establishment he describes, advocates Capitalism, i.e. weak states dominated by private power; any system based on "strong state, weak society" is, to him, an Oriental Despotism. The Anglo-American Establishment are too elegant to call themselves Aryanists, but for them, Civilisations begins with Greece - not Egypt.} Basically such an Asiatic despotism is a two-class society in which a lower class, consisting of at least nine-tenths of the population, supports an upper, ruling class consisting of several interlocking groups. These ruling groups are a governing bureaucracy of scribes and priests associated with army leaders, landlords, and moneylenders. Such an upper class accumulated great quantities of wealth as taxes, rents, interest on loans, fees for services, or simply as financial extortions. The social consequences were either progressive or reactionarv, depending on w hether this accumulated wealth in the possession of the ruling class was invested in more productive utilization of resources or was simply hoarded and wasted. The essential character of such an Asiatic despotism rests on the fact that the ruling class has legal claims on the working masses, and possesses the power (from its control of arms and the political structure) to enforce these claims. A modified Asiatic despotism is one aspect of the social structures all along the Pakistani-Peruvian axis.
{p. 1120} The ethical sides of Judaism, Christianity, and Islam sought to counteract harshness, egocentricity, tribalism, cruelty, scorn of work and of one's fellow creatures, but these efforts, on the whole, have met with little success throughout the length of the Pakistani-Peruvian axis. Of the three, Christianity, possibly because it set the highest standards of the three, has fallen furthest from achieving its aims. Love, humility, brotherhood, cooperation, the sanctity of work, the fellowship of the community, the image of man as a fellow creature made in the image of God, respect for women as personalities and partners of men, mutual helpmates on the road to spiritual salvation, and the vision of our universe, with all its diversity, complexity, and multitude of creatures, as a reflection of the power and goodness of God - these basic aspects of Christ's teachings are almost totally lacking throughout the Pakistani-Peruvian axis and most notably absent on the "Christian" portion of that axis from Sicily, or even the Aegean Sea, westward to Baja California and Tierra del Fuego. Throughout the whole axis, human actions are not motivated by these "Christian virtues" but by the more ancient Arabic personality traits, which became vices and sins in the Christian outlook: harshness, envy, lust, greed, selfishness, cruelty, and hatred.
Islam, the third in historical sequence of the ethical monotheistic religions of the Near East, was very successful in establishing its monotheism, but had only very moderate success in spreading its version of Jewish and Christian ethics to the Arabs. These moderate successes were counterbalanced by other, incidental consequences of Muhammad's personal life and of the way in which Islam spread to make the Muslim religion more rigid, absolute, uncompromising, self-centered, and dogmatic.
The failure of Christianity in the areas west from Sicily was even greater, and was increased by the spread of Arab outlooks and influence to that area, and especially to Spain. The old French proverb which says that "Africa begins at the Pyrenees" does not, of course, mean by "Africa" that Black Africa which exists south of the deserts, but means the world of the Arabs which spread, in the eighth century, across Africa from Sinai to Morocco.
To this day the Arab influence is evident in southern Italy, northern Africa and, above all, in Spain. It appears in the obvious things such as architecture, music, the dance, and literature, but most prominently it appears in outlook, attitudes, motivations, and value systems. Spain and Latin America, despite centuries of nominal Christianity, are Arabic areas. {ed. comment: is "Nordic" attitude is a refined version of the Nazi one? Does its elegance masking the similarity to the American supporters of the Confederacy, with their paranoia about Mexico? Quigley would say that, like Arnold Toynbee and Samuel Huntington, his concern is not with Race, but with Culture or Civilisation.}
No statement is more hateful to Spaniards and Latin Americans than that. But once it is made, and once the evidence on which it was based is examined in an objective way, it becomes almost irrefutable. In Spain,
{p. 1121} the Arab conquest of 711, which was not finally ejected until 1492, served to spread Arab personality traits, in spite of the obvious antagonism between Muslim and Christian. In fact, the antagonism helped to build up those very traits that I have called Arabic: intolerance, selfesteem, hatred, militarization, cruelty, dogmatism, rigidity, harshness, suspicion of outsiders, and the rest of it. The Arab traits that were not engendered by this antagonism were built up by emulation - the tendency of a conquered people to copy their conquerors, no matter how much they profess to hate them, simply because they are a superior social class. From this emulation came the Spanish and Latin American attitudes toward sex, family structure, and child-rearing that are the distinctive features of Spanish speaking life today and that make Spanish-speaking areas so ambiguously part of Western Civilization in spite of their nominal allegiance to such an essential Western trait as Christianity. For the West, even as it nominally ceases to be Christian, and most obviously in those areas which have, at least nominally, drifted furthest from Christianity, still has many of the basic Christian traits of love, humility, social concern, humanitarianism, brotherly care, and future preference, however detached these traits may have become from the Christian idea of deity or of individual salvation in a spiritual eternity.
