International Bankers:

Robber Barons?
By William P. Litynski
Wall Street Bankers: Manhattan Mobsters?
Jamie Dimon (left), chairman of the board of JP Morgan Chase bank, and Lloyd Blankfein, chairman of the board of oldman !achs bank,
lea"e the White #o$se after they and %& other bank e'ec$ti"es met (ith President Barack )bama at the White #o$se in Washington, D.C. on
March *+, *,,-. Jamie Dimon and Lloyd Blankfein are members of the Co$ncil on .oreign /elations, a 0ri"ate 0olitical organi1ation in 2e(
3ork City. (Photo by Chi0 !omode"illa4etty 5mages)
Woodrow Wilson
However it has come about, it is more important still that the control of credit also has
become dangerously centralized. It is the mere truth to say that the financial resources of
the country are not at the command of those who do not submit to the direction and
domination of small groups of capitalists who wish to keep the economic development of the
country under their own eye and guidance. The great monopoly in this country is the
monopoly of big credits. So long as that exists our old !ariety and freedom and
indi!idual energy of de!elopment are out of the "uestion. # great industrial nation is
controlled by its system of credit. $ur system of credit is pri!ately concentrated. The
gro%th of the nation therefore and all our acti!ities are in the hands of a fe% men %ho
e!en if their action be honest and intended for the public interest are necessarily
concentrated upon the great undertakings in %hich their o%n money is in!ol!ed and
%ho necessarily by !ery reason of their o%n limitations chill and check and destroy
genuine economic freedom. This is the greatest question of all, and to this statesmen must
address themselves with an earnest determination to serve the long future and the true
liberties of men. This money trust, or, as it should be more properly called, this credit trust,
of which ongress has begun an investigation, is no myth! it is no imaginary thing. It is not
an ordinary trust like another. It doesn"t do business every day. It does business only when
there is occasion to do business. #ou can sometimes do something large when it isn$t
watching, but when it is watching, you can"t do much. #nd & ha!e seen men s"ueezed by it'
& ha!e seen men %ho as they themsel!es expressed it %ere put out of business by Wall
Street because Wall Street found them incon!enient and didn(t %ant their
competition.% & '.(. )resident Woodrow Wilson, The New Freedom *+,+-., hapter /
*0onopoly, or 1pportunity2.
6he 2ational Debt Clock on dis0lay in 2e( 3ork City on .ebr$ary %, *,%,. 7ccording to the 2ational Debt Clock, the 8nited !tates of 7merica
is o"er 9%* trillion in debt. President Barack )bama sent Congress a 9&.:& trillion b$dget on .ebr$ary %, *,%, that (o$ld 0o$r more money
into the fight against high $nem0loyment, boost ta'es on the (ealthy, and free1e s0ending for a (ide s(ath of go"ernment 0rograms. 6he
deficit for this year (o$ld s$rge to a record;breaking 9%.<= trillion. (7P Photo)
.irst De0$ty Managing Director of the 5nternational Monetary .$nd !tanley .ischer (left), .ederal /eser"e Chairman 7lan reens0an (center),
and 5nternational Monetary .$nd Managing Director Michel Camdess$s ha"e a 0ri"ate con"ersation at a meeting on !e0tember *=, %---.
7lan reens0an and !tanley .ischer are members of the Co$ncil on .oreign /elations. !tanley .ischer is c$rrently the o"ernor of the Bank
of 5srael.
7merican flag (left) and Comm$nist China>s flag (right) are dis0layed at the entrance of oldman !achs head?$arters at :< Broad !treet in
2e( 3ork City.
Partners of oldman, !achs @ Co. in %--A, from left to rightB #enry Pa$lson, !te0hen .riedman, and Jon Cor1ineC all three men (o$ld ser"e
as Chairman of oldman !achs. (PhotoB !aba4Corbis)
President of /$ssia Dmitry Med"ede" (left) shakes hands (ith Lloyd Blankfein, the chairman of the board of oldman !achs
bank in 2e( 3ork City, d$ring a meeting in the orki residence o$tside Mosco(, /$ssia on March %<, *,%%. Lloyd Blankfein is
a member of the Co$ncil on .oreign /elations, a 0ri"ate organi1ation in 2e( 3ork City.
(7P Photo4/57 2o"osti, Dladimir /odiono", Presidential Press !er"ice)
3nd 4esus went into the temple of 5od, and cast out all them that sold and bought in the temple, and overthrew the tables of the
moneychangers, and the seats of them that sold doves, 3nd said unto them, It is written, 0y house shall be called the house of
prayer! but ye have made it a den of thieves.% & 0atthew 6+7+68+-, 94:
Bro(n Brothers #arriman @ Co. international banking head?$arters on %A, Broad(ay in 2e( 3ork City (PhotoB .lickr)

Citigro$0 (left) and JP Morgan Chase (right) international banking head?$arters in 2e( 3ork City
;either a borrower nor a lender be!
<or loan oft loses both itself and friend,
3nd borrowing dulls the edge of husbandry.
This above all7 to thine ownself be true,
3nd it must follow, as the night the day,
Thou canst not then be false to any man.%
& William (hakespeare, Hamlet, 3ct I
6he Bank for 5nternational !ettlements (B5!) head?$arters in Basel, !(it1erland. 6he B5! (as established on May %+, %-&,. 2a1i (ar
criminal Walther .$nk ser"ed on the board of directors of Bank for 5nternational !ettlements before World War 55. (PhotoB .lickr)
6he World Bank in Washington D.C.
5nternational Monetary .$nd in Washington D.C.
E$ro0ean Central Bank in .rankf$rt, ermany

Bank of England in 6he City of London
6he .ederal /eser"e head?$arters in Washington, D.C., 8nited !tates of 7merica

J.P. Morgan @ Co. 0artners John Pier0ont Morgan Jr. (left, .ebr$ary *<, %-*-) and 6homas W. Lamont (right, 2o"ember %%, %-*-)

F$hn, Loeb @ Co. 0artner )tto #. Fahn (left, 2o"ember *, %-*<) and 2e( 3ork City financier Bernard M. Bar$ch (right, March %*, %-*:)

Chase Manhattan Bank chiefs John J. McCloy (left, J$ne *,, %-A-) and Da"id /ockefeller (right, !e0tember +, %-=*)

5nternational banker eorge !oros (left, !e0tember %, %--+) and !ecretary of the 6reas$ry /obert E. /$bin (former 0artner of oldman,
!achs @ Co. (ho a00ears alongside .ederal /eser"e Chairman 7lan reens0an and De0$ty !ecretary of the 6reas$ry La(rence !$mmers
(right, .ebr$ary %<, %---)
Bank of England: Central Bank of the British Empire
6he Bank of England, officially kno(n as G6he o"ernor and Com0any of the Bank of EnglandH, (as established in %=-A (hen members of the
English Parliament 0assed the 6onnage 7ct of %=-A. (PhotoB .lickr)

Fing William 555 of England (left) and his (ife I$een Mary 55 of England (right) r$led England, !cotland, and 5reland beginning in %=:-, after
Fing James 55 of England (as de0osed in the Glorio$s /e"ol$tionH in %=::. Fing William 555 of England (as formerly Prince William of )range
and a monarch from the 2etherlands.
Dam !?$are in 7msterdam, #olland J2etherlandsK in the late %=,,s. D$tch moneychangers in 7msterdam 0ro"ided loans to English and
!cottish moneychangers 0rior to the establishment of the Bank of England in %=-A.
6he moneychangers of Denice, E$ro0e>s ancient bankers
William )aterson, founder of the =ank of >ngland
=ank ;ote produced by the =ank of >ngland
G6he 7ct of Parliament by (hich the Bank (as established is called G7n 7ct for granting to their MaLesties se"eral /ates and D$ties
$0on 6$nnages of !hi0s and Dessels, and $0on Beer, 7le, and other Li?$orsC for sec$ring certain /ecom0enses and 7d"antages, in
the said 7ct mentioned, to s$ch 0ersons as shall "ol$ntarily ad"ance the !$m of .ifteen h$ndred tho$sand Po$nds to(ards carrying on
the (ar against .rance.H 7fter "ario$s articles referring to the im0osition of ta'es, the 7ct a$thorised the raising of M%,*,,,,,, by
s$bscri0tion, the s$bscribers forming a cor0oration to be called, G6he o"ernor and Com0any of the Bank of England.H 2o 0erson
might s$bscribe more than M%,,,,, before the %st of J$ly follo(ing, and e"en after this date no indi"id$al s$bscri0tion might e'ceed
M*,,,,,. 6he cor0oration (as to lend the (hole of its ca0ital to the o"ernment, and in ret$rn it (as to be 0aid interest at the rate of :
0er cent., and MA,,,, for e'0enses of management, in all M%,,,,,, 0er ann$m. 6he cor0oration (as to ha"e the 0ri"ileges of a bank
for t(el"e years, then the o"ernment reser"ed the right of ann$lling the charter after gi"ing one yearNs notice to the com0any. 6he
cor0oration (ere not a$thorised to borro( or o(e more than their ca0italC if they did so, the members became 0ersonally liable in
0ro0ortion to the amo$nt of their stock. 6he cor0oration (ere forbidden to trade in any merchandise (hate"er, b$t Gthey (ere allo(ed
to deal in bills of e'change, gold or sil"er b$llion, and to sell any (ares or merchandise $0on (hich they had ad"anced money, and
(hich had not been redeemed (ithin three months after the time agreed $0on.H 6he s$bscri0tion list (as o0ened at the Mercers>
Cha0el, then the head?$arters of the cor0oration, on 6h$rsday, J$ne *%, %=-AO7fter this great s$ccess the Charter of 5ncor0oration
(as granted on J$ly *+, %=-A.H P History of the Bank of England: 1640 to 1903 by Dr. 7. 7ndreades, 0. +*;+A
>?cerpts from Taxation in Colonial America by 3lvin @abushka, hapter +A *p. 6,B86,,.
G6he mechanism of credit established thro$gh the Bank of England merits e'0lanation. 5n May %=-A, the Ways and Means 7ct granted
a charter to the Bank of England. 6he bank (as to lend the go"ernment M%,*,,,,,, at : 0ercent interest, a moderate rate gi"en the
go"ernment>s dire financial straits. 5n ret$rn, the bank (as to be gi"en the 0ri"ilege of registering as a Loint;stock com0any. 6his (as
an enormo$s concession beca$se all other banks (ere re?$ired to o0erate as indi"id$als or 0artnershi0s on the basis of $nlimited
liability to their indi"id$al 0ro0rietors. 6he 0ro0rietors of the Bank of England, in contrast, did not face 0ersonal liability on their 0ri"ate
f$nds. 6heir risk (as limited to the ca0ital in"ested in the bank . 6he bank enLoyed this ad"antage for more than a cent$ry. 6he ne(ly
chartered bank (as em0o(ered to do ordinary banking b$siness of recei"ing de0osits and creating a credit c$rrency.
6he bank (as both a bank of iss$e and a bank of de0osit. 6he original 0lan 0$t before a 0arliamentary committee in %=-& contained
an e'0licit reference to the right of note iss$e, b$t this (as a 0oint of contention. 7s a res$lt, the act of %=-A contains no reference to
bank notes and only one to bank bills. 5t en"isaged that the bank (o$ld acce0t de0osits and borro( on bills, b$t that borro(ing sho$ld
ne"er e'ceed the s$m of M%,*,,,,,, at any one time, the amo$nt the bank (o$ld raise and lend to the go"ernment, $nless it be by an
act of Parliament $0on f$nds agreed in Parliament. 5n this restriction, the act a00ears to limit the bill liabilities of the bank to
M%,*,,,,,,. 5t (as not clear if the bank co$ld legally o(e more than M%,*,,,,,, $0on its notes. )ther 0ro"isions forbade the 0$rchase
of cro(n lands or lending to the Cro(n (itho$t 0arliamentary consent. 7 0er0et$al f$nd of interest, : 0ercent on the M%,*,,,,,,,
0ayable to the s$bscribers from the shi0s> tonnage and li?$or d$ties le"ied $nder the act, (as set at M%,,,,,,, ta' free. 2o indi"id$al
(as 0ermitted to s$bscribe more than M*,,,,,, and a ?$arter of all s$bscri0tions (as to be 0aid in 0rom0t cash. 5ndi"id$als (ere to
be 0ersonally liable for any debts of the bank e'ceeding its ca0ital of M%,*,,,,,,.
6he bank>s ca0ital of M%,*,,,,,, (as s$bscribed (ithin t(el"e days. 6he s$bscribers became a cor0oration called the o"ernor and
Com0any of the Bank of England. )nly =, 0ercent of the sc$bscri0tion, M+*,,,,,, (as called $0 immeiately by the go"ernors of the
bank. 6he bank made its loan to the go"ernment in installments. )n 7$g$st %, %=-A, it ga"e the go"ernment M+*,,,,, in cash, in a
combination of drafts on other banks and MA:,,,,, in notes $nder the seal of the bank, (hich became kno(n as Gsealed bank bills.H 5n
ret$rn, the bank took the go"ernment>s 0romise to re0ay in the form of interest;bearing tallies (bonds, or go"ernment stock). .rom
7$g$st **, treas$ry orders for the s0ending of the money began. By year>s end, the f$ll s$m had been ad"anced to the go"ernment.
#o(e"er, as of Jan$ary %, %=-<, the remaining MA:,,,,, of shareholders> s$bscri0tions had not beeen called in and remained
a"ailable for f$t$re banking acti"ities. Moreo"er, e"en some of the M+*,,,,, e'isted in the form of s$bscribers bonds that the bank
reckoned, o0timistically, as cash.
)n recei0t of the loan, the go"ernment $sed the bank>s notes to 0$rchase s$00lies for the armyOBank of England sealed bank bills
ass$red the king of 0$rchasing 0o(er. 6he bank, in t$rn, (as g$aranteed interest by a s0ecific act of Parliament. .or M%,,,,,, in
earmarked ta' re"en$e, the go"ernment of England co$ld s0end M%,*,,,,,,. .or their 0art, the bank>s shareholders recei"ed a
di"idend of = 0ercent in the first half year, a do$ble;digit ret$rn on an ann$ali1ed basis.
6he bank raised additional ca0ital from its acce0tance of de0osits and the circ$lation of sealed bills in addition to those it ga"e the
go"ernment as 0art of the original M%,*,,,,,,. More im0ortant to the 0rofitabilty of the bank and its ability to create additional credit for
the go"ernment and 0ri"ate commerce (as if its total borro(ing (as limited to M%,*,,,,,, as stated in the act of %=-A. 6he go"ernor of
the bank tried b$t failed in %=-< to negotiate a cla$se in the act that (o$ld 0ermit an iss$e of sealed bills in e'cess of M%,*,,,,,,. 7
co$rt r$ling declared that ne( bills co$ld be iss$ed only as old bills (ere retired. #o(e""er, the co$rt r$led that the limit a00lied only to
sealed bills, not to the less formal Gr$nning cash notesH of the bank, (hich lacked the cor0orate seal and (ere merely signed by the
cashier. E'cl$ding r$nning cash notes from the limit amo$nted to a license to 0rint money, literally cash, s$bLect to the 0r$dential
L$dgement of the bank>s managers. .orms (ere 0rinted (ith blanks for names, amo$nts, and the cashier>s signat$re. 6hese cash
notes, nicknamed G!0eed>s notesH from the name of the cashier, (ere iss$ed, circ$lated freely, and (ere acce0ted at f$ll face "al$e.
6hey (ere deemed as sec$re as the sealed bills backed by the bank>s share c0atial and go"ernment tallies or loans. 6he combined
iss$e of sealed bills and cash notes ?$ickly e'ceeded the a$thori1ed s$bscribed ca0ital and borro(ing on bills. Credit co$ld be created
to the e'tent that the 0$blic acce0ted bank 0a0er as good c$rrency.H
>?cerpts from Taxation in Colonial America by 3lvin @abushka, hapter +A *p. 6/C86/B.7
5n Jan$ary %=+* the Cro(n faced bankr$0tcy, (hich 0rom0ted a sto0 of the E'che?$er, the free1ing of all re0ayment for a year
from Jan$ary %, %=+*, on )rders iss$ed before December %:, %=+%. )rders amo$nting to M%,%,,,,,, rested on the ordinary
re"en$e. /e0ayment of )rders (o$ld ha"e red$ced the Cro(n>s dis0osable income in %=+* to MA,,,,,,, an intolerably lo(
le"el. 6he sto0 tem0orarily relie"ed re0ayment of M%,*,,,,,,. 6he memory of the sto0, (hich r$ined se"eral goldsmiths and
other small lenders, (as not ?$ickly forgotten. 5ts damage constrained go"ernment credit o0erations d$ring the remainder of
Charles>s reign and the brief r$le of his brother, James.
William>s e'0endit$res in 5reland and far greater military o$tlays in E$ro0e as he in"ol"ed England in (hat became more than a
cent$ry;long str$ggle against .rance on the continent and in 7merica re?$ired f$nds abo"e and beyond grants of Parliament.
6his circ$mstance 0ro"ided an o00ort$nity for a gro$0 of men (ho 0ro0osed the creation of a 0ri"ate, Loint;stock bank that (o$ld
ha"e some of the 0o(ers of a national bank, es0ecially the iss$e of bank notes. 7fter disc$ssions bet(een the fo$nders of the
0ro0osed bank, the Pri"y Co$ncil in the 0resence of I$een Mary, and a committee of Parliament, an agreement (as e"ent$ally
reached in the Ways and Means 7ct of %=-A that a$thori1ed the creation of the Bank of England.
6he 0re"io$s system of granting credit directly to the monarch (as re0laced (ith loans made to the state, (ith debt ser"ice
g$aranteed by s0ecific ta'es on acts of Parliament. Parliament, not the king>s ta' collectors, g$aranteed 0$blic debt. 5t 0assed
the 6onnage 7ct of %=-A to g$arantee ann$al interest of M%,,,,,, on a loan of M%,*,,,,,, to the go"ernment made by the ne(
Bank of England. Parliament>s a00ro"al of earmarked ta'es to g$arantee 0ayment of interest on loans to the state created a
bond market in (hich indi"id$als co$ld sec$rely in"est in go"ernment stock, the English term for long;term go"ernment bonds.
6he Bank of England in conL$nction (ith the 6onnage 7ct marked the beginning of an official national debt, (hich (o$ld gro( by
lea0s and bo$nds in the eighteenth cent$ry. Cro(n ac?$iescence in the s$0remacy of Parliament (ith Parliament>s stat$tory
g$arantee of interest and ca0ital redem0tion transformed the 0re"io$s insec$rity of lending to the go"ernment thro$gh 0ersonal
loans, tallies, and )rders (ith the generally safe in"estment of 0$rchasing go"ernment bonds.
6he credit re"ol$tion of %=-A allo(ed the go"ernment of England to li"e beyond its means P to s0end more than it collected in
ta'es each year. 6he creation of credit at lo( rates of interest enabled the go"ernment to engage in lengthy (ars costing
millions of 0o$nds (itho$t ha"ing to s$bLect English ta'0ayers at once to their f$ll cost. 7s debt and debt ser"ice 0iled $0, the
conse?$ences of steadily rising ta'es (o$ld lead England into (ar (ith its 7merican colonies later in the eighteenth cent$ry.
>?cerpts from History of the Bank of England by Dr. 3. 3ndreades *p. CE8CB.
6he 0lan no( (as to raise M%,*,,,,,, to be lent to the o"ernment in ret$rn for a yearly interest of M%,,,,,,. 6he s$bscribers
to the loan (ere to form a cor0oration (ith the right to iss$e notes $0 to the "al$e of its total ca0ital. 6he cor0oration (as to be
called, G6he o"ernor and Com0any of the Bank of England.H
Paterson (rote a 0am0hlet demonstrating the economic 0rinci0les on (hich the f$t$re Bank of England (as to rest.
#e notes the old mistake Gthat the stam0 or denomination gi"es or adds to the "al$e of money.H 6he fallacy contained in this
(as 0ointed o$t by those (ho had s$ggested the fo$ndation of the Bank some years earlier. 5ts 0romoters had seen that the
instit$tion o$ght to be based on the follo(ing 0rinci0lesB
G%. 6hat all money or credit not ha"ing an intrinsic "al$e, to ans(er the contents or denomination thereof, is false and co$nterfeit,
and the loss m$st fall one (here or other.
G*. 6hat the s0ecies of gold and sil"er being acce0ted, and chosen by the commercial (orld for the standard, or meas$re, of
other effects, e"erything else is only acco$nted "al$able as com0ared (ith these.
G&. Wherefore all credit not fo$nded on the $ni"ersal s0ecies of gold and sil"er is im0racticable, and can ne"er s$bsist neither
safely nor long, at least till some other species of credit be found out and chosen by the trading part of mankind oer and aboe
or in lieu thereof!H
7fter describing the strong 0osition of the Bank and its 0ros0ects of s$ccess, and stating that no di"idend (o$ld be 0aid (itho$t
se"eral monthsN notice, in order to gi"e the shareholders the choice of selling or retaining their shares, Paterson remarks that
G6he 0oliticians Odisting$ish bet(een the interest of land and trade, as they ha"e lately done bet(een that of a king and his
0eo0le,H b$t Gif the 0ro0rietors of the Bank can circ$late their o(n fundation JsicK of t(el"e h$ndred tho$sand 0o$nds (itho$t
ha"ing more than t(o or three h$ndred tho$sand 0o$nds lying dead at one time (ith another, this Bank (ill be in effect as nine
h$ndred tho$sand 0o$nds or a million of fresh money bro$ght into the nation.H