In Latin America the Mediterranean version of Arabized life again found its traits preserved, and sometimes reinforced, by the historical process. In Latin America non-Spanish influences, chiefly Indian, Negro, and North American, can be observed in such things as music, dances, superstitions, agricultural crops and diet (largely Indian), or in transportation, communications, and weapons (largely European); but the basic structures of family and social life, of ideological patterns and values are, to this day, largely those of the Arabic end of the PakistaniPeruvian axis.
The Iberian conquest of Latin America, not as an area of settlement but as an area of exploitation, and the Spanish attitude toward the Indians and Negro slaves as instruments in that exploitative process, the development of plantation colonialism, and of mineral extraction, intensified the exploitative, ransacking, extensive attitude toward resources and peoples whicll the Mediterranean area had obtaincd from the Romans and the Saracens. None of these activities became permanent community traits for those involved in them, even for the underlings who operated as part of the exploitative way of life, but remained temporary, get-rich-quick methods of mercenary gain for persons who regarded themselves as strangers whose roots were elsewhere, or nowhere. The Spanish oligarchy in the colonial period saw its roots in Spain itself, and this attitude, widened somewhat to include Paris, London, the Riviera, or New York, has remained the attitude of the ruling oligarchy after the wars of liberation broke the formal links with Spain or Portugal.
{p. 1237} For more than half a century, from before World War I, the middle-
{p. 1238} class outlook has been under relentless attack, often by its most ardent members, who heedlessly, and unknowingly, have undermined and destroyed many of the basic social customs that preserved it through earlier generations. Many of these changes occurred from changes in childrearing practices, and many arose from the very success of the middle-class way of life, which achieved material affluence that tended to weaken the older emphasis on self-discipline, saving, future preference, and the rest of it.
One of the chief changes, fundamental to the survival of the middle-class outlook, was a change in our society's basic conception of human nature. This had two parts to it. The traditional Christian attitude toward human personality was that human nature was essentially good and that it was formed and modified by social pressures and training. The "goodness" of human nature was based on the belief that it was a kind of weaker copy of God's nature, lacking many of God's qualities (in degree rather than in kind), but none the less perfectible, and perfectible largely by its own efforts with God's guidance. The Christian view of the universe as a hierarchy of beings, with man about two-thirds of the way up, saw these beings, especially man, as fundamentally free creatures able to move, at their own volition toward God or away from him, and guided or attracted in the correct direction for realization of their potentialities by God's presence at the top of the Universe, a presence which, like the north magnetic pole, attracted men, as compasses, upward toward fuller realization and knowledge of God who was the fulfillment of all good. Thus the effort came from free men, the guidance came from God's grace, and ultimately the motive power came from God's attractiveness.
In this Western point of view, evil and sin were negative qualities; they arose from the absence of good, not from the presence of evil. Thus sin was the failure to do the right thing, not doing the wrong thing (except indirectly and secondarily). In this view the devil, Lucifer, was not the epitome of positive wickedness, but was one of the highest of the angels, close to God in his rational nature, who fell because he failed to keep his perspective and believed that he was as good as God.
In this Christian outlook, the chief task was to train men so that they would use their intrinsic freedom to do the right thing by following God's guidance.
Opposed to this Western view of the world and the nature of man, there was, from the beginning, another opposed view of both which received its most explicit formulation by the Persian Zoroaster in the seventh century B.C. and came into the Western tradition as a minor, heretical, theme. It came in through the Persian influence on the Hebrews, especially during the Babylonian Captivity of the Jews, in the sixth century B.C., and it came in, more fully, through the Greek
{p. 1239} rationalist tradition from Pythagoras to Plato {ed. comment: note the anti-Plato stance, common to Karl Popper, Thomas Szasz, and other "libertarians". The problem is that, in the Capitalist alternative, a private elite - Quigley's Establishment - rules, despite nominal Democracy}. This latter tradition encircled the early Christian religion, giving rise to many of the controversies that were settled in the early Church councils and continuing on in the many heresies that extended through history from the Arians, the Manichaeans, Luther, Calvin, and the Jansenists.
{ed. comment: many Jewish writers claim that this Dualism, with its anti-body puritanism, is characteristic of Christianity, not a deviation within it, whereas Judaism (post Essenes) favours the body and "this world"; Marxists make a similar claim}.
The chief avenue by which these ideas, which were constantly rejected by the endless discussions formulating the doctrine of the West, continued to survive was through the influence of St. Augustine. From this dissident minority point of view came seventeenth-century Puritanism. The general distinction of this point of view from Zoroaster to William Golding (in Lord of the Flies) is that the world and the flesh are positive evils {ed. comment: this seems not to have been a view of original Zoroastrianism; it arose in Alexandria when Buddhist ideas were fused with Zoroastrian ones} and that man, in at least this physical part of his nature, is essentially evil. As a consequence he must be disciplined totally to prevent him from destroying himself and the world. In this view the devil is a force, or being, of positive malevolence, and man, by himself, is incapable of any good and is, accordingly, not free. He can be saved in eternity by God's grace alone, and he can get through this temporal world only by being subjected to a regime of total despotism. The direction and nature of the despotism is not regarded as important, since the really important thing is that man's innate destructiveness be controlled. Nothing could be more sharply contrasted than these two points of view, the orthodox and the puritanical. The contrasts can be summed up
Orthodox
Evil is absence of Good. Man is basically good. Man is free. Man can contribute to his salvation by good works. Self-discipline is necessary to guide or direct. Truth is found from experience and revelation, interpreted by tradition.
Puritan
Evil is positive entity. Man is basically evil. Man is a slave of his nature. Man can be saved only by God. Discipline must be external and total. Truth is found by rational deduction from revelation.
The puritan point of view, which had been struggling to take over Western Civilization for its first thousand years or more, almost did so in the seventeenth century. It was represented to varying degrees in the work and agitations of Luther, Calvin, Thomas Hobbes, Cornelius Jansen (Augustimus, 1640), Antoine Arnauld (1612-1694), Blaise Pascal, and others. In general this point of view believed that the truth was to be found by rational deduction from a few basic revealed truths ...
{p. 1246} In these terms the political struggle in the United States has shifted in two ways, or even three. This struggle, in the minds of the ill informed, had always been viewed as a struggle between Republicans and Democrats at the ballot box in November. Wall Street, long ago, however, had seen that the real struggle was in the nominating conventions the preceding summer. This realization was forced upon the petty-bourgeois supporters of Republican candidates by their antipathy for Willkie, Dewey, Eisenhower, and other Wall Street interventionists and their inability to nominate their congressional favorites, like Senators Knowland, Bricker, and Taft, at national party conventions. Just as these disgruntled voters reached this conclusion, with Taft's failure in 1952, the new wealth appeared in the political picture, sharing the petty bourgeoisie's suspicions of the East, big cities, Ivy League universities, foreigners, intellectuals, workers, and aristocrats. By the 1964 election, the major political issue in the country was the financial struggle behind the scenes between the Old wealth, civilized and cultured in foundations, and the new wealth, virile and uninformed, arising from the flowing profits of government-dependent corporations in the Southwest and West.
At issue here was the whole future face of America, for the older wealth stood for values and aims close to the Western traditions of diversity, tolerance, human rights and values, freedom, and the rest of it, while the newer wealth stood for the narrow and fear-racked aims of petty-bourgeois insecurity and egocentricity. The nominal issues between them, such as that between internationalism and unilateral isolationism (which its supporters preferred to rename "nationalism"), were less fundamental than they seemed, for the real issue was the control of the Federal government's tremendous power to influence the future of America by spending of government funds. The petty bourgeois and new-wealth groups wanted to continue that spending into the industrial-military complex, such as defense and space, while the older wealth and nonbourgeois groups wanted to direct it toward social diversity and social amelioration for the aged and the young, for education, for social outcasts, and for protecting national resources for future use.
{p. 1247} The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people
{p. 1248} can "throw the rascals out" at any election without leading to any profound or extensive shifts in policy. ...
The capture of the Republican National Party by the extremist elements of the Republican Congressional Party in 1964, and their effort to elect Barry Goldwater to the Presidency with the petty-bourgeois extremists alone, was only a temporary aberration on the American political scene, and arose from the fact that President Johnson had preempted all the issues (which are, as we have said, now acceptable to the overwhelming majority) and had occupied the whole broad center of the American political spectrum, so that it was hardly worth while for the Republicans to run a real contestant against him in the same area. Thus Goldwater was able to take control of the Republican National Party by default.