>?cerpts from History of the Bank of England by Dr. 3. 3ndreades *p. 6/8-6.
There had been an interval of seven years between the two publications, and during this time an event had occurred which, to Fudge by
other countries, must have e?ercised considerable influence on the development of banks in >ngland. I refer to the return of the 4ews.
The return of the )e%s to *ngland. &ts influence on banking. & The effect of the influ? of (panish 4ews on the development of
Dutch commerce is well known. The influence of the 4ews at :enice was no less marked. It was two 4ews who first *in +GAA.
obtained the authority of the (enate to found a bank in the strict sense of the word. Their success was so great that many :enetian
nobles established rival institutions. 3buses followed which, combined with monetary difficulties, determined the 5overnment to
establish the =ank of :enice.
The same influence must have made itself felt in >ngland. =ut at what date2 In other words, when and for what reason were the 4ews
authorised to return to >ngland2 We will proceed to consider this question! it is not altogether easy to answer it.
It is certain that as soon as harles I. was dead, the 4ews attempted to return to >ngland. )ublic opinion was not unfavourable to them,
partly on account of the biblical spirit which then prevailed, and partly because of the services rendered by them in Holland, a country
which the >nglish of this period constantly set before them as a model. Thus 5ardiner mentions the publication of a pamphlet about
this time, in which in order to prove the importance of Dunkirk, it is stated that the 4ews were prepared to give HCA,AAA to H/A,AAA in
return for the toleration of a synagogue there, and that such permission would attract all the )ortuguese merchants from 3msterdam,
from which a still greater benefit would result. The 3msterdam merchants had not e?pected such demonstrations of sympathy. They
took the initiative, and two of them presented a petition in +CG, to <airfa? and the ouncil, for the revocation of the banishment of the
4ews.
3nother petition is referred to by some historians. ertain 4ews had asked for the repeal of the laws passed against them, and on
condition that the =odleian Iibrary was made over to them, together with permission to convert (t. )aul"s athedral into a synagogue,
they undertook to pay Jsi? millions of livresJ according to some, HEAA,AAA according to others. It is stated that negotiations were
broken off because the parties could not agree as to the price, the >nglish 5overnment asking eight millions or H/AA,AAA. It is
unfortunate as far as concerns the authenticity of this tale, that the references given by the historians" are inadequate or erroneous,
hence we only refer to it as a curiosity. These negotiations came to nothing. 0r. Wolf proves however, that notwithstanding this
rebuff a number of 4ews established themselves secretly in Iondon in the time of the ommonwealth.
The situation improved still more during the )rotectorate. romwell"s ideas were in advance of his times, and as 0r. <. Harrison
remarks, ;oble were the efforts of the )rotector to impress his own spirit of toleration on the intolerance of his age! K He effectively
protected the Luakers! he admitted the 4ews, after an e?pulsion of three centuries! and he satisfied 0aMarin that he had given to
atholics all the protection that he dared.% romwell was particularly well8disposed towards the 4ews, with whom he had, according to
0. 5uiMot, fairly frequent dealings. They seem to have done him numerous services. The 4ews for their part were not unaware of the
)rotector$s feeling towards them, and did their best to profit by it.
@abbi 0anasseh =en Israel took the initiative in the matter. This @abbi was a remarkable character. He was born in )ortugal about
+CAG, but while still a child he emigrated with his family to Holland. There he became a brilliant student, wrote books, and even
established the first 4ewish printing press at 3msterdam. =ut his chief efforts were devoted to improving the lot of his co8religionists,
and to securing their admission into the different >uropean countries. In particular he tried by various means, such as petitions to the
)rotector, and even the dedication of his book, Spes Israelis, to the =ritish )arliament, to obtain permission for the 4ews to return to
>ngland.
3 commission, presided over by romwell, was appointed to consider the question. It was composed of lawyers, priests and
merchants. The debates were long8winded and threatened to be interminable. romwell consequently dissolved the assembly,
remarking that the matter, complicated enough to start with, now appeared more intricate than ever, and that, although he wished no
more reasoning, he yet begged an interest in their prayers.%
The conference was thus without result and 0anasseh$s hopes were apparently vain. 3s a matter of fact however, the 4ews were tacitly
allowed to live in >ngland. 0anasseh received a pension of H+AA to console him for his disappointment. 3nd three years later, on
<ebruary +Eth +CE/, at a reception at Whitehall, romwell seems to have given an assurance of his protection to arvaFal and his
coreligionists.
Whatever may be the truth about this fatter point, it is probable that romwell took no legislative action with regard to the 4ews, but it
is certain that he tolerated their return, and that at the end of the )rotectorate a number of them were living in >ngland. They must have
taken an active part in trade, for shortly afterwards a petition was signed by numerous merchants complaining that the 4ews were not
subFect to the alien law, and that in consequence the Treasury suffered a yearly loss of H+A,AAA.
Bank of the United States: A Peculiar Institution?

6he !econd Bank of the 8nited !tates in Philadel0hia, Pennsyl"ania o0erated from %:%= to %:&=. 6he !econd Bank of the 8nited !tates (as
officially closed in %:&+, after President 7ndre( Jackson "etoed the rene(al of the Bank on J$ly %,, %:&*. 2icholas Biddle (right) (7.B.
Princeton %:,%) ser"ed as the President of the !econd Bank of the 8nited !tates from %:*& to %:&=.
/ichard La(rence, an $nem0loyed ho$se;0ainter from England, attem0ts to assassinate President 7ndre( Jackson at the entrance of the
8.!. Ca0itol in Washington, D.C. on Jan$ary &,, %:&<. Congress 0assed the !econd Coinage 7ct on J$ne *:, %:&A. 6he Panic of %:&+
occ$rred on May %,, %:&+ L$st after the !econd Bank of the 8nited !tates (as dissol"ed in %:&=C 7ndre( Jackson is the only 0resident e"er to
0ay off 7merica>s national debt. 7merica>s national debt today has e'ceeded 9%* trillion. (Was /ichard La(rence a Glone g$nmanHQ Was
/ichard La(rence a 0atsyQ)
0y dear sir, I have to thank you for four letters, all very interesting N very welcome. The last only requires any answer N that I
will give very e?plicitly. #ou may rely upon it that the =ank has taken its final course and that it will be neither frightened nor
caFoled from its duty by any small drivelling about relief to the country. 3ll that you have heard on that subFect from ;ew #ork
is wholly without foundation. The relief, to be useful or permanent, must come from ongress N from ongress alone. If that
body will do its duty, relief will come if not, the =ank feels no vocation to redress the wrongs inflicted by these miserable
people. @ely upon that. This %orthy +resident thinks that because he has scalped &ndians and imprisoned )udges he is to
ha!e his %ay %ith the Bank. ,e is mistaken and he may as well send at once and engage lodgings in 3rabia . . .%
& ;icholas =iddle *)resident of the (econd =ank of the 'nited (tates., in a letter to 4oseph Hopkinson *4udge of the 'nited
(tates District ourt for the >astern District of )ennsylvania. on <ebruary 6+, +/-G
The =ankKis trying to kill me, but I will kill it.% & '.(. )resident 3ndrew 4ackson, +/-6, in a conversation with 0artin :an =uren
During the 0onroe years, 3merican workers got a harsh lesson in the dangers of capitalism when the economy crashed. The )anic of
+/+, initiated the nation"s first maFor depression. The crash resulted from a confluence of national and international events. In the
heady atmosphere after the war, both imports and e?ports surged. >uropean demand for 3merican goods, especially agricultural
staples like cotton, tobacco, and flour, increased. To feed the overheated economy, state banks proliferated, and credit was easy. The
federal government offered for sale vast tracts of western lands, fueling real estate speculation funded by bank notes. @eserves of
specie, or hard money, plummeted, especially in the West and the (outh. 3s early as +/+G, Thomas 4efferson warned, We are to be
ruined by paper, as we were formerly by the old ontinental paper.% Two years later, he asserted that we are under a bank bubble%
that would soon burst. The (econd =ank of the 'nited (tates was supposed to steady the economy, but gross mismanagement in its
early phase sapped its effectiveness. The bank"s first president, William 4ones, instead of taking steps to regulate the nation"s
currency, doled out huge loans that fed speculation and inflation. He also kept la? watch over state banks, where fraud and
embeMMlement created chaos. 3 congressional committee"s proposal to terminate the nearly insolvent ='( had little backing because
forty members of ongress held stock in the bank. The bank"s problems arose at precisely the wrong moment, when the economy
needed a firm rudder during its postwar e?pansion. 4ones resigned and was replaced by the (outh arolina congressman Iangdon
heves and later by the )hiladelphia lawyer ;icholas =iddle. 3lthough the bank sharply contracted loans in +/+/, the damage had
been done. The ='(, far from helping the economy, was among the destabiliMing forces that led to the depression of +/+,. 3t the
same time, swelling crop yields in >urope reduced the demand for 3merican farm products, whose prices plunged. 3n economic
contraction in >urope led banks there to reduce credit. The crisis abroad, coupled with the contraction at home, forced 3merican
banks to call in their loans as well. =y early +/+,, credit, once so easy, was unavailable to many 3mericans. With specie reserves
depleted, many 3merican banks failed, and other businesses followed. (ales of public lands plummeted. 'nemployment soared, and
in some regions food and other basic necessities were difficult to come by. >specially hard hit were cities outside of ;ew >ngland like
)hiladelphia, )ittsburgh, and incinnati. <armers suffered too, though many survived by resuming a subsistence lifestyle. With
insolvency rife, prisons were overcrowded with debtors. The depression lingered for two years. It was the first of several severe
downturns that would tarnish 3merica"s otherwise vigorous economy throughout the nineteenth century. The )anic of +/+, fostered
mistrust of banks, bankers, and paper money.% & aking !iant" America in the Age of #ackson by David (. @eynolds, p. 6,8-A
=y 4anuary +/-G the Treasury had withdrawn O,.-C million from the ='(, while =iddle continued to contract the bank"s loans. 1nly
when real signs of recession appeared did =iddle relent and restore credit to previous levels. The Treasury continued the dispersal of
federal monies into the pet banks. The deposits reached O66 million by the end of +/-G, peaking at over OGE million in ;ovember
+/-C, by which time there were over ninety pet P(tateQ banks throughout the nation. 3t first widely lambasted, the pet8bank scheme
won increasing favor. In 3pril +/-G the House gave 4ackson a vote of confidence by passing a four8point resolution approving his
removal of funds from the ='( and transferring them to the deposit banksKThis system got an une?pected boost when =iddle
committed another blunder. 3lthough he had made up for his first mistake by rela?ing credit, =iddle churlishly refused to cooperate
with the House when it tried to investigate the records of the ='(. There is no evidence that =iddle had anything illegal to hide. =ut
he gave the impression of a cover8up when congressional representatives arrived in )hiladelphia only to find him stubbornly insisting
that the bank"s books would remain closed to the inspectors. 3s =iddle and his bank declined, the pet banks prospered along with the
3merican economy.% & aking !iant" America in the Age of #ackson by David (. @eynolds, p. +AB8+A/
3lthough a bill to recharter the bank was passed by ongress well ahead of time, in 4uly +/-6, it was vetoed by )resident 3ndrew
4ackson, who, ever since learning about the (outh (ea =ubble, had taken against banks in general and the =ank of the 'nited (tates in
particular. The (enate failed to override the veto. When its charter e?pired in <ebruary +/-C, the second =ank of the 'nited (tates
was turned into a state bank, the 'nited (tates =ank of )ennsylvania. 0ore than likely embittered, P;icholasQ =iddle, who remained
its head, seems to have thrown caution to the winds. The bank began speculating in stocks and commodities! it failed in <ebruary
+/G+. )rivate shareholders lost everything! =iddle was arrested and charged with fraudKthe evidence against =iddle was deemed
insufficient and he escaped sentence. =ut the country"s e?periment with a central bank ended, not to be revived for more than seventy
years.% & The Central Banks by 0arForie Deane and @obert )ringle, p. EA
The )anic of +/-B initiated the worst economic depression the country had yet known. The downturn resulted from various
international and native economic developments. In +/-C the =ank of >ngland, fearing a run on its deposits of specie *silver and
gold., sharply contracted credit. =ritish companies curtailed their business with 3merica. <oreign demand for 3merican cotton
plummeted, cutting cotton prices nearly in half. (outh planters suffered, and many northern companies associated with the cotton
trade failed. The (pecie ircular, which mandated that speculators could purchase public land only with hard money, caused a drain
of specie from eastern to western banks. In 3pril +/-B, world prices suddenly collapsed, creating a run on banks. 1n 0ay +A, +/-B,
all banks in ;ew #ork suspended specie payments! that is, they refused to redeem paper currency in silver or gold. =anks in ;ew
1rleans and other cities soon did the same. The specie suspensions caused panic, which in turn led to widespread bank failuresK3ll
told, around GA percent of 3merica"s /EA banks soon were out of business. 0ost sectors of the economy slumped. =usiness failure
brought unemployment. =y the 4anuary +/-/, half a million 3mericans were Fobless. The economy then briefly rebounded, but
another contraction abroad brought on a second panic in 1ctober +/-,, leading to four more years of depression.%
& aking !iant" America in the Age of #ackson by David (. @eynolds, p. -+A8-++
This session, the session of +/--, was known at the time as the panic% session. The =ank was still a prodigious power, and it
was allied to and supported by the great Whig party, with Henry lay in its lead. It was in no humor, therefore, to abandon the
fight, but it determined by the use of its great money power, in aid of its political associates, to e?tort from ongress a renewal
of its charter. &ts plan of campaign %as by contracting circulation calling in its loans and discontinuing future loans at
the mother Bank to produce as much disaster and distress as possible, and to keep the ears of ongress constantly harassed
with memorials from every quarter of the 'nion where it had influence enough to get them signed, reciting in the most affecting
manner the ruin that the veto and the removal of the deposits had brought on the country. &ts mo!ements %ere directed
especially against business communities and establishments employing a great many operati!es so as to thro% out of
employment as many %orking men as possible. 1ne loan of O+AA,AAA to a single distress8agitator was detected, and
O+,+AA,AAA was discovered to have been put with a single broker, to be employed in making panic and distress. The plan was
fully carried out, according to its design. Wherever the =ank through its manifold agencies could cause a disaster, the disaster
was caused.% & Andrew #ackson and the Bank of the $nited States by William I. @oyall, p. 6G86E
The day of the =ank"s doom had arrived. 5oaded by public reproaches, and left alone in a state of suspension by other banks,
in 4anuary, +/GA, she essayed the perilous effort of resumption. ;o one approached her doors save to demand specie. In twenty
days si? millions of dollars in coin, accumulated by great effort to operate on the e?tra session of ongress, were taken from her.
(he was forced to close her doors again, but of course with the pretence published to the world that the suspension was only
temporary and for the public good. =ut she never again resumed. In time, the stockholders having become alarmed, appointed a
committee of themselves to look into the affairs of the =ank, who found it a shell. The thirty8five millions of capital was all
gone, to the last dollar. The seventy8si? millions of assets sworn to the month before she suspended for the last time either could
not be discovered or were worthless. 3nd now, when the confiding stockholders came to look into the manner in which their
trusted officers had dealt with their money! when they came to e?amine the true inwardness of the affair, strange things made
their appearance. The committee of the stockholders, having made a thorough e?amination of the =ank"s affairs, reported, and
showed that from the year -./0 to the year -./1 the period %hen it %as making its most desperate struggles for a re2
charter the loans and discount of the Bank %ere about doubled its expenses trebled. 3ear thirty millions of these loans
%ere not loans upon business paper' they %ere loans to members of 4ongress editors of ne%spapers bra%ling
politicians brokers 5obbers fa!orites and connections. They %ere in most instances made by Mr. Biddle himself, the
directory having put everything under the control of the e?change committee, and it having practically put everything under his
sole control. The details of the manner in which the =ank"s money was squandered to control political power would be
sickening, if it did not arouse indignation and wrath. 6rom -./0 to -./1 large sums %ere al%ays out on loan to members of
4ongressKIndictments were found by the grand Fury of the county of )hiladelphia against ;icholas =iddle, (amuel 4audon and
4ohn 3ndrews, officers of the =ank, for a conspiracy to defraud the stockholders in the =ank. They were arrested and held to
bail for trial. They were released from custody, however, upon a writ of habeas corpus, upon some technicality, and were never
brought to trial before a Fury. 3nd thus miserably ended the great =ank of the 'nited (tates, an institution that for a generation
had swayed the destinies of 3merica, and which was powerful enough to control the ongress of the 'nited (tates.%
& Andrew #ackson and the Bank of the $nited States by William I. @oyall, p. E+8E-
The )resident immediately took up his promise to destroy the (econd =ank of the 'nited (tates. Hamilton"s charter for the
<irst =ank had not been renewed in +/++, after an intense debate over whether a national bank violated the onstitution by
giving too much power to the government! state8chartered banks resented having to compete with and be regulated by the federal
institution. In +/+C, however, the financial chaos created by the War of +/+6 and the e?plosive growth of (tate banks led
ongress to charter a (econd =ank for twenty years. Headquartered in )hiladelphia under the direction of an arrogant patrician
named ;icholas =iddle between +/6- and +/-6, the (econd =ank proved no less controversial than the <irst. =iddle"s bank &
like its predecessor, a pri!ate corporation operating %ith "uasi2go!ernmental authority & served as a cautious, reasonably
effective regulator of the growing economy. It issued bank notes, lent money, sold government bonds, held federal reserves,
stabiliMed domestic and foreign e?change, tried to control the international balance of payments, disciplined state banks by
requiring them to maintain adequate reserves & and made more enemies than friends.%
& %organ" American Financier by 4ean (trouse, p. 66
r! Carroll "uigle#$s escription of International Bankers