The virulence behind the Goldwater campaign, however, had nothing to do with default or lack of intensity. Quite the contrary. His most ardent supporters were of the extremist petty-bourgeois mentality driven to near hysteria by the disintegration of the middle classes and the steady rise in prominence of everything they considered anathema: Catholics, Negroes, immigrants, intellectuals, aristocrats (and near aristocrats), scientists, and educated men generally, people from big cities or from the East, cosmopolitans and internationalists and, above all, liberals who accept diversity as a virtue.
This disintegration of the middle classes had a variety of causes, some of them intrinsic, many of them accidental, a few of them obvious, but many of them going deeply into the very depths of social existence. All these causes acted to destroy the middle classes by acting to destroy the middle-class outlook. And this outlook was destroyed, not by adult middle-class persons abandoning it, but by a failure or inability of parents to pass it on to their children. {ed. comment: a failure brought about by Quigley's Establishment? by Hollywood?} ...
{p. 1249} Much of the disintegration of the middle-class outlook can be traced to a weakening of its chief aspects, such as future preference, intense self-discipline, and, to a lesser degree, to a decreasing emphasis on infinitely expandable material demand and on the importance of middle-class status symhols. Only a few of the factors that have influenced these changes can he mentioned here.
The chief external factor in the destruction of the middle-class out
{p. 1250} look has been the relentless attack upon it in literature and drama through most of the twentieth century. In fact, it is difficult to find works that defended this outlook or even assumed it to be true, as was frequent in the nineteenth century. Not that such works did not exist in recent years; they have existed in great numbers, and have been avidly welcomed by the petty bourgeoisie and by some middle-class housewives. Lending libraries and women's magazines of the 1910's, 1920's, and 1930's were full of them, but, by the 1950'S they were largely restricted to television soap dramas. ...
In the earlier period, even down to 1940, literature's attack on the middle-class outlook was direct and brutal, from such works as Upton Sinclair's The Jungle or Frank Norris's The Pit, both dealing with the total corruption of personal integrity in the meatpacking and wheat markets. These early assaults were aimed at the commercialization of life under bourgeois influence and were fundamentally reformist in outlook because they assumed that the evils of the system could somehow be removed, perhaps by state intervention. By the 1920's the attack was much more total, and saw the problem in moral terms so fundamental that no remedial action was possible. Only complete rejection of middle-class values could remove the corruption of human life seen by Sinclair Lewis in Babbitt or Main Street.
After 1940, writers tended less and less to attack the bourgeois way of life; that job had been done. Instead they described situations, characters, and actions that were simply nonbourgeois: violence, social irresponsibility, sexual laxity and perversion, miscegenation, human weakness in relation to alcohol, narcotics, or sex, or domestic and business relationships conducted along completely nonbourgeois lines. Ernest Hemingway, William Faulkner, Erskine Caldwell, John Dos Passos, and a host of lesser writers, many of them embracing the cult of violence, showed the trend.
{p. 1251} The literary assault on the bourgeois outlook was directed at all the aspects of it that we have mentioned, at future preference, at self-discipline, at the emphasis on materialistic acquisition, at status symbols. The attack on future preference appeared as a demonstration that the future is never reached. Its argument was that the individual who constantly postpones living from the present (with living taken to mean real personal relationships with individuals) to a hypothetical future eventually finds that the years have gone by, death is approaching, he has not yet lived, and is, in most cases, no longer able to do so. ...
The more recent form of this attack on future preference has appeared in the existentialist novel and the theater of the absurd. Existentialism, by its belief that reality and life consist only of the specific, concrete personal experience of a given place and moment, ignores the context of each event and thus isolates it. But an event without context has no cause, meaning, or consequence; it is absurd, as anything is which has no relationship to any context. And such an event, with neither past nor future, can have no connection with tradition or with future preference. This point of view came to saturate twentieth-century literature ...
A similar attack was made on self-discipline. The philosophic hasis for this attack was found in an oversimplified Freudianism that regarded all suppression of human impulse as leading to frustration and psychic distortions that made suhsequent life unattainable....
{p. 1252} A similar reversal of values has flooded the market with novels filled with pointless clinical descriptions, presented in obscene language and in fictional form, of swamps of perversions ranging from homosexuality, incest, sadism, and masochism, to cannibalism, necrophilia, and coprophagia. These performances, as the critic Edmund Fuller has said, represent not so much a loss of values as a loss of any conception of the nature of man. Instead of seeing man the way the tradition of the Greeks and of the West regarded him, as a creature midway between animal and God, "a little lower than the angels," and thus capable of an infinite variety of experience, these twentieth-century writers have completed the revolt against the middle classes by moving downward from the late nineteenth century's view of man as simply a higher animal to their own view of man as lower than any animal would naturally descend. From this has emerged the Puritan view of man (but without the Puritan view of God) as a creature of total depravity in a deterministic universe without hope of any redemption. This point of view, which, in the period 1550-1650, justified despotism in a Puritan context, now may be used, with petty-bourgeois support, to justify a new despotism to preserve, by force instead of conviction, petty-bourgeois values in a system of compulsory conformity. George Orwell's 1984 has given us the picture of this system as Hitler's Germany showed us its practical operation. {ed. comment: wrong; Orwell depicted his totalitarian nightmare as a Left onecalled "English Socialism"}
{p. 1253} ... affluence weakened both future preference and self-denying self-discipline training. ... Another element in this process was a change in the educational philosophy of America and a somewhat similar change in the country's ideas on the whole process of child training. Early generations had continued to cling to the vestiges of the Puritan outlook to the degree that they insisted that children must be trained under strict discipline, including corporal punishment. This seventeenth-century idea, by 1920, was being replaced in American family ideology by an idea of the nineteenth century that child maturation is an innate process not subject to modification by outside training. In educational theory this erroneous idea went back to the Emile of Jean-Jacques Rousseau (1762), which idealized the state of nature as equivalent to the Garden of Eden, and believed that education must consist in leaving a youth completely free so that his innate goodness could emerge and reveal itself. This idea was developed, intensified, and given a pseudoscientific foundation by advances in biology and genetics in the late nineteenth century. By 1910 or so, childrearing and
{p. 1254} educational theories had accepted the idea that man was a biological organism, like any animal, that his personality was a consequence of hereditary traits, and that each child had within him a rigid assortment of inherited talents and a natural rate of maturation in the development of these talents. These ideas were incorporated in a series of slogans of which two were: "Every child is different," and "He'll do it when he's ready."
From all this came a wholesale ending of discipline, both in the home and in school, and the advent of "permissive education," with all that it entailed. Children were encouraged to have opinions and to speak out on matters of which they were totally ignorant; acquisition of information and intellectual training were shoved into the background; and restrictions of time, place, and movement in schools and homes were reduced to a minimum. Every emphasis was placed on "spontaneity"; and fixed schedules of time periods or subject matter to be covered were belittled. ...
In marriage, as in so many other things, Western Civilization has been subjected to quite antithetical theories; these we might call the Western and the Romantic theories of love and marriage. The Romantic theory of these things was that each man or woman had a unique personality consisting of inborn traits, accumulated by inheritance from a unique combination of ancestors. This is, of course, the same theory that was used to justify permissive education. In Romantic love, however, the theory went on to assume, simply as a matter of faith, that for each man or woman there existed in a world a person of the opposite sex whose personality traits would just fit into those of his or her destined mate. The only problem was to find that mate. It was assumed that this would he done, at first sight, when an almost instantaneous flash of recognition would reveal to both that they had found the one possible life's partner.
The idea of love at first sight as a flash of recognition was closely related to the Manichaean and Puritan religious idea that God's truth came to men in a similar flash of illumination (an idea that goes back, like so many of these ideas, to Plato's theory of knowledge as reminiscence). In its most extreme form, this Romantic theory of love assumed that each of the destined lovers was only part of a person, the two parts fitting together instantly on meeting into a single personality. Associated with this were a number of other ideas, including the idea that marriages were
{p. 1255} "made in heaven," that such a Romantic marriage was totally satisfying to the partners, and that such a marriage should be "eternal." ...
Opposed to this Romantic theory of love and marriage, and almost equally opposed to the bourgeois practice of "sensible" marriage, was what we may call the Western idea of love and marriage. This assumes that personalities are dynamic and flexible ... love and marriage are never total and all-absorbing, that each partner remains an independent personality with the right to an independent life. (This is found throughout the Western tradition and goes back to the Christian belief that each person is a separate soul with its own, ultimately separate, fate. )
{p. 1260} ... as female domination becomes, generation by generation, a more distinctive feature of American family life, the daughter's shift of attention to her father becomes less complete, and, by adolescence, she tends to pity him rather than to admire him and may become relatively ambivalent in her feelings toward both her father and mother, sometimes hating the latter for dominating her father and despising his weakness in allowing it. In such a case, the whole development of which we speak is accelerated and intensified in the next generation, and the daughter's relatively ambivalent
{p. 1261} feelings toward her parents are repeated in her relatively ambivalent feelings toward her hushand. This serves to intensify both her emotional smothering and overprotection of her son and her tendency toward emotional rejection of her daughter as a potential danger to the relatively precarious emotional relationship between hushand and wife.