G5n effect, this creation of 0a0er claims greater than the reser"es a"ailable means that bankers (ere creating money o$t of nothing.
6he same thing co$ld be done in another (ay, not by note;iss$ing banks b$t by de0osit banks. De0osit bankers disco"ered that orders
and checks dra(n against de0osits by de0ositors and gi"en to third 0ersons (ere often not cashed by the latter b$t (ere de0osited to
their o(n acco$nts. 6h$s there (ere no act$al mo"ements of f$nds, and 0ayments (ere made sim0ly by bookkee0ing transactions on
the acco$nts. 7ccordingly, it (as necessary for the banker to kee0 on hand in act$al money (gold, certificates, and notes) no more
than the fraction of de0osits likely to be dra(n $0on and cashedC the rest co$ld be $sed for loans, and if these loans (ere made by
creating a de0osit for the borro(er, (ho in t$rn (o$ld dra( checks $0on it rather than (ithdra( it in money, s$ch Gcreated de0ositsH or
loans co$ld also be co"ered ade?$ately by retaining reser"es to only a fraction of their "al$e. !$ch created de0osits also (ere a
creation of money o$t of nothing, altho$gh bankers $s$ally ref$sed to e'0ress their actions, either note iss$ing or de0osit lending, in
these terms. William Paterson, ho(e"er, on obtaining the charter of the Bank of England in %=-A, to $se the moneys he had (on in
0ri"ateering, said, G6he Bank hath benefit of interest on all moneys (hich it creates o$t of nothing.H 6his (as re0eated by !ir Ed(ard
#olden, fo$nder of the Bank, on December %:, %-,+, and is, of co$rse, generally admitted today.H
P "ragedy and Hope by Carroll I$igley, 0. A:;A-
G6he infl$ence of financial ca0italism and of the international bankers (ho created it (as e'ercised both on b$siness and on
go"ernments, b$t co$ld ha"e done neither if it had not been able to 0ers$ade both these to acce0t t(o Ga'iomsH of its o(n ideology.
Both of these (ere based on the ass$m0tion that 0oliticians (ere too (eak and too s$bLect to tem0orary 0o0$lar 0ress$res to be
tr$sted (ith control of the money systemC accordingly, the sanctity of all "al$es and the so$ndness of money m$st be 0rotected in t(o
(aysB by basing the "al$e of money on gold and by allo(ing bankers to control the s$00ly of money. 6o do this it (as necessary to
conceal, or e"en to mislead, both go"ernments and 0eo0le abo$t the nat$re of money and its methods of o0eration.H
P "ragedy and Hope by Carroll I$igley, 0. =,
G6he names of some of these banking families are familiar to all of $s and sho$ld be more so. 6hey incl$de Baring, La1ard, Erlanger,
Warb$rg, !chroder, !eligman, the !0eyers, Miraba$d, Mallet, .o$ld, and abo"e all /othschild and Morgan. E"en after these banking
families became f$lly in"ol"ed in domestic ind$stry by the emergence of financial ca0italism, they remained different from ordinary
bankers in distincti"e (aysB (%) they (ere cosmo0olitan and internationalC (*) they (ere close to go"ernments and (ere 0artic$larly
concerned (ith ?$estions of go"ernment debts, incl$ding foreign go"ernment debts, e"en in areas (hich seemed, at first glance, 0oor
risks, like Egy0t, Persia, )ttoman 6$rkey, 5m0erial China, and Latin 7mericaC (&) their interests (ere almost e'cl$si"ely in bonds and
"ery rarely in goods, since they admired Gli?$idityH and regarded commitments in commodities or e"en real estate as the first ste0
to(ard bankr$0tcyC (A) they (ere, accordingly, fanatical de"otees of deflation ((hich they called Gso$ndH money from its close
associations (ith high interest rates and a high "al$e of money) and of the gold standard, (hich, in their eyes, symboli1ed and ens$red
these "al$esC and (<) they (ere almost e?$ally de"oted to secrecy and the secret $se of financial infl$ence in 0olitical life. 6hese
bankers came to be called Ginternational bankersH and, more 0artic$larly, (ere kno(n as Gmerchant bankersH in England, G0ri"ate
bankersH in .rance, and Gin"estment bankersH in the 8nited !tates. 5n all co$ntries they carried on "ario$s kinds of banking and
e'change acti"ities, b$t e"ery(here they (ere shar0ly disting$ishable from other, more ob"io$s, kinds of banks, s$ch as sa"ings banks
or commercial banks. )ne of their less ob"io$s characteristics (as that they remained as 0ri"ate $nincor0orated firms, $s$ally
0artnershi0s, $ntil relati"ely recently, offering no shares, no re0orts, and $s$ally no ad"ertising to the 0$blic. 6his risky stat$s, (hich
de0ri"ed them of limited liability, (as retained, in most cases, $ntil modern inheritance ta'es made it essential to s$rro$nd s$ch family
(ealth (ith the immorality of cor0orate stat$s for ta';a"oidance 0$r0oses. 6his 0ersistence as 0ri"ate firms contin$ed beca$se it
ens$red the ma'im$m of anonymity and secrecy to 0ersons of tremendo$s 0$blic 0o(er (ho dreaded 0$blic kno(ledge of their
acti"ities as an e"il almost as great as inflation. 7s a conse?$ence, ordinary 0eo0le had no (ay of kno(ing the (ealth or areas of
o0eration of s$ch firms, and often (ere some(hat ha1y as to their membershi0.H
P "ragedy and Hope by Carroll I$igley, 0. <-
G5n addition to their 0o(er o"er go"ernment based on go"ernment financing and 0ersonal infl$ence, bankers co$ld steer go"ernments
in (ays they (ished them to go by other 0ress$res. !ince most go"ernment officials felt ignorant of finance, they so$ght ad"ice from
bankers (hom they considered to be e'0erts in the field. 6he history of the last cent$ry sho(s, as (e shall see later, that the ad"ice
gi"en to go"ernments by bankers, like the ad"ice they ga"e to ind$strialists, (as consistently good for bankers, b$t (as often
disastro$s for go"ernments, b$sinessmen, and the 0eo0le generally. !$ch ad"ice co$ld be enforced if necessary by mani0$lation of
e'changes, gold flo(s, disco$nt rates, and e"en le"els of b$siness acti"ity.H P "ragedy and Hope by Carroll I$igley, 0. =*
G5n addition to these 0ragmatic goals, the 0o(ers of financial ca0italism had another far;reaching aim, nothing less than to create a
(orld system of financial control in 0ri"ate hands able to dominate the 0olitical system of each co$ntry and the economy of the (orld as
a (hole. 6his system (as to be controlled in a fe$dalist fashion by the central banks of the (orld acting in concert, by secret
agreements arri"ed at in fre?$ent 0ri"ate meetings and conferences. 6he a0e' of the system (as to be the Bank for 5nternational
!ettlements in Basle, !(it1erland, a 0ri"ate bank o(ned and controlled by the (orld>s central banks (hich (ere themsel"es 0ri"ate
cor0orations. Each central bank, in the hands of men like Montag$ 2orman of the Bank of England, BenLamin !trong of the 2e( 3ork
.ederal /eser"e Bank, Charles /ist of the Bank of .rance, and #Lalmar !chacht of the /eichsbank, so$ght to dominate its go"ernment
by its ability to control 6reas$ry loans, to mani0$late foreign e'changes, to infl$ence the le"el of economic acti"ity in the co$ntry, and to
infl$ence coo0erati"e 0oliticians by s$bse?$ent economic re(ards in the b$siness (orld. 5n each co$ntry the 0o(er of the central bank
rested largely on its control of credit and money s$00ly. 5n the (orld as a (hole the 0o(er of the central bankers rested "ery largely on
their control of loans and of gold flo(s.H P "ragedy and Hope by Carroll I$igley, 0. &*A
2oteB Dr. Carroll I$igley (as a 0rofessor of history at eorgeto(n 8ni"ersityC one of his st$dents (as Bill Clinton, the former President
of the 8.!.
In each country the power of the central bank rested largely on its control of credit and money supply. In the world as a whole
the power of the central bankers rested very largely on their control of loans and of gold flows. In the final days of the system,
these central bankers were able to mobiliMe resources to assist each other through the =.I.(., where payments between central
banks could be made by bookkeeping adFustments between the accounts which the central banks of the world kept there. The
=.I.(. as a private institution was owned by the seven chief central banks and was operated by the heads of these, who together
formed its governing board. >ach of these kept a substantial deposit at the =.I.(., and periodically settled payments among
themselves *and thus between the maFor countries of the world. by bookkeeping in order to avoid shipments of gold. They made
agreements on all the maFor financial problems of the world, as well as on many of the economic and political problems,
especially in reference to loans, payments, and the economic future of the chief areas of the globe. The =.I.(. is generally
regarded as the ape? of the structure of financial capitalism whose remote origins go back to the creation of the =ank of >ngland
in +C,G and the =ank of <rance in +/A-. 3s a matter of fact its establishment in +,6, was rather an indication that the
centraliMed world financial system of +,+G was in decline. It was set up rather to remedy the decline of Iondon as the world$s
financial center by providing a mechanism by which a world with three chief financial centers in Iondon, ;ew #ork, and )aris
could still operate as one. The =.I.(. was a vain effort to cope with the problems arising from the growth of a number of centers.
It was intended to be the world cartel of ever8growing national financial powers by assembling the nominal heads of these
national financial centers. The commander in chief of the world system of banking control was 0ontagu ;orman, 5overnor of
the =ank of >ngland, who was built up by the private bankers to a position where he was regarded as an oracle in all matters of
government and business. In government the power of the =ank of >ngland was a considerable restriction on political action as
early as +/+, but an effort to break this power by a modification of the bank"s charter in +/GG failed. In +/E6, 5ladstone, then
chancellor of the >?chequer and later prime minister, declared, The hinge of the whole situation was this7 the government itself
was not to be a substantive power in matters of <inance, but was to leave the 0oney )ower supreme and unquestioned.% This
power of the =ank of >ngland and of its governor was admitted by most qualified observers. &n )anuary -789 :eginald
Mc;enna %ho had been chancellor of the *xche"uer in -7-<2-7-1 as chairman of the board of the Midland Bank told
its stockholders: =& am afraid the ordinary citizen %ill not like to be told that the banks can and do create money.... #nd
they %ho control the credit of the nation direct the policy of >o!ernments and hold in the hollo% of their hands the
destiny of the people.? In that same year, (ir Drummond <raser, vice8president of the Institute of =ankers, stated, The
5overnor of the =ank of >ngland must be the autocrat who dictates the terms upon which alone the 5overnment can obtain
borrowed money.% 1n (eptember 6C, +,6+, The Financial Times wrote, Half a doMen men at the top of the =ig <ive =anks
could upset the whole fabric of government finance by refraining from renewing Treasury =ills.% :incent :ickers, who had
been a director of the bank for nine years, said, (ince +,+, the monetary policy of the 5overnment has been the policy of the
=ank of >ngland and the policy of the =ank of >ngland has been the policy of 0r. 0ontagu ;orman.% 1n ;ovember ++, +,6B,
the Wall (treet 4ournal called 0r. ;orman the currency dictator of >urope.% This fact was admitted by 0r. ;orman himself
before the court of the bank on 0arch 6+, +,-A, and before the 0acmillan ommittee five days later. 0ontagu ;orman"s
position may be gathered from the fact that his predecessors in the governorship, almost a hundred of them, had served two8year
terms, increased rarely, in time of crisis, to three or even four years. =ut ;orman held the position for twenty8four years *+,6A8
+,GG., during which he became the chief architect of the liquidation of =ritain"s global preeminence.%
& Tragedy and Hope by arroll Luigley, p. -6G8-6E
In the +,6A"s, they %ere determined to use the financial po%er of Britain and of the @nited States to force all the ma5or
countries of the %orld to go on the gold standard and to operate it through central banks free from all political control
%ith all "uestions of international finance to be settled by agreements by such central banks %ithout interference from
go!ernments. It must not be felt that these heads of the world"s chief central banks were themselves substantive powers in
world finance. They were not. @ather, they were the technicians and agents of the dominant investment bankers of their own
countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers of the
world were in the hands of these investment bankers *also called international% or merchant% bankers. who remained largely
behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national
dominance which was more private, more powerful, and more secret than that of their agents in the central banks. This
dominance of investment bankers was based on their control over the flows of credit and investment funds in their own countries
and throughout the world. They could dominate the financial and industrial systems of their own countries by their influence
over the flow of current funds through bank loans, the discount rate, and the re8discounting of commercial debts! they could
dominate governments by their control over current government loans and the play of the international e?changes. 3lmost all of
this power was e?ercised by the personal influence and prestige of men who had demonstrated their ability in the past to bring
off successful financial coupe, to keep their word, to remain cool in a crisis, and to share their winning opportunities with their
associates. In this system the @othschilds had been preeminent during much of the nineteenth century, but, at the end of that
century, they were being replaced by 4. ). 0organ whose central office was in ;ew #ork, although it was always operated as if
it were in Iondon *where it had, indeed, originated as 5eorge )eabody and ompany in +/-/.. 1ld 4. ). 0organ died in +,+-,
but was succeeded by his son of the same name *who had been trained in the Iondon branch until +,A+., while the chief
decisions in the firm were increasingly made by Thomas W. Iamont after +,6G.%
& Tragedy and Hope by arroll Luigley, p. -6C8-6B
6homas Jefferson
GE"erything 0redicted by the enemies of banks, in the beginning, is no( coming to 0ass. We are to
be r$ined no( by the del$ge of bank 0a0er, as (e (ere formerly by the old Continental 0a0er. 5t is
cr$el that s$ch re"ol$tions in 0ri"ate fort$nes sho$ld be at the mercy of a"aricio$s ad"ent$rers, (ho,
instead of em0loying their ca0ital, if any they ha"e, in man$fact$res, commerce, and other $sef$l
0$rs$its, make it an instr$ment to b$rden all the interchanges of 0ro0erty (ith their s(indling 0rofits,
0rofits (hich are the 0rice of no $sef$l ind$stry of theirs. Pr$dent men m$st be on their g$ard in this
game of /obin>s ali"es, and take care that the s0ark does not e'ting$ish in their hands. 5 am an
enemy to all banks disco$nting bills or notes for anything b$t coin.H
P 6homas Jefferson, in a letter to Dr. 6homas Coo0er on Jan$ary %=, %:%A
G5 do not remember the con"ersation bet(een $s (hich yo$ mention in yo$rs of 2o"ember %<th, on
yo$r 0ro0osition to "est in Congress the e'cl$si"e 0o(er of establishing banks. My opposition to it
must have been grounded, not on taking the power from the States, but on leaving any
vestige of it in existence, even in the hands of Congress; because it would only have been a
change of the organ of abuse. I have ever been the enemy of banks, not of those discounting
for cash, but of those foisting their own paper into circulation, and thus banishing our cash.
My eal against those institutions was so warm and open at the establishment of the !ank of
the "nited States, that I was derided as a maniac by the tribe of bank#mongers, who were
seeking to filch from the public their swindling and barren gains. !ut the errors of that day
cannot be recalled. $he evils they have engendered are now upon us, and the %uestion is
how we are to get out of them& !hall (e b$ild an altar to the old 0a0er money of the /e"ol$tion,
(hich r$ined indi"id$als b$t sa"ed the re0$blic, and b$rn on that all the bank charters, 0resent and
f$t$re, and their notes (ith themQ .or these are to r$in both re0$blic and indi"id$als. 6his cannot be
done. 6he mania is too strong. 5t has sei1ed, by its del$sions and corr$0tions, all the members of
o$r go"ernments, general, s0ecial and indi"id$al.H
P 6homas Jefferson, in a letter to John 7dams, (ritten at Monticello (Dirginia) on Jan$ary *A, %:%A
G7nd 5 sincerely belie"e, (ith yo$, that banking establishments are more dangero$s than standing
armiesC and that the 0rinci0le of s0ending money to be 0aid by 0osterity, $nder the name of f$nding,
is b$t s(indling f$t$rity on a large scale.H
P 6homas Jefferson, in a letter to John 6aylor on May *:, %:%=
G5 am not among those (ho fear the 0eo0le. 6hey, and not the rich, are o$r de0endence for
contin$ed freedom. 7nd to 0reser"e their inde0endence, (e m$st not let o$r r$lers load $s (ith
0er0et$al debt. We m$st make o$r election bet(een economy and liberty, or 0rof$sion and
ser"it$de. 5f (e r$n into s$ch debts, as that (e m$st be ta'ed in o$r meat and in o$r drink, in o$r
necessaries and o$r comforts, in o$r labors and o$r am$sements, for o$r callings and o$r creeds, as
the 0eo0le of England are, o$r 0eo0le, like them, m$st come to labor si'teen ho$rs in the t(enty;
fo$r, gi"e the earnings of fifteen of these to the go"ernment for their debts and daily e'0ensesC and
the si'teenth being ins$fficient to afford $s bread, (e m$st li"e, as they no( do, on oatmeal and
0otatoesC ha"e no time to think, no means of calling the mismanagers to acco$ntC b$t be glad to
obtain s$bsistence by hiring o$rsel"es to ri"et their chains on the necks of o$r fello(;s$fferers.H
& 6homas Jefferson, in a letter to !am$el Ferchi"al on J$ly %*, %:%=
G5 belie"e that banking instit$tions are more dangero$s to o$r liberties than standing armies. . . 6he
modern theory of the 0er0et$ation of debt has drenched the earth (ith blood, and cr$shes its
inhabitants $nder b$rdens e"er acc$m$lating. 5f the 7merican 0eo0le e"er allo( 0ri"ate banks to
control the iss$e of their c$rrency, first by inflation, then by deflation, the banks and cor0orations that
(ill gro( $0 aro$nd Jthe banksK (ill de0ri"e the 0eo0le of all 0ro0erty $ntil their children (ake;$0
homeless on the continent their fathers con?$ered. 6he iss$ing 0o(er sho$ld be taken from the
banks and restored to the 0eo0le, to (hom it 0ro0erly belongs.H
P 8.!. President 6homas Jefferson, %:,*, in a letter to the !ecretary of the 6reas$ry 7lbert allatin
and later 0$blished in 6he Debate )"er 6he /echarter )f 6he Bank Bill (%:,-)

John .. #ylan
G6he real menace of o$r /e0$blic is this in"isible go"ernment (hich like a giant octo0$s s0ra(ls its
slimy legs o"er o$r cities, states, and nation. Like the octo0$s of real life, it o0erates $nder co"er of
a self;created screen. 5t sei1es in its long and 0o(erf$l tentacles o$r e'ec$ti"e officers, o$r
legislati"e bodies, o$r schools, o$r co$rts, o$r ne(s0a0er, and e"ery agency created for the 0$blic
0rotection. 5t s?$irms in the La(s of darkness and th$s is the better able to cl$tch the reins of
go"ernment, sec$re enactment of the legislation fa"orable to corr$0t b$siness, "iolate the la( (ith
im0$nity, smother the 0ress and reach into the co$rts. O7t the head of this octo0$s are the
/ockefeller;!tandard )il interests and a small gro$0 of 0o(erf$l banking ho$ses generally referred
to as the international bankers. 6he little coterie of 0o(erf$l international bankers "irt$ally r$n the
8nited !tates go"ernment for their o(n selfish 0$r0oses. 6hey 0ractically control both 0olitical
0arties, (rite 0olitical 0latforms, make cat>s;0a(s of 0arty leaders, $se the leading men in 0ri"ate
organi1ations, and resort to e"ery de"ice to 0lace in nomination for high office only s$ch candidates
as (ill be amenable to the dictate of corr$0t big b$siness. 6hey conni"e at centrali1ation of
go"ernment on the theory that a small gro$0 of hand0icked, 0ri"ately controlled indi"id$als in 0o(er
can be more easily handled than a larger gro$0 among (hom there (ill most likely be men sincerely
interested in 0$blic (elfare. 6hese international bankers and /ockefeller;!tandard )il interests
control the maLority of ne(s0a0ers and maga1ines in this co$ntry. 6hey $se the col$mns of these
0a0ers to cl$b into s$bmission or dri"e o$t of office 0$blic officials (ho ref$se to do the bidding of the
0o(erf$l corr$0t cli?$es (hich com0ose the in"isible go"ernment.H
& John .. #ylan, Mayor of 2e( 3ork City (%-%:;%-*<), from a s0eech made in %-**
Woodro( Wilson
G5 am a most $nha00y man. 5 ha"e $n(ittingly r$ined my co$ntry. 7 great ind$strial nation is
controlled by its system of credit. )$r system of credit is concentrated. 6he gro(th of the nation,
therefore, and all o$r acti"ities are in the hands of a fe( men. We ha"e come to be one of the (orst
r$led, one of the most com0letely controlled and dominated go"ernments in the ci"ili1ed (orld. 2o
longer a go"ernment by free o0inion, no longer a go"ernment by con"iction and the "ote of the
maLority, b$t a go"ernment by the o0inion and d$ress of a small gro$0 of dominant men.H
P 8.!. President Woodro( Wilson, %-%=
John Maynard Feynes
GBy a contin$o$s 0rocess of inflation, go"ernments can confiscate, secretly and $nobser"ed, an
im0ortant 0art of the (ealth of their citi1ens. By this method, they not only confiscate, b$t they
confiscate arbitrarilyC and (hile the 0rocess im0o"erishes many, it act$ally enriches some O 6he
0rocess engages all of the hidden forces of economic la( on the side of destr$ction, and does it in a
manner that not one man in a million can diagnose.H
& John Maynard Feynes, "he Economic #onse$uences of the %eace, %-%-
!ir Josiah !tam0
G6he modern banking system man$fact$res money o$t of nothing. 6he 0rocess is 0erha0s the most
astonishing 0iece of slight of hand e"er in"ented. Banking (as concei"ed in ini?$ity, and born in sin.
Bankers o(n the earth. 6ake it a(ay from them, b$t lea"e them the 0o(er to create money, and (ith
the flick of a 0en, they (ill create eno$gh money to b$y it back again. 6ake this great 0o(er a(ay
from them, and all great fort$nes like mine (ill disa00ear. 7nd, they o$ght to disa00ear, for then this
(o$ld be a better and ha00ier (orld to li"e in. B$t if yo$ (ant to contin$e to be the sla"es of the
bankers, and 0ay the cost of yo$r o(n sla"ery, then let bankers contin$e to create money, and
control credit.H
& !ir Josiah !tam0 (%::,;%-A%), former go"ernor of the Bank of England, from a lect$re in the late
%-*,>s at 8ni"ersity of 6e'as
/eginald McFenna
G5 am afraid the ordinary citi1en (ill not like to be told that the banks can, and do, create money...
7nd they (ho control the credit of the nation direct the 0olicy of o"ernments and hold in the hollo(
of their hands the destiny of the 0eo0le.H
P /eginald McFenna, former Chancellor of the British E'che?$er (%-%<;%-%=), in Jan$ary %-*A
(!o$rceB "ragedy and Hope by Carroll I$igley, 0. &*<)
James Madison
G#istory records that the money changers ha"e $sed e"ery form of ab$se, intrig$e, deceit, and
"iolent means 0ossible to maintain their control o"er go"ernments by controlling the money and its
iss$ance.H P James Madison
William Cobbett
GO6hat so long as 5 am com0elled to 0ay interest for a Debt, it is no matter to (hom, or $nder (hat
name, 5 0ay it. 6his is an ob"io$s tr$th. 6here is something so cons$mmately ridic$lo$s in the idea
of a nationNs getting money by 0aying interest to itself $0on its o(n stock, that the mind of e"ery
rational man nat$rally reLects it. 5t is, really, something little short of madness to s$00ose, that a
nation can increase its (ealthC increase its means of 0aying othersC that it can do this by 0aying
interest to itself. When time is taken to reflect, no rational man (ill attem0t to maintain a 0ro0osition
so shockingly abs$rd.H
P William Cobbett, M.P., %aper &gainst 'old, 0.:&, from a letter Cobbett (rote in !e0tember %:%,
2a0oleon Bona0arte
GWhen a go"ernment is de0endent for money $0on the bankers, they and not the leaders of the
go"ernment control the sit$ation, since the hand that gi"es is abo"e the hand that takes ... financiers
are (itho$t 0atriotism and (itho$t decency...H
P 2a0oleon Bona0arte
#orace reeley
RWhile boasting of o$r noble deeds, (e are caref$l to conceal the $gly fact that by an ini?$ito$s
money system (e ha"e nationali1ed a system of o00ression (hich, tho$gh more refined, is not less
cr$el than the old system of chattel sla"ery.R
P #orace reeley, former editor of "he (e) *ork "imes
Dladimir Lenin
G6he s$rest (ay to destroy a nation is to deba$ch its c$rrency.H P Dladimir Lenin
William Lyon Macken1ie
Fing
R8ntil the control of the iss$e of c$rrency and credit is restored to go"ernment and recogni1ed as its
most cons0ic$o$s and sacred res0onsibility, all talk of the so"ereignty of Parliament and of
democracy is idle and f$tile...)nce a nation 0arts (ith control of its c$rrency and credit, it matters not
(ho makes that nationNs la(s...8s$ry once in control (ill (reck any nationR
P William Lyon Macken1ie Fing, former Prime Minister of Canada, in %-&<
Po0e Pi$s S55
R6his 0o(er becomes 0artic$larly irresistible (hen e'ercised by those (ho, beca$se they hold and
control money, are able also to go"ern credit and determine its allotment, for that reason s$00lying
so to s0eak, the life;blood to the entire economic body, and gras0ing, as it (ere, in their hands the
"ery so$l of 0rod$ction, so that no one dare breathe against their (ill.R
P Po0e Pi$s S55, from his encyclical letter G6#E /EC)2!6/8C65)2 ). 6#E !)C57L )/DE/H
G6his is a staggering tho$ght. We are com0letely de0endent on the commercial Banks. !omeone
has to borro( e"ery dollar (e ha"e in circ$lation, cash or credit. 5f the Banks create am0le synthetic
money (e are 0ros0ero$sC if not, (e star"e. We are absol$tely (itho$t a 0ermanent money system.
When one gets a com0lete gras0 of the 0ict$re, the tragic abs$rdity of o$r ho0eless 0osition is
almost incredible, b$t there it is. 5t is the most im0ortant s$bLect intelligent 0ersons can in"estigate
and reflect $0on. 5t is so im0ortant that o$r 0resent ci"ili1ation may colla0se $nless it becomes
(idely $nderstood and the defects remedied "ery soon.H
& /obert #. #em0hill, former Credit Manager of the .ederal /eser"e Bank of 7tlanta (!enate
Doc$ment 2o. *&, Jan$ary *A, %-&-)
6homas 7. Edison
GPeo0le (ho (ill not t$rn a sho"el f$ll of dirt on the 0roLect (M$scel !hoals Dam) nor contrib$te a
0o$nd of material, (ill collect more money from the 8nited !tates than (ill the Peo0le (ho s$00ly all
the material and do all the (ork. 6his is the terrible thing abo$t interest...B$t here is the 0ointB 5f the
nation can iss$e a dollar bond it can iss$e a dollar bill. 6he element that makes the bond good
makes the bill good also. 6he difference bet(een the bond and the bill is that the bond lets the
money broker collect t(ice the amo$nt of the bond and an additional *,T. Whereas the c$rrency,
the honest sort 0ro"ided by the Constit$tion, 0ays nobody b$t those (ho contrib$te in some $sef$l
(ay. 5t is abs$rd to say o$r Co$ntry can iss$e bonds and cannot iss$e c$rrency. Both are 0romises
to 0ay, b$t one fattens the $s$rer and the other hel0s the Peo0le. 5f the c$rrency iss$ed by the
Peo0le (ere no good, then the bonds (o$ld be no good either. 5t is a terrible sit$ation (hen the
o"ernment, to ins$re the 2ational Wealth, m$st go in debt and s$bmit to the r$ino$s interest
charges at the hands of men (ho control the fictitio$s "al$e of gold. 5nterest is the in"ention of
!atan.H P 6homas 7. Edison, in"entor of the light b$lb
James 7. arfield
GWhen the money of the co$ntry is gold and sil"er, it ada0ts itself to the fl$ct$ations of b$siness
(itho$t the aid of legislation. 5f, at any time, (e ha"e more than is needed, the s$r0l$s flo(s off to
other co$ntries thro$gh the channels of international commerce. 5f less, the deficiency is s$00lied
thro$gh the same channels. 6h$s the monetary e?$ilibri$m is maintained. !o immense is the trade of
the (orld that the golden streams 0o$ring from California and 7$stralia into the s0ecie circ$lation,
are soon absorbed in the great mass and e?$ali1ed thro$gho$t the (orld, as the (aters of all the
ri"ers are s0read $0on the s$rface of all the seas. 2ot so, ho(e"er, (ith an incon"ertible 0a0er
c$rrency. E'ce0ting the s0ecie $sed in 0ayment of c$stoms and the interest on o$r 0$blic debt, (e
are c$t off from the money c$rrents of the (orld. )$r c$rrency resembles rather the (aters of an
artificial lake (hich lie in stagnation or rise to f$ll banks at the ca0rice of the gatekee0er. old and
sil"er abhor de0reciated 0a0er money, and (ill not kee0 com0any (ith it. 5f o$r c$rrency be more
ab$ndant than b$siness demands, not a dollar of it can go abroadC if deficient, not a dollar of gold (ill
come in to s$00ly the lack. 6here is no Legislat$re on earth, (ise eno$gh to adL$st s$ch a c$rrency
to the (ants of the co$ntry.H
P James 7. arfield, 8.!. Congressman (/e0$blican;)hio), in a s0eech he deli"ered in the 8.!.
#o$se of /e0resentati"es on May %<, %:=:
GWhoe"er controls the "ol$me of money in any co$ntry is absol$te master of all ind$stry and
commerce. 7nd (hen yo$ reali1e that the entire system is "ery easily controlled, one (ay or
another, by a fe( 0o(erf$l men at the to0, yo$ (ill not ha"e to be told ho( 0eriods of inflation and
de0ression originate.R P 8.!. President James 7. arfield

1tto von =ismarck *left., 3ndrew 4ackson *center., and 3braham Iincoln
The division of the 'nited (tates into two federations of equal force was decided long before the ivil War by the High
<inancial )ower of >urope. These bankers were afraid that the 'nited (tates, if they remained in one block and as one nation,
would attain economical and financial independence, which would upset their financial domination over the World. The voice of
the @othschilds predominated. They foresaw tremendous booty if they could substitute two feeble democracies, indebted to the
4ewish financiers, to the vigorous @epublic, confident and self8providing. Therefore, they started their emissaries in order to
e?ploit the question of slavery and thus to dig an abyss between the two parts of the @epublic. Iincoln never suspected these
underground machinations. He was anti8(laverist, and he was elected as such, =ut his character prevented him from being the
man of one party. When he had affairs in his hands, he perceived that these sinister financiers of >urope, the @othschilds, wished
to make him the e?ecutor of their designs. They made the rupture between the ;orth and the (outh imminentR The masters of
<inance in >urope made this rupture definitive in order to e?ploit it to the utmost. Iincoln$s personality surprised them. His
candidature did not trouble them7 they thought to easily dupe the candidate woodcutter. =ut Iincoln read their plots and soon
understood, that the (outh was not the worst foe, but the 4ew financiers. He did not confide his apprehensions! he watched the
gestures of the Hidden Hand! he did not wish to e?pose publicly the questions which would disconcert the ignorant masses. He
decided to eliminate the International bankers, by establishing a system of Ioans, allowing the (tates to borrow directly from the
people without intermediary. He did not study financial questions, but his robust good sense revealed to him, that the source of
any wealth resides in the work and economy of the nation. He opposed emissions through the International financiers. He
obtained from ongress the right to borrow from the people by selling to it the $bonds$ of (tates. The local banks were only too
glad to help such a system. 3nd the 5overnment and the nation escaped the plots of the foreign financiers. They understood at
once, that the 'nited (tates would escape their grip. The death of Iincoln was resolved upon. ;othing is easier than to find a
fanatic to strike.$ . . .The death of Iincoln, was a disaster for hristendom. There was no man in the 'nited (tates great enough
to wear his boots. 3nd Israel went anew to grab the riches of the World. I fear that 4ewish =anks with their craftiness and
tortuous tricks will entirely control the e?uberant riches of 3merica, and use it to systematically corrupt modern civiliMation. The
4ew will not hesitate to plunge the whole of hristendom into wars and chaos, in order that Sthe earth should become the
inheritance of Israel."% & 1tto von =ismarck, hancellor of 5ermany, in +/BC
*(ource7 $Ia :ieille <rance,$ ;86+C, 0arch, +,6+.
The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than
monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its
methods or throw Iight upon its crimes. I have two great enemies, the (outhern 3rmy in front of me and the =ankers in the rear.
1f the two, the one at my rear is my greatest foe...I see in the near future a crisis approaching that unnerves me and causes me to
tremble for the safety of my country. 3s a result of the war, corporations have been enthroned and an era of corruption in high
places will follow, and the money power of the country will endeavor to prolong its reign by working upon the preFudices of the
people until all wealth is aggregated in a few hands and the @epublic is destroyed.%
& '.(. )resident 3braham Iincoln, ;ovember 6+, +/CG, in a letter to ol. William <. >lkins
(/eferenceB "he +incoln Encyclopedia, 7rcher #. !ha( (Macmillan, %-<,, 2e( 3ork)
If that mischievous financial policy which had its origin in the ;orth 3merican @epublic should become indurated down to a
fi?ture, then that government will furnish its own money without cost. It will pay off its debts and be without a debt. It will have
all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civiliMed
governments of the world. The brains and wealth of all countries will go to ;orth 3merica. That government must be destroyed
or it will destroy every monarchy on the globe.% & editorial in The Times of &ondon in +/C6
>?cerpts from )resident 3ndrew 4ackson"s <arewell 3ddress, delivered on 0arch G, +/-B
In reviewing the conflicts which have taken place between different interests in the 'nited (tates and the policy pursued since
the adoption of our present form of 5overnment, we find nothing that has produced such deep8seated evil as the course of
legislation in relation to the currency. The onstitution of the 'nited (tates unquestionably intended to secure to the people a
circulating medium of gold and silver. =ut the establishment of a national bank by ongress, with the privilege of issuing paper
money receivable in the payment of the public dues, and the unfortunate course of legislation in the several (tates upon the same
subFect, drove from general circulation the constitutional currency and substituted one of paper in its place.
It was not easy for men engaged in the ordinary pursuits of business, whose attention had not been particularly drawn to the
subFect, to foresee all the consequences of a currency e?clusively of paper, and we ought not on that account to be surprised at
the facility with which laws were obtained to carry into effect the paper system. Honest and even enlightened men are sometimes
misled by the specious and plausible statements of the designing. =ut e?perience has now proved the mischiefs and dangers of a
paper currency, and it rests with you to determine whether the proper remedy shall be applied.
The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden
fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain. The corporations which create
the paper money can not be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when
confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to e?tend their
issues of paper beyond the bounds of discretion and the reasonable demands of business! and when these issues have been
pushed on from day to day, until public confidence is at length shaken, then a reaction takes place, and they immediately
withdraw the credits they have given, suddenly curtail their issues, and produce an une?pected and ruinous contraction of the
circulating medium, which is felt by the whole community. The banks by this means save themselves, and the mischievous
consequences of their imprudence or cupidity are visited upon the public. ;or does the evil stop here. These ebbs and flows in
the currency and these indiscreet e?tensions of credit naturally engender a spirit of speculation inFurious to the habits and
character of the people. We have already seen its effects in the wild spirit of speculation in the public lands and various kinds of
stock which within the last year or two seiMed upon such a multitude of our citiMens and threatened to pervade all classes of
society and to withdraw their attention from the sober pursuits of honest industry. It is not by encouraging this spirit that we shall
best preserve public virtue and promote the true interests of our country! but if your currency continues as e?clusively paper as it
now is, it will foster this eager desire to amass wealth without labor! it will multiply the number of dependents on bank
accommodations and bank favors! the temptation to obtain money at any sacrifice will become stronger and stronger, and
inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your
5overnment. (ome of the evils which arise from this system of paper press with peculiar hardship upon the class of society least
able to bear it. 3 portion of this currency frequently becomes depreciated or worthless, and all of it is easily counterfeited in
such a manner as to require peculiar skill and much e?perience to distinguish the counterfeit from the genuine note. These frauds
are most generally perpetrated in the smaller notes, which are used in the daily transactions of ordinary business, and the losses
occasioned by them are commonly thrown upon the laboring classes of society, whose situation and pursuits put it out of their
power to guard themselves from these impositions, and whose daily wages are necessary for their subsistence. It is the duty of
every government so to regulate its currency as to protect this numerous class, as far as practicable, from the impositions of
avarice and fraud. It is more especially the duty of the 'nited (tates, where the 5overnment is emphatically the 5overnment of
the people, and where this respectable portion of our citiMens are so proudly distinguished from the laboring classes of all other
nations by their independent spirit, their love of liberty, their intelligence, and their high tone of moral character. Their industry
in peace is the source of our wealth and their bravery in war has covered us with glory! and the 5overnment of the 'nited (tates
will but ill discharge its duties if it leaves them a prey to such dishonest impositions. #et it is evident that their interests can not
be effectually protected unless silver and gold are restored to circulation.
These views alone of the paper currency are sufficient to call for immediate reform! but there is another consideration which
should still more strongly press it upon your attention.
@ecent events have proved that the paper8money system of this country may be used as an engine to undermine your free
institutions, and that those who desire to engross all power in the hands of the few and to govern by corruption or force are
aware of its power and prepared to employ it. #our banks now furnish your only circulating medium, and money is plenty or
scarce according to the quantity of notes issued by them. While they have capitals not greatly disproportioned to each other, they
are competitors in business, and no one of them can e?ercise dominion over the rest! and although in the present state of the
currency these banks may and do operate inFuriously upon the habits of business, the pecuniary concerns, and the moral tone of
society, yet, from their number and dispersed situation, they can not combine for the purposes of political influence, and
whatever may be the dispositions of some of them their power of mischief must necessarily be confined to a narrow space and
felt only in their immediate neighborhoods.
=ut when the charter for the =ank of the 'nited (tates was obtained from ongress it perfected the schemes of the paper system
and gave to its advocates the position they have struggled to obtain from the commencement of the <ederal 5overnment to the
present hour. The immense capital and peculiar privileges bestowed upon it enabled it to e?ercise despotic sway over the other
banks in every part of the country. <rom its superior strength it could seriously inFure, if not destroy, the business of any one of
them which might incur its resentment! and it openly claimed for itself the power of regulating the currency throughout the
'nited (tates. In other words, it asserted *and it undoubtedly possessed. the power to make money plenty or scarce at its
pleasure, at any time and in any quarter of the 'nion, by controlling the issues of other banks and permitting an e?pansion or
compelling a general contraction of the circulating medium, according to its own will. The other banking institutions were
sensible of its strength, and they soon generally became its obedient instruments, ready at all times to e?ecute its mandates! and
with the banks necessarily went also that numerous class of persons in our commercial cities who depend altogether on bank
credits for their solvency and means of business, and who are therefore obliged, for their own safety, to propitiate the favor of
the money power by distinguished Meal and devotion in its service. The result of the ill8advised legislation which established this
great monopoly was to concentrate the whole moneyed power of the 'nion, with its boundless means of corruption and its
numerous dependents, under the direction and command of one acknowledged head, thus organiMing this particular interest as
one body and securing to it unity and concert of action throughout the 'nited (tates, and enabling it to bring forward upon any
occasion its entire and undivided strength to support or defeat any measure of the 5overnment. In the hands of this formidable
power, thus perfectly organiMed, was also placed unlimited dominion over the amount of the circulating medium, giving it the
power to regulate the value of property and the fruits of labor in every quarter of the 'nion, and to bestow prosperity or bring
ruin upon any city or section of the country as might best comport with its own interest or policy.
We are not left to conFecture how the moneyed power, thus organiMed and with such a weapon in its hands, would be likely to
use it. The distress and alarm which pervaded and agitated the whole country when the =ank of the 'nited (tates waged war
upon the people in order to compel them to submit to its demands can not yet be forgotten. The ruthless and unsparing temper
with which whole cities and communities were oppressed, individuals impoverished and ruined, and a scene of cheerful
prosperity suddenly changed into one of gloom and despondency ought to be indelibly impressed on the memory of the people
of the 'nited (tates. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at
your doors2 ;o nation but the freemen of the 'nited (tates could have come out victorious from such a contest! yet, if you had
not conquered, the 5overnment would have passed from the hands of the many to the hands of the few, and this organiMed
money power from its secret conclave would have dictated the choice of your highest officers and compelled you to make peace
or war, as best suited their own wishes. The forms of your 5overnment might for a time have remained, but its living spirit
would have departed from it.
The distress and sufferings inflicted on the people by the bank are some of the fruits of that system of policy which is continually
striving to enlarge the authority of the <ederal 5overnment beyond the limits fi?ed by the onstitution. The powers enumerated
in that instrument do not confer on ongress the right to establish such a corporation as the =ank of the 'nited (tates, and the
evil consequences which followed may warn us of the danger of departing from the true rule of construction and of permitting
temporary circumstances or the hope of better promoting the public welfare to influence in any degree our decisions upon the
e?tent of the authority of the 5eneral 5overnment. Iet us abide by the onstitution as it is written, or amend it in the
constitutional mode if it is found to be defective.
The severe lessons of e?perience will, I doubt not, be sufficient to prevent ongress from again chartering such a monopoly,
even if the onstitution did not present an insuperable obFection to it. =ut you must remember, my fellow8citiMens, that eternal
vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing. It behooves you,
therefore, to be watchful in your (tates as well as in the <ederal 5overnment. The power which the moneyed interest can
e?ercise, when concentrated under a single head and with our present system of currency, was sufficiently demonstrated in the
struggle made by the =ank of the 'nited (tates. Defeated in the 5eneral 5overnment, tho same class of intriguers and
politicians will now resort to the (tates and endeavor to obtain there the same organiMation which they failed to perpetuate in the
'nion! and with specious and deceitful plans of public advantages and (tate interests and (tate pride they will endeavor to
establish in the different (tates one moneyed institution with overgrown capital and e?clusive privileges sufficient to enable it to
control the operations of the other banks. (uch an institution will be pregnant with the same evils produced by the =ank of the
'nited (tates, although its sphere of action is more confined, and in the (tate in which it is chartered the money power will be
able to embody its whole strength and to move together with undivided force to accomplish any obFect it may wish to attain. #ou
have already had abundant evidence of its power to inflict inFury upon the agricultural, mechanical, and laboring classes of
society, and over those whose engagements in trade or speculation render them dependent on bank facilities the dominion of the
(tate monopoly will be absolute and their obedience unlimited. With such a bank and a paper currency the money power would
in a few years govern the (tate and control its measures, and if a sufficient number of (tates can be induced to create such
establishments the time will soon come when it will again take the field against the 'nited (tates and succeed in perfecting and
perpetuating its organiMation by a charter from ongress.
It is one of the serious evils of our present system of banking that it enables one class of society88and that by no means a
numerous one88by its control over the currency, to act inFuriously upon the interests of all the others and to e?ercise more than its
Fust proportion of influence in political affairs. The agricultural, the mechanical, and the laboring classes have little or no share
in the direction of the great moneyed corporations, and from their habits and the nature of their pursuits they are incapable of
forming e?tensive combinations to act together with united force. (uch concert of action may sometimes be produced in a single
city or in a small district of country by means of personal communications with each other, but they have no regular or active
correspondence with those who are engaged in similar pursuits in distant places! they have but little patronage to give to the
press, and e?ercise but a small share of influence over it! they have no crowd of dependents about them who hope to grow rich
without labor by their countenance and favor, and who are therefore always ready to e?ecute their wishes. The planter, the
farmer, the mechanic, and the laborer all know that their success depends upon their own industry and economy, and that they
must not e?pect to become suddenly rich by the fruits of their toil. #et these classes of society form the great body of the people
of the 'nited (tates! they are the bone and sinew of the country88men who love liberty and desire nothing but equal rights and
equal laws, and who, moreover, hold the great mass of our national wealth, although it is distributed in moderate amounts among
the millions of freemen who possess it. =ut with overwhelming numbers and wealth on their side they are in constant danger of
losing their fair influence in the 5overnment, and with difficulty maintain their Fust rights against the incessant efforts daily
made to encroach upon them. The mischief springs from the power which the moneyed interest derives from a paper currency
which they are able to control, from the multitude of corporations with e?clusive privileges which they have succeeded in
obtaining in the different (tates, and which are employed altogether for their benefit! and unless you become more watchful in
your (tates and check this spirit of monopoly and thirst for e?clusive privileges you will in the end find that the most important
powers of 5overnment have been given or bartered away, and the control over your dearest interests has passed into the hands of
these corporations.
The paper8money system and its natural associations88monopoly and e?clusive privileges88have already struck their roots too
deep in the soil, and it will require all your efforts to check its further growth and to eradicate the evil. The men who profit by
the abuses and desire to perpetuate them will continue to besiege the halls of legislation in the 5eneral 5overnment as well as in
the (tates, and will seek by every artifice to mislead and deceive the public servants. It is to yourselves that you must look for
safety and the means of guarding and perpetuating your free institutions. In your hands is rightfully placed the sovereignty of the
country, and to you everyone placed in authority is ultimately responsible. It is always in your power to see that the wishes of the
people are carried into faithful e?ecution, and their will, when once made known, must sooner or later be obeyed! and while the
people remain, as I trust they ever will, uncorrupted and incorruptible, and continue watchful and Fealous of their rights, the
5overnment is safe, and the cause of freedom will continue to triumph over all its enemies.
=ut it will require steady and persevering e?ertions on your part to rid yourselves of the iniquities and mischiefs of the paper
system and to check the spirit of monopoly and other abuses which have sprung up with it, and of which it is the main support.
(o many interests are united to resist all reform on this subFect that you must not hope the conflict will be a short one nor success
easy. 0y humble efforts have not been spared during my administration of the 5overnment to restore the constitutional currency
of gold and silver, and something, I trust, has been done toward the accomplishment of this most desirable obFect! but enough
yet remains to require all your energy and perseverance. The power, however, is in your hands, and the remedy must and will be
applied if you determine upon it.
T T T T T

=>entlemen & ha!e had men %atching you for a long time and & am con!inced that you ha!e used the funds of the bank
to speculate in the breadstuffs of the country. When you %on you di!ided the profits amongst you and %hen you lost
you charged it to the bank. Aou tell me that if & take the deposits from the bank and annul its charter & shall ruin ten
thousand families. That may be true gentlemen but that is your sinB Should & let you go on you %ill ruin fifty thousand
families and that %ould be my sinB Aou are a den of !ipers and thie!es. & intend to rout you out and by the eternal >od
& %ill rout you out.? C +resident #ndre% )ackson -./1
D&f 4ongress has the right under the 4onstitution to issue paper money it %as gi!en to be used by themsel!es not to be
delegated to indi!iduals or corporations.D C #ndre% )ackson

E$ro P the official c$rrency of the E$ro0ean 8nion
Pa0er money 0rod$ced by the Bank of 5srael, 5srael>s central bank

(oviet @ussian paper money *bank note2.
7 co0y of 5srael>s c$rrency (ith Edmond de /othschild 0ortrayed on the bank note
ommunist hinese bank note produced by the )eople"s =ank of hina
This is a 5erman @eichsbanknote dated + 3ugust +,G6 with a face value of E 0arks. ;ote the appearance of the swastika on the
D@= seal of the note and the significantly higher quality printing and paper used.
*(ource7 http7UUwww.snyderstreasures.comUpagesUgermancurrency.htm.
*(ource7 '(solete )aper %oney Iss*ed (y Banks in the $nited States+ ,-./0,.11 by L. David =owers, p. G6,.
entral bankers like to huddle together. Their camaraderie, we dare to suggest, is cemented by resentmentKentral bankers
therefore take an almost malicious Foy in the e?clusiveness of their club. The solid town of =asle & the (wiss )hiladelphia, as
some call it & is far away from political clamour. The =ank for International (ettlements & the =I(, pronounced S=iss" & was set
up there in +,-A and takes pride in being the world"s oldest international financial institution. It was created to deal with
national payment problems arising from 5erman reparations after the +,+G8+/ war and to provide services to the central banks,
looking after some of their gold and dollar reserves. =ut right from the start, its special role was to promote the cooperation of
central bankers. There they can huddle to their hearts" content. 1ne weekend each month, central bankers eagerly converge on
the =I( in =asle from all the >uropean capitals and from Washington, 1ttawa, Tokyo and ;ew #ork. The big names nearly
always attendK% & The Central Banks by 0arForie Deane and @obert )ringle, p. +A8++
apital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and
mortgages foreclosed as soon as possible. When, through a process of law, the common people have lost their homes, they will
be more tractable and more easily governed by the strong arm of the law, applied by the central power of wealth, under control
of leading financiers. )eople without homes will not quarrel with their leaders. This is well known among our principal men
now engaged in forming an imperialism of capital to govern the world. =y dividing the people, they can be made to e?pend
their energies in quarreling over questions of little importance to us, e?cept as teachers of the common herd.%
& from The Banker2s %anifesto *+,-G.
6he /oyal Bank of Canada on the Cayman 5slands, a British )"erseas 6erritory island located so$th of C$ba. 6he Cayman 5slands is
reno(ned for offshore banking and ta' e'em0tions, incl$ding the 0rohibition of income ta' and ca0ital gains ta'. 5nternational banking firms,
incl$ding 7merican banking firms, maintain GofficesH and Gacco$ntsH (i.e. sl$sh f$nds) on the Cayman 5slands, 0rimarily to a"oid ta'ation in the
home co$ntries. (PhotoB .lickr)
7 ma0 of the Cayman 5slands
Cayman 5slands BankingB List of Cayman Banks
7le'andria Bancor0 Limited
7ltaLir Bank
B2P Pri"ate Bank @ 6r$st Cayman Ltd
Banca 8nione Di Credito (Cayman) Ltd
Banco Bradesco ! 7
Banco Do Brasil ! 7
Banco do Estado do /io rande do !$l ! 7 Banris$l
Banif;Banco 5nternational Do .$nchal
Bank 7$stria Cayman 5slands Ltd
Bank Danamon 5ndonesia
Bank Es0irito !anto 5nternational Ltd
Bank 2iaga rand Cayman Branch
Bank of 7merica 6r$st @ Banking Cor0
Bank of Berm$da (Cayman) Ltd
Bank of China
Bank of Credit @ Commerce 5nternational (in li?$idation)
Bank of 2e( 3ork 6r$st Com0any
Bank Dontobel Cayman
BC2 5nternational Bank Ltd
BCP Bank @ 6r$st Co. Ltd.
Bessemer 6r$st Com0any (Cayman) Ltd
B#D Cayman 5nternational Bank
B$tterfield Bank (Cayman) Limited (.ort !t.)
B$tterfield Bank (Cayman) Limited (Com0ass Centre)
B$tterfield Bank (Cayman) Limited (West !hore)
C5BC Bank @ 6r$st Com0any (Cayman) Limited
Caledonian Bank @ 6r$st Ltd
Cayman 5slands De"elo0ment Bank
Cayman 2ational Bank Ltd (Main )ffice)
Cayman 2ational Bank Ltd (West Wind)
Cayman 2ational Bank Ltd (B$ckingham !?$are)
Cayman 2ational Bank Ltd (Centennial 6o(er)
Citco Bank @ 6r$st Co Ltd
Close Bank Cayman Limited
Co$tts (Cayman) Ltd
Delta Bank @ 6r$st Co
De$tsche Bank (Cayman) Ltd
De'tra;Bank @ 6r$st Co Ltd
Dresdner Bank Lateinamerika 7
D$ndee Bank (D$ndee Leeds)
.idelity Bank(Cayman) Ltd.
.irstCaribbean 5nternational Bank
.irst Cayman Bank (5n Li?$idation)
.ortis Bank (Cayman) Ltd
erfiner Bank
i"ens #all Bank @ 6r$st Ltd
$lf 8nion Bank Ltd
#!BC .inancial !er"ices (Cayman) Limited
5BJ Whitehall Bank @ 6r$st Co
J$li$s Baer Bank @ 6r$st Co Ltd
L6 Bank ln Liechtenstein (Cayman) Ltd
Merc$ry Bank @ 6r$st Ltd
Merrill Lynch Bank @ 6r$st Co (Cayman) Ltd
Midland Bank 6r$st Cor0oration (Cayman) Ltd
Mor"al Bank @ 6r$st Cayman Ltd
M$lti Banking Cor0oration ()"erseas) Ltd
2ational B$ilding !ociety of Cayman
2CB (Cayman) Limited
PD Bank (Cayman) Ltd
Pig$et Bank @ 6r$st Ltd
P6 Bank Mandiri (Persero) 6bk
P6 Bank 2iaga
I$eensgate Bank @ 6r$st Co Ltd
/oyal Bank of Canada (Main )ffice)
/oyal Bank of Canada (I$eens Co$rt)
/oyal Bank of Canada 6r$st Co (Cayman) Ltd
!chroder Cayman Bank @ 6r$st Co Ltd
!cotiabank (Cayman 5slands) Ltd
!cotiabank Ltd (.osters 7ir0ort Br)
!cotiabank Ltd (6he !trand)
!$l 7merica 5nternational Bank (Cayman) Ltd
6rade Link Bank
6ransocean Bank @ 6r$st Ltd
8nicor0 Bank @ 6r$st Co Ltd
8nited Mi1rahi Bank
Denecredit Bank + 6r$st Ltd
Wacho"ia Bank @ 6r$st Com0any (Cayman) Ltd.
Wing #ang Bank (Cayman) Ltd
Cayman Brac @ Little Cayman
Cayman 2ational Bank Ltd (6ibbetts !?, Cayman Brac
Cayman 2ational Bank Ltd (Blossom Dillage, Little Cayman)
2oteB !(it1erland has no ta' treaties (ith the 8nited !tates andis
regarded as the most sec$re and 0restigio$s location in the (orld for
Pri"ate Banking.
!o$rceB Cayman Banking !er"ices
<lag of the ayman Islands
.ractional reser"e banking in"ol"es bankers loaning money at a fraction of the "al$e of the de0osit.
(E'am0leB Bankers loan 9*,, (ith 9%,, in de0osit.)
8s$ry in"ol"es loaning money to lenders at a high rate of interest (fee).
GBy the end of the cent$ry it had become a00arent that some national go"ernments had ass$med too many res0onsibilities that
they co$ld not 0ro0erly meet. 6he Comm$nist go"ernments, (hich had ass$med the greatest role, sim0ly colla0sed and
became $nable to 0erform e"en the most basic f$nctions. 5n the more affl$ent democracies of the West, go"ernments merely
st$mbled. 6hey did not colla0se, b$t it became a00arent to the 0eo0le that a go"ernment that had tro$ble deli"ering mail on
time might also ha"e tro$ble r$nning the c$rrency and o"erseeing the economy. 7 go"ernment that co$ld not control the selling
of cocaine and heroin might also ha"e tro$ble 0olicing the monetary system. 7 go"ernment that co$ld not make its streets safe
for its citi1ens or e"en kee0 the school gro$nds safe for children and teachers might also ha"e 0roblems kee0ing the nation>s
money s$00ly safe and free of corr$0tion.H
P "he History of ,oney by Jack Weatherford, 0. %::;%:-
G6hro$gho$t the t(entieth cent$ry, the 0o(er of go"ernments to control money gre( tremendo$sly in "irt$ally all 0arts of the
(orld. 6his increased control allo(ed go"ernment a$thorities to 0rint more money, to borro(, or to do (hate"er they (ished
(hen they needed to increase s0ending or adL$st the economy. 7s go"ernments increased their s0ending, they also increased
their 0o(er o"er the economy in tho$sands of large and small (ays. 2o longer constrained by the need to ha"e a s0ecific gold
reser"e for each $nit of money iss$ed, the go"ernments sim0ly iss$ed more money to finance their ne( $ndertakings.
Politicians can al(ays conL$re $0 good reasons to tam0er (ith the moneyC they often set o$t to combat some great e"il l$rking
o"er the hori1on or a"er t some horrific disaster looming in o$r children>s f$t$re. When .ranklin /oose"elt took the 8nited
!tates off the gold standard internally, it (as for good reasons P to end the De0ression and then to fight World War 55. 6hen the
8nited !tates had to reb$ild E$ro0e and combat comm$nism, (hich enco$raged more debts. Lyndon Johnson enco$raged the
0oliticians to acc$m$late more debt to fight the (ar in Dietnam and sim$ltaneo$sly cond$ct the War on Po"erty at home.
/ather than re"ersing Johnson>s 0olicies (hen it became a00arent that the 8nited !tates (as losing both (ars, /ichard 2i'on
took the dollar off the gold standard com0letely. With the financial freedom granted by the ne( easy money, 0oliticians on both
the /ight and the Left co$ld finance (hate"er 0et 0roLects they might s$00ort P more high(ays and food stam0s, e'0loration of
o$ter s0ace and increased agric$lt$ral s$bsidies, foreign aid and $rban ho$sing, !tar Wars (ea0ons and art endo(ments,
cancer research and fighting the narcotics trade. 6he co$ntry had eno$gh money to finance the r$thless regimes of friendly
dictators and to in"ade or 0ay for g$erilla (ars against small co$ntries r$n by $nfriendly dictators. 5t seemed that e"eryone co$ld
ha"e e"erything. 6he 0oliticians, lobbyists, and s0ecial interests had ta00ed into the magic form$la for generating (ealth from
air.H P "he History of ,oney by Jack Weatherford, 0. %:=;%:+
GMany of $s regard these hoard s of gold as a kind of 0sychic sec$rity that backs $0 the dollars (e carry in o$r 0ockets and
0$rses. 6he gold at .ort Fno' and in the .ederal /eser"e is belie"ed to re0resent the 7merican monetary system. )$r
go"ernment makes no effort to co$nter that notion, b$t it is merely one of the many myths that other(ise rational and (ell;
informed 0eo0le hold abo$t money today. In truth, the gold in 'ort (nox and the 'ederal )eserve actually has nothing to
do with the *merican dollar. !ince President /ichard 2i'on se"ered the final tie bet(een the dollar and gold, not one o$nce
of gold any(here in the (orld stands behind the 8.!. dollar. 6he 0iles of gold are 0art of the (ealth of the 7merican
go"ernment, as are the go"ernment storeho$ses filled (ith soybeans, nickel, and old f$rnit$re, b$t they are not a 0art of the
money system. 6he dollar no more rests on the gold at .ort Fno' than on the go"ernment stock0iles of 0rocessed cheese ke0t
in its refrigerated (areho$ses. )$r dollar is neither a sil"er dollar nor a gold one. 6he go"ernment (ill not redeem a dollar bill
for anything other than another dollar bill. $he dollar is simply fiat currency. 6he dollar rests on the 0o(er of the go"ernment
and the faith of the 0eo0le (ho $se it P faith that it (ill be able to b$y something tomorro(, faith that the 8.!. go"ernment (ill
contin$e to e'ist and to acce0t dollars in 0ayment of ta'es and 0ay them o$t in e'0enses, and faith that other 0eo0le (ill
contin$e to belie"e in it. 7side from that faith, nothing backs $0 the dollar.H
P "he History of ,oney by Jack Weatherford, 0. %+-;%:,
G6he 0roblem (ith a gold;based c$rrency is that it is limited by the amo$nt of gold in the (orld, and that amo$nt fl$ct$ates (ith
each ne( find and each ne( de"elo0ment in technology.. 7t times, ne(ly disco"ered gold floods the market $ne'0ectedly. 7t
other times, it trickles in "ery slo(ly e"en tho$gh the economy may des0erately need an inf$sion of money. !ometimes
go"ernments, banks, and e"en (ealthy indi"id$als can tem0orarily mani0$late the gold market for their o(n benefit, b$t for the
most 0art, it o0erates beyond the control of indi"id$als and e"en nations. 6he necessity of con"erting the money to gold on
demand 0re"ents the go"ernment from making too many loans or iss$ing too m$ch money in order to satisfy a tem0orary
0olitical 0roblem. 7s long as the citi1ens ha"e the right to t$rn their 0a0er money into gold, they hold a "ote on ho( the
monetary system (orks and ho( m$ch faith they ha"e in their 0oliticians. 7s soon as they lose confidence in the 0a0er, they
can con"ert to gold and abandon the 0a0er.H
P "he History of ,oney by Jack Weatherford, 0. %:,;%:%
G)ne of /oose"elt>s first acts as 0resident (as to take the 8nited !tates off the gold standard in order to stim$late the economy
and increase the go"ernment>s ability to borro( money to finance his economic and social 0olicies. By an act of March -, %-&&,
Gto 0ro"ide relief in the e'isting national emergency in banking and other 0$r0oses,H Congress ga"e /oose"elt the 0o(er to
0re"ent the GhoardingH of gold. By /oose"elt>s e'ec$ti"e order a month later 8.!. citi1ens and residents co$ld no longer redeem
their dollars for gold, b$t e'ternally, the 8nited !tates remained on the gold standard so that other co$ntries and foreign banks
co$ld still con"ert their dollars into gold as they needed. /oose"elt also nationali1ed gold and made it a crime 0$nishable by
arrest and im0risonment for an 7merican citi1en to hold gold b$llion or coins.H
P "he History of ,oney by Jack Weatherford, 0. %:%
G6hro$gho$t the nineteenth cent$ry, the E$ro0ean go"ernments fo$nd themsel"es se"erely limited by the gold system aro$nd
them. 8nable to gi"e a(ay lands and make grants as earlier monarchs had done and $nable to 0rint endless amo$nts of
money, the go"ernments needed to find ne( (ays to enrich themsel"es. 5f gold (as the $ltimate "al$able behind the c$rrency,
then to make more money, they need more gold. 6his need for gold set off the greatest international scramble since the
con?$est of 7merica in the si'teenth cent$ry. 6he E$ro0ean go"ernments sent o$t armies aro$nd the (orld in search of gold.
6hey fo$nd it in !o$th 7frica, 7$stralia, !iberia, and the 3$kon. E"en the 8nited !tates became a maLor 0rod$cer of gold in the
California territory, (hich had recently been taken from Me'ico . . . 6hro$gho$t the nineteenth cent$ry, s0ending on armaments
and armies increased constantly. 7s go"ernment b$dgets for the military and the gro(ing b$rea$cracies e'0anded, their
e'0endit$res made greater claims on the economy and began to 0$t 0ress$res on the gold reser"es of these nations. 5n the
0rocess of con?$ering the inhabited continents and making them into colonies, the E$ro0ean 0o(ers created massi"e standing
armies, na"ies, and the ind$strial and organi1ational str$ct$res needed o s$00ort them. With these enormo$s military reso$rces
a"ailable and "irt$ally no ne( lands to con?$er, they fell $0on one another in the .irst World War, the greatest bloodbath kno(n
$0 to that time. With the o$tbreak of (ar, the go"ernments of E$ro0e had an e'c$se to take o"er management of their o(n
economies, to e'0and the internal 0o(er of the go"ernment o"er all sectors of 0$blic life, to im0ose ta'es s$ch as income ta' in
the 8nited !tates. 5f they lacked the gold to finance their ne( $ndertakings, then P in the name of 0atriotism and (ar emergency
P they sim0ly 0rinted the money any(ay and took the co$ntry off the gold standard. 7s long as a co$ntry stayed on the gold
standard, it limited the amo$nt of money in circ$lation and thereby limited the amo$nt of money that the go"ernment co$ld
borro(. 5f the 0eo0le lacked the money to b$y go"ernment bonds, then the go"ernment had only its ta' re"en$es to s0end.H
P "he History of ,oney by Jack Weatherford, 0. %=*;%=A
GD$ring hy0erinflation, as in Boli"ia in %-:A and %-:<, the economy o0erates on a cash;only basis. 2o one acce0ts 0ayment by
check or credit card beca$se clearance takes far too long. Conse?$ently no one kee0s money on de0osit in the bank. Banks
make no loans beca$se of diffic$lty determining the interest rate. Credit, in the local c$rrency, ceases to e'ist. E"en ser"ices
s$ch as tele0hone and electricity, (hich are s$00lied on a monthly basis and billed at the end of the month, demand ad"ance
0ayment $nless they are go"ernment ser"ices, in (hich case c$stomers (ait as long as 0ossible to 0ay their bills, beca$se a bill
for fifty dollars co$ld dro0 to only a fe( 0ennies (ithin a (eek. #y0erinflation follo(s a similar 0attern (here"er it strikes. Banks
sto0 financing mortgages. Wo$ld;be home b$yers and e"en b$sinesses 0ay for their b$ildings as they 0rogress. 7
conscientio$s family b$ys bricks or bags of cement as ?$ickly as they ac?$ire the money, e"en tho$gh they b$ilding the ho$se
slo(ly, o"er years or e"en decades. Beca$se of this 0ractice of in"esting in b$ilding materials, the cities and co$ntryside seem
to be filled (ith 0artially constr$cted ho$ses, (alls (itho$t roofs, ho$ses (itho$t (indo(s, and bare;brick str$ct$res (itho$t
st$cco, all of (hich gi"es the neighborhoods a deteriorated and slo00y a00earance. D$ring hy0erinflation, fi'ed incomes no
longer e'ist. Peo0le on 0ensions or retirement find the "al$e of their 0ayments red$ced to only a fe( dollars a month. E"en
tho$gh go"ernment offices adL$st the checks, they are $s$ally (eeks behind the inflation rate in an economy (here e"en one
(eek can red$ce the "al$e of the money by -- 0ercent.H
P "he History of ,oney by Jack Weatherford, 0. %-<
G5n s$ch times of r$na(ay inflation, c$rrency s0ec$lation becomes a maLor b$siness for "irt$ally the entire ad$lt comm$nity.
#$ndreds of 0eo0le line the streets e'changing 0esos for dollars on the illegal b$t tolerated black market. C$rrency traders (alk
the streets, and messengers sc$rry back and forth e'changing dollars for 0esos and 0esos for dollars. Beca$se store
transactions m$st be made in the national c$rrency, sho00ers arri"e (ith dollars, (hich they trade for 0esos on the street before
entering the store. Beca$se the sho0kee0er does not (ant to be left (ith large n$mbers of 0esos at the end of the day, (hen
the c$stomer lea"es, eh sends the ne(ly arri"ed 0esos to a c$rrency trader to trade them back into dollars. )ften the same
traders may trade the e'act same bills se"eral times in a day, charging, of co$rse, a small fee each time. 6hese small fees and
the high t$rno"er make the c$rrency trader>s Lob m$ch more l$crati"e than that of the b$sinessmen (ho e'change goods. E"ery
b$siness, from the large national airline to the (oman selling shelled n$ts on the street corner, m$st kno( the "al$e of the 0eso
relati"e to that of the dollar at all times of the day and m$st 0lay a constant game of sh$ffling 0esos, dollars, and goods. 7s in a
game of m$sical chairs, e"eryone kno(s that at any moment of the day, (eek, or year, the rates co$ld s$ddenly change, and
(hoe"er has too m$ch of one c$rrency and not eno$gh of the other (ill lose.H
P "he History of ,oney by Jack Weatherford, 0. %-+;%-:
G#y0erinflation cannot last long beca$se it destroys the ca0ital markets and makes cash increasingly $n(ieldy. 6o kee0 $0 (ith
the changing "al$e of the c$rrency and the large stacks of bills, 0eo0le mentally lo0 off the 1eros. 5n e"eryday market
transactions, a million 0esos sim0ly becomes one and ten million 0esos becomes ten. 6his may s$ffice for b$ying groceries and
other small 0$rchases, b$t for higher;0riced items s$ch as refrigerators and a$tomobiles, 0eo0le sim0ly abandon the 0eso
terminology entirely and disc$ss 0rices in dollars, regardless of (hether 0ayment (ill be made in dollars or 0esos. Prod$ction
and commerce grad$ally slo( as 0eo0le s0ending more and more of their daily li"es searching for (ays to esca0e the cost of
inflation. 7s 0ress$re increases on the go"ernment to control the inflation, and as the national economy contin$es to
deteriorate, the go"ernment m$st e"ent$ally iss$e a ne( c$rrency that remo"es the 1eroes and ret$rns the c$rrency to bet(een
one and ten to the dollar. 7ltho$gh hy0erinflation is de"astating for some segments of the 0o0$lation, other P debtors, for
e'am0le P benefit from it. D$ring inflation loans that once totaled tho$sands of dollars are red$ced to only a fe( cents.H
P "he History of ,oney by Jack Weatherford, 0. %-:
EC)2)M5C P725C!, /ECE!!5)2!, @ DEP/E!!5)2!
7 cro(d forms on Wall !treet in 2e( 3ork City d$ring the Bankers> Panic of %-,+ in )ctober %-,+.
(PhotoB 2e( 3ork P$blic Library Digital allery, 5rma and Pa$l Milstein Di"ision of 8nited !tates #istory, Local #istory and enealogy)
ommotion on Wall (treet in ;ew #ork ity on 1ctober +G, +/EB during the )anic of +/EB
*(ource7 '(solete )aper %oney Iss*ed (y Banks in the $nited States+ ,-./0,.11 by L. David =owers, p. --,.
3 run on a bank in the )anic of +/EB, as customers sought to withdraw their deposits and also to e?change paper money for
coins.% *(ource7 '(solete )aper %oney Iss*ed (y Banks in the $nited States+ ,-./0,.11 by L. David =owers, p. --,.
7 homeless tent city sits in front of the !acramento skyline in !acramento, California on March A, *,,-. 6he tent city is seeing an increase in
0o0$lation as the economy (orsens and more 0eo0le are becoming $nem0loyed and ha"ing their homes sli0 into foreclos$re. (etty 5mages)
8nem0loyed 7mericans (ait in line for assistance d$ring a recession. !$b0rime mortgage and other lending schemes 0romoted by "ario$s
banking firms in 2e( 3ork City s0arked an economic recession in 7merica in late *,,:. Lehman Brothers, an international banking firm in
2e( 3ork City, filed for bankr$0tcy on !e0tember %<, *,,:.
3merican ;ational Debt since +B,+
4anuary +, +B,+ 8 OBE,GC-,GBC.E6
4anuary +, +B,6 8 OBB,66B,,6G.CC
4anuary +, +B,- 8 O/A,-E/,C-G.AG
4anuary +, +B,G 8 OB/,G6B,GAG.BB
4anuary +, +B,E 8 O/A,BGB,E/B.-,
4anuary +, +B,C 8 O/-,BC6,+B6.AB
4anuary +, +B,B 8 O/6,ACG,GB,.--
4anuary +, +B,/ 8 OB,,66/,E6,.+6
4anuary +, +B,, 8 OB/,GA/,CC,.BB
4anuary +, +/AA 8 O/6,,BC,6,G.-E
4anuary +, +/A+ 8 O/-,A-/,AEA./A
4anuary +, +/A6 8 O/A,B+6,C-6.6E
4anuary +, +/A- 8 OBB,AEG,C/C.GA
4anuary +, +/AG 8 O/C,G6B,+6A.//
4anuary +, +/AE 8 O/6,-+6,+EA.EA
4anuary +, +/AC 8 OBE,B6-,6BA.CC
4anuary +, +/AB 8 OC,,6+/,-,/.CG
4anuary +, +/A/ 8 OCE,+,C,-+B.,B
4anuary +, +/A, 8 OEB,A6-,+,6.A,
4anuary +, +/+A 8 OE-,+B-,6+B.E6
4anuary +, +/++ 8 OG/,AAE,E/B.BC
4anuary +, +/+6 8 OGE,6A,,B-B.,A
4anuary +, +/+- 8 OEE,,C6,/6B.EB
4anuary +, +/+G 8 O/+,G/B,/GC.6G
4anuary +, +/+E 8 O,,,/--,CCA.+E
4anuary +, +/+C 8 O+6B,--G,,--.BG
4anuary +, +/+B 8 O+6-,G,+,,CE.+C
4anuary +, +/+/ 8 O+A-,GCC,C--./-
4anuary +, +/+, 8 O,E,E6,,CG/.6/
4anuary +, +/6A 8 O,+,A+E,ECC.+E
4anuary +, +/6+ 8 O/,,,/B,G6B.CC
4anuary +, +/66 8 O,-,EGC,CBC.,/
4anuary +, +/6- 8 O,A,/BE,/BB.6/
4anuary +, +/6G 8 O,A,6C,,BBB.BB
4anuary +, +/6E 8 O/-,B//,G-6.B+
4anuary +, +/6C 8 O/+,AEG,AE,.,,
4anuary +, +/6B 8 OB-,,/B,-EB.6A
4anuary +, +/6/ 8 OCB,GBE,AG-./B
4anuary +, +/6, 8 OE/,G6+,G+-.CB
4anuary +, +/-A 8 OG/,ECE,GAC.EA
4anuary +, +/-+ 8 O-,,+6-,+,+.C/
4anuary +, +/-6 8 O6G,-66,6-E.+/
4anuary +, +/-- 8 O B,AA+,C,/./-
4anuary +, +/-G 8 O G,BCA,A/6.A/
4anuary +, +/-E 8 O --,B--.AE
4anuary +, +/-C 8 O -B,E+-.AE
4anuary +, +/-B 8 O --C,,EB./-
4anuary +, +/-/ 8 O -,-A/,+6G.AB
4anuary +, +/-, 8 O+A,G-G,66+.+G
4anuary +, +/GA 8 O -,EB-,-G-./6
4anuary +, +/G+ 8 O E,6EA,/BE.EG
4anuary +, +/G6 8 O+-,E,G,G/A.B-
4anuary +, +/G- 8 O6A,6A+,66C.6B
4uly +, +/G- 8 O-6,BG6,,66.AA
4uly +, +/GG 8 O6-,GC+,CE6.EA
4uly +, +/GE 8 O+E,,6E,-A-.A+
4uly +, +/GC 8 O+E,EEA,6A6.,B
4uly +, +/GB 8 O-/,/6C,E-G.BB
4uly +, +/G/ 8 OGB,AGG,/C6.6-
4uly +, +/G, 8 O C-,AC+,/E/.C,
4uly +, +/EA 8 O C-,GE6,BB-.EE
4uly +, +/E+ 8 O C/,-AG,B,C.A6
4uly +, +/E6 8 O CC,+,,,-G+.B+
4uly +, +/E- 8 O E,,/A-,++B.BA
4uly +, +/EG 8 O G6,6G6,666.G6
4uly +, +/EE 8 O -E,E/C,,EC.EC
4uly +, +/EC 8 O -+,,B6,E-B.,A
4uly +, +/EB 8 O 6/,C,,,/-+./E
4uly +, +/E/ 8 O GG,,++,//+.A-
4uly +, +/E, 8 O E/,G,C,/-B.//
4uly +, +/CA 8 O CG,/G6,6/B.//
4uly +, +/C+ 8 O ,A,E/A,/B-.B6
4uly +, +/C6 8 O E6G,+BC,G+6.+-
4uly +, +/C- 8 O+,++,,BB6,+-/.C-
4uly +, +/CG 8 O+,/+E,B/G,-BA.EB
4uly +, +/CE 8 O6,C/A,CGB,/C,.BG
4uly +, +/CC 8 O6,BB-,6-C,+B-.C,
4uly +, +/CB 8 O6,CB/,+6C,+A-./B
4uly +, +/C/ 8 O6,C++,C/B,/E+.+,
4uly +, +/C, 8 O6,E//,GE6,6+-.,G
4uly +, +/BA 8 O6,G/A,CB6,G6B./+
4uly +, +/B+ 8 O6,-E-,6++,--6.-6
4uly +, +/B6 8 O6,6E-,6E+,-6/.B/
4uly +, +/B- 8 O6,6-G,G/6,,,-.6A
4uly +, +/BG 8 O6,6E+,C,A,GC/.G-
4uly +, +/BE 8 O6,6-6,6/G,E-+.,E
4uly +, +/BC 8 O6,+/A,-,E,ACB.+E
4uly +, +/BB 8 O6,6AE,-A+,-,6.+A
4uly +, +/B/ 8 O6,6EC,6AE,/,6.E-
4uly +, +/B, 8 O6,-G,,ECB,G/6.AG
4uly +, +//A 8 O6,+6A,G+E,-BA.C-
4uly +, +//+ 8 O6,AC,,A+-,EC,.E/
4uly +, +//6 8 O+,,+/,-+6,,,G.A-
4uly +, +//- 8 O+,//G,+B+,B6/.AB
4uly +, +//G 8 O+,/-A,E6/,,6-.EB
4uly +, +//E 8 O+,/C-,,CG,/B-.+G
4uly +, +//C 8 O+,BBE,AC-,A+-.B/
4uly +, +//B 8 O+,CEB,CA6,E,6.C-
4uly +, +/// 8 O+,C,6,/E/,,/G.E/
4uly +, +//, 8 O+,C+,,AE6,,66.6-
4uly +, +/,A 8 O+,EE6,+GA,6AG.B-
4uly +, +/,+ 8 O+,EGE,,,C,E,+.C+
4uly +, +/,6 8 O+,E//,GCG,+GG.C-
4uly +, +/,- 8 O+,EGE,,/E,C/C.+-
4uly +, +/,G 8 O+,C-6,6E-,C-C.C/
4uly +, +/,E 8 O+,CBC,+6A,,/-.6E
4uly +, +/,C 8 O+,BC,,/GA,-6-.GA
4uly +, +/,B 8 O+,/+B,CB6,CCE.,A
4uly +, +/,/ 8 O+,B,C,E-+,,,E.,A
4uly +, +/,, 8 O+,,,+,,6B,-AC.,6
4uly +, +,AA 8 O6,+-C,,C+,A,+.CB
4uly +, +,A+ 8 O6,+G-,-6C,,--./,
4uly +, +,A6 8 O6,+E/,C+A,GGE./,
4uly +, +,A- 8 O6,6A6,GCG,B/+./,
4uly +, +,AG 8 O6,6CG,AA-,E/E.+G
4uly +, +,AE 8 O6,6BG,C+E,AC-./G
4uly +, +,AC 8 O6,--B,+C+,/-,.AG
4uly +, +,AB 8 O6,GEB,+//,AC+.EG
4uly +, +,A/ 8 O6,C6C,/AC,6B+.EG
4uly +, +,A, 8 O6,C-,,EGC,6G+.AG
4uly +, +,+A 8 O6,CE6,CCE,/-/.AG
4uly +, +,++ 8 O6,BCE,CAA,CAC.C,
4uly +, +,+6 8 O6,/C/,-B-,/BG.+C
4uly +, +,+- 8 O6,,+C,6AG,,+-.CC
4uly +, +,+G 8 O6,,+6,G,,,6C,.+C
4uly +, +,+E 8 O-,AE/,+-C,/B-.+C
4uly +, +,+C 8 O-,CA,,6GG,6C6.+C
4uly +, +,+B 8 OE,B+B,BBA,6B,.E6
4uly +, +,+/ 8 O+G,E,6,+C+,G+G.AA
4uly +, +,+, 8 O6B,-,A,,BA,++-.+6
4uly +, +,6A 8 O6E,,E6,GEC,GAC.+C
4une -A, +,6+ 8 O6-,,BB,GEA,EE6.EG
4une -A, +,66 8 O66,,C-,-/+,BA/.-+
4une -A, +,6- 8 O66,-G,,BAB,-CE.-C
4une -A, +,6G 8 O6+,6EA,/+6,,/,.G,
4une -A, +,6E 8 O6A,E+C,+,-,//B.,A
4une -A, +,6C 8 O+,,CG-,6+C,-+E.+,
4une -A, +,6B 8 O+/,E++,,AC,,-+./E
4une -A, +,6/ 8 O+B,CAG,6,-,6A+.G-
4une 6,, +,6, 8 O+C,,-+,A//,G/G.+A
4une -A, +,-A 8 O+C,+/E,-A,,/-+.G-
4une -A, +,-+ 8 O+C,/A+,6/+,G,+.B+
4une -A, +,-6 8 O+,,G/B,AA6,GGG.+-
4une -A, +,-- 8 O66,E-/,CB6,ECA.+E
4une -A, +,-G 8 O6B,AE-,+G+,G+G.G/
4une 6,, +,-E 8 O6/,BAA,/,6,C6G.E-
4une -A, +,-C 8 O--,BB/,EG-,G,-.B-
4une -A, +,-B 8 O-C,G6G,C+-,B-6.6,
4une -A, +,-/ 8 O-B,+CG,BGA,-+E.GE
4une -A, +,-, 8 OGA,G-,,E-6,G++.++
4une 6,, +,GA 8 OG6,,CB,E-+,A-B.C/
4une -A, +,G+ 8 OG/,,C+,GG-,E-E.B+
4une -A, +,G6 8 OB6,G66,GGE,++C.66
4une -A, +,G- 8 O+-C,C,C,A,A,-6,.,A
4une -A, +,GG 8 O6A+,AA-,-/B,66+.+-
4une -A, +,GE 8 O6E/,C/6,+/B,GA,.,-
4une 6/, +,GC 8 O6C,,G66,A,,,+B-.6C
4une -A, +,GB 8 O6E/,6/C,-/-,+A/.CB
4une -A, +,G/ 8 O6E6,6,6,6GC,E+6.,,
4une -A, +,G, 8 O6E6,BBA,-E,,/CA.--
4une -A, +,EA 8 O6EB,-EB,-E6,-E+.AG
4une 6,, +,E+ 8 O6EE,66+,,BC,/+G.,-
4une -A, +,E6 8 O6E,,+AE,+B/,B/E.G-
4une -A, +,E- 8 O6CC,AB+,AC+,C-/.EB
4une -A, +,EG 8 O6B+,6E,,E,,,+A/.GC
4une -A, +,EE 8 O6BG,-BG,666,/A6.C6
4une -A, +,EC 8 O6B6,BEA,/+-,CG,.-6
4une -A, +,EB 8 O6BA,E6B,+B+,/,C.G-
4une -A, +,E/ 8 O6BC,-G-,6+B,BGE./+
4une -A, +,E, 8 O6/G,BAE,,AB,AB/.66
4une -A, +,CA 8 O6/C,--A,BCA,/G/.-B
4une -A, +,C+ 8 O6//,,BA,,-/,C+A.AE
4une -A, +,C6 8 O6,/,6AA,/66,B6A./B
4une -A, +,C- 8 O-AE,/E,,C-6,,,C.G+
4une -A, +,CG 8 O-++,B+6,/,,,6EB.-A
4une -A, +,CE 8 O-+B,6B-,/,/,,/-.CG
4une -A, +,CC 8 O-+,,,AB,A/B,B,E.G/
4une -A, +,CB 8 O-6C,66A,,-B,B,G.EG
4une -A, +,C/ 8 O-GB,EB/,GAC,G6E.//
4une -A, +,C, 8 O-E-,B6A,6E-,/G+.G+
4une -A, +,BA 8 O-BA,,+/,BAC,,G,.,-
4une -A, +,B+ 8 O-,/,+6,,BGG,GEE.EG
4une -A, +,B6 8 OG6B,6CA,GCA,,GA.EA
4une -A, +,B- 8 OGE/,+G+,CAE,-+6.A,
4une -A, +,BG 8 OGBE,AE,,/+E,B-+.EE
4une -A, +,BE 8 OE--,+/,,AAA,AAA.AAV
4une -A, +,BC 8 OC6A,G--,AAA,AAA.AAV
(eptember -A, +,BB 8 OC,/,/GA,AAA,AAA.AAV
(eptember -A, +,B/ 8 OBB+,EGG,AAA,AAA.AAV
(eptember -A, +,B, 8 O/6C,E+,,AAA,AAA.AAV
(eptember -A, +,/A 8 O,AB,BA+,AAA,AAA.AAV
(eptember -A, +,/+ 8O,,B,/EE,AAA,AAA.AAV
(eptember -A, +,/6 8 O+,+G6,A-G,AAA,AAA.AAV
(eptember -A, +,/- 8 O+,-BB,6+A,AAA,AAA.AAV
(eptember -A, +,/G 8 O+,EB6,6CC,AAA,AAA.AAV
(eptember -A, +,/E 8 O+,/6-,+A-,AAA,AAA.AAV
(eptember -A, +,/C 8 O6,+6E,-A6,C+C,CE/.G6
(eptember -A, +,/B 8O6,-EA,6BC,/,A,,E-.AA
(eptember -A, +,// 8 O6,CA6,--B,B+6,AG+.+C
(eptember 6,, +,/, 8 O6,/EB,G-A,,CA,+/B.-6
(eptember 6/, +,,A 8 O-,6--,-+-,GE+,BBB.6E
(eptember -A, +,,+ 8 O-,CCE,-A-,-E+,C,B.A-
(eptember -A, +,,6 8 OG,ACG,C6A,CEE,E6+.CC
(eptember -A, +,,- 8 OG,G++,G//,//-,+-,.-/
(eptember -A, +,,G 8 OG,C,6,BG,,,+A,A+-.-6
(eptember 6,, +,,E 8 OG,,B-,,/6,,AA,BA,.-,
(eptember -A, +,,C 8 OE,66G,/+A,,-,,+-E.B-
(eptember -A, +,,B 8 OE,G+-,+GC,A++,-,B.-G
(eptember -A, +,,/ 8 OE,E6C,+,-,AA/,/,B.C6
(eptember -A, +,,, 8 OE,CEC,6BA,,A+,C+E.G-
(eptember -A, 6AAA 8 OE,CBG,+B/,6A,,//C./C
(eptember -A, 6AA+ 8 OE,/AB,GC-,G+6,6AA.AC
(eptember -A, 6AA6 8 OC,66/,6-E,,CE,E,B.+C
(eptember -A, 6AA- 8 OC,B/-,6-+,AC6,BG-.C6
(eptember -A, 6AAG 8 OB,-B,,AE6,C,C,--A.-6
(eptember -A, 6AAE 8 OB,,-6,BA,,CC+,B6-.EA
(eptember -A, 6AAC 8 O/,EAC,,B-,/,,,6+E.6-
(eptember -A, 6AAB 8 O,,AAB,CE-,-B6,6C6.G/
(eptember -A, 6AA/ 8 O+A,A6G,B6G,/,C,,+6.G,
(eptember -A, 6AA, 8 O++,,A,,/6,,AA-,E++.BE
(eptember -A, 6A+A 8 O+-,EC+,C6-,A-A,/,+.B,
(eptember -A, 6A++ 8 O+G,B,A,-GA,-6/,EEB.+E
(eptember -A, 6A+6 8 O+C,ACC,6G+,GAB,-/E./,
5nternational Bankers @ reat De0ressionB
)rgani1ed CrimeQ
President .ranklin D. /oose"elt shakes hands (ith #Lalmar !chacht, the President of the /eichsbank. 6he /eichsbank (as the
central bank of ermany $nder the Weimar /e0$blic and the 6hird /eich. #Lalmar !chacht (as tried in 2$remberg as a 2a1i
(ar criminal shortly after World War 55.
)(en D. 3o$ng (atches Emile Morea$ (left),o"ernor of the Bank of .rance, shake hands (ith #Lalmar !chacht (right), President of
the /eichsbank (ermany>s central bank), in %-*- after they acce0ted the terms of the 3o$ng Plan. #Lalmar !chacht (as tried in
2$remberg, ermany for (ar crimes and collaboration (ith the 2a1is after World War 55. )(en D. 3o$ng (as the Chairman of the
board of eneral Electric Com0any (%-**;%-&-, %-A*;%-AA), +eputy Chairman of the 'ederal )eserve !ank of ,ew -ork ./012#
/0324, Chairman of the 'ederal )eserve !ank of ,ew -ork ./035#/0674, Director of the Co$ncil on .oreign /elations (%-*+;%-A,),
and 6r$stee of the /ockefeller .o$ndation (%-*:;%-&-). (PhotoB -)en .! *oung: & (e) "ype of /ndustrial +eader by 5da M. 6arbell)
7merican b$sinessman )(en D. 3o$ng (center), the chairman of the .ederal /eser"e Bank of 2e( 3ork, (atches #Lalmar !chacht
(foregro$nd right, President of the /eichsbank) sign the 3o$ng Plan in the #otel eorge D in Paris, .rance on J$ne +, %-*-.
(PhotoB htt0B44germanhistorydocs.ghi;dc.org4s$bUimglist.cfmQstartro(V%%@s$bUidV&<+@sectionUidV%*)
)(en D. 3o$ng, 7merican re0aration e'0ert and De0$ty Chairman of the .ederal /eser"e Bank of 2e( 3ork, shakes hands (ith Dr. #Lalmar
!chacht, erman delegate to the /e0arations Conference and President of the /eichsbank (ermany>s central bank), at a train station in
Paris, .rance on J$ne %+, %-*-, from the (indo( of a train (hich carried him to the !.!. I$itania, (hich carried him to the 8nited !tates.
(PhotoB W Bettmann4C)/B5!)
0embers of the 3merican @eparations ommission, who recently returned to 3merica after negotiating a settlement with the
>uropean nations, were in conference with '.(. (ecretary of (tate Henry I. (timson on 4une 6E, +,6,. In the front row, seated,
left to right7 4ohn )ierpont 0organ 4r. *)artner of 4.). 0organ N o. bank.! '.(. (ecretary of (tate Henry I. (timson! and
1wen D. #oung *chairman of the <ederal @eserve =ank of ;ew #ork., chairman. In the back row, left to right7 Thomas W.
Iamont *)artner of 4.). 0organ N o. bank.! Thomas ;elson )erkins! 'nder (ecretary of (tate 4oseph ). otton! and 3ssistant
(ecretary of (tate William @. astle. (timson, #oung, Iamont, )erkins, and otton were members of the ouncil on <oreign
@elations. *)hoto7 Harris N >wing ollection! Iibrary of ongress.
&t is to be regretted that the rich and po%erful too often bend the acts of go!ernment to their selfish purposes.
Distinctions in society will always e?ist under every Fust government. >quality of talents, of education, or of wealth can not be
produced by human institutions. In the full enFoyment of the gifts of Heaven and the fruits of superior industry, economy, and
virtue, every man is equally entitled to protection by law! but %hen the la%s undertake to add to these natural and 5ust
ad!antages artificial distinctions to grant titles gratuities and exclusi!e pri!ileges to make the rich richer and the
potent more po%erful the humble members of societyEthe farmers mechanics and laborersE%ho ha!e neither the
time nor the means of securing like fa!ors to themsel!es ha!e a right to complain of the in5ustice of their >o!ernment.
There are no necessary e!ils in go!ernment. &ts e!ils exist only in its abuses. If it would confine itself to equal protection,
and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified
blessing.%
& 3ndrew 4ackson, )resident of the 'nited (tates, in his :eto 0essage regarding the (econd =ank of the '.(. on 4uly +A, +/-6
7 gro$0 of erman (orkers sal$te 2a1i ermany>s dictator 7dolf #itler (center) and /eichsbank 0resident #Lalmar !chacht (right) d$ring a
0arade in ermany in %-&<. (PhotoB 6ime Life)
#Lalmar !chacht (left), President of the /eichsbank, shakes hands (ith Montag$ 2orman (right), the o"ernor of the Bank of England, at
Li"er0ool !treet !tation in London in December %-&:. #Lalmar !chacht (as a 2a1i (ar criminal.
The scene on Wall (treet when the ;ew #ork (tock >?change crashed in 1ctober +,6,. )revious economic crises and
depressions in 3merica occurred in +/+,, +/-B, +/EB, +/B-, +//G, +/,-, and +,AB. *=ettmannU1@=I(.
I,$8),*$I9,*:; +<*bernon 9n =old
Monday, Jan$ary <, %-&%
6ime Maga1ine
old may (ell be I$estion of the 3ear in %-&%. What heads of central banks all o"er the (orld are going to do abo$t gold is L$st
no( their closest secret, the s$bLect of earnest, secret conferences (65ME, Dec. % @ Dec. %<).
Last (eek EnglandNs noted elder economist Disco$nt dN7bernon of !toke dN7bernon, (ho (as her 7mbassador to ermany
directly after the War, s0oke $0, as more acti"e financiers cannot "ery (ell do. !aid heB >$his depression is the stupidest and
most gratuitous in history?>
!o$rceB 6ime Maga1ine
Panicked stock traders cro(d o$tside the 2e( 3ork !tock E'change in 2e( 3ork City on the day of the market crash on )ctober *A, %-*-.
(Bettmann4C)/B5!)
Cro(d at 2e( 3orkNs 7merican 8nion Bank d$ring a bank r$n early in the reat De0ression. 6he Bank o0ened in %-%+ and (ent o$t of
b$siness on J$ne &,, %-&%. Congress 0assed the Banking 7ct of %-&&, also kno(n as the lass;!teagall 7ct, (hich called for the se0aration
of commercial and in"estment bankingC re?$ired the $se of go"ernment sec$rities as collateral for .ederal /eser"e notesC and established the
.ederal De0osit 5ns$rance Cor0oration (.D5C). Congress re0ealed the lass;!teagall 7ct in %---. (PhotoB !ocial !ec$rity 7dministration)
)ctober *A %-*-B 6he front 0age of the Brooklyn Daily Eagle, 0$blished on the day of the initial Wall !treet Crash, kno(n as Black 6h$rsday.
(#$lton4etty 5mages)
7 s0ec$lator tries to sell his car after losing all his money in the market. (Bettmann4Corbis)
2o"ember %= %-&,, Chicago, 8nited !tates of 7mericaB 2otorio$s gangster 7l Ca0one attem0ts to hel0 $nem0loyed men (ith his so$0
kitchen, Big 7lNs Fitchen for the 2eedy. (Bettmann4C)/B5!)
8nem0loyed 7merican men eating in a so$0 kitchen circa %-&,. (Bettmann4C)/B5!)
#Lalmar !chacht (left), President of 6he /eichsbank, confers (ith Montag$ 2orman, o"ernor of the Bank of England, d$ring the erman
financierNs "isit to London in .