As a consequence of this situation, the frustrated wife has a tendency to cling to her son by keeping him dependent and immature as long as possible and to seek to hasten the maturing of her daughter in order to edge her out of the family circle as soon as possible. The chief consequence of this is the increasingly late maturity, the weakness, undersexuality, and dependence of American boys and American men of middle-class origins and the increasingly early maturing, aggressiveness, oversexuality, and independence of American middle-class girls.
{p. 1262} If his father tries to help (and he is the only one who is likely to try to do so), and insists that his son become a responsible and independent human being, the mother fights like a tigress to defend her son's continued immaturity and dependence, accusing the husband of cruelty, of hatred for his son, and of jealousy of his son's feeling for the mother. She does not hesitate to use the weapons that she has. They are many and powerful, including a "reluctant" and ambiguous "revelation" to the son that his father hates him. Any effort by the father to argue that true love must seek to help the son advance in maturity and independence, and that insistence that he avoid or postpone these advances might well be regarded as hatred rather than love, are usually blocked with ease. At this stage in the family history, emotional frustrations and confusions are generally at so high a level that it is fairly easy for mother and son to agree that black is white. "Momism" is usually triumphant for a more or less extended period, while normal adolescent rebellion becomes a whole-
{p. 1263} sale rejection of the father and only much later a delayed effort at achieving emotional detachment from the mother.
The point of all this is that normal adolescent rebellion has become, in America today, a radical and wholesale rejection of parental values, including middle-class values, because of the protracted emotional warfare which now goes on in the middle-class home with teen-age children. The chief damage in the situation lies in the pervasive destruction of the adolescent middle-class boy and his alienation from the achieving aspects of middle-class culture. The middle-class girl, chiefly because she still tries to please her father, may continue to be a considerable success as an achiever, especially in academic life where her earlier successes make continuance of the process fairly easy. But the middle-class boy who rejects the achieving aspects of middle-class life often does so in academic matters that seem to him to be an alien and feminine world from the beginning. His rejection of this world and his unconscious yearning for academic failure arise from a series of emotional influences: (1) a desire to strike back at his father; (2) a desire to free himself from dependence on his mother and thus to escape from the feminine atmosphere of much academic life; and (3) a desire to escape from the endless academic road, going to age twenty-three or later, which modern technical and social complexities require for access to positions leading to high middle-class success. The lengthening of the interval of time between sexual awareness and the ending of education, from about two years in the 1880's to at least ten or twelve years in the 1960's, has set up such tensions and strains in the bourgeois American family that they threaten to destroy the family and are already in the process of destroying much of the middle-class outlook that was once so distinctive of the American way of life.
From this has emerged an almost total breakdown of communication between teen-agers and their parents' generation. Generally the adolescents do not tell their parents their most acute problems; they do not appeal to parents or adults but to each other for help in facing such problems (except where emotionally starved girls appeal to men teachers); and, when any effort is made to talk across the gap between the generations, words may pass but communication does not. Behind this protective barrier a new teen-age culture has grown up. Its chief characteristic is rejection of parental values and of middle-class culture.
Quigley's books are published by GSG Books. To buy direct from them: http://www.matriots.com/books/store/
To buy Quigley's books second-hand: http://dogbert.abebooks.com/abe/BookSearch?an=carroll+quigley
To buy Tragedy and Hope from Amazon:
http://www.amazon.com/exec/obidos/ASIN/094500110X/qid=982384394/sr=2-1/ref=sc_b_1/t/107-9719545-5965300
Carroll Quigley's most important book: The Anglo-American Establishment: quigley.html.
Quigley's book The Evolution of Civilizations: huntington.html.
Lionel Curtis (of the Round Table) on why the British Empire should re-incorporate the United States and become a World-State:
(1) The Commonwealth of Nations (1911-16): curtis1.html
(2) The Commonwealth of God (1938): curtis2.html.
Bertrand Russell & H. G. Wells promoting the World-State: opensoc.html.
The 1946 Baruch Plan for control of Atomic Energy and for World Government: baruch-plan.html.
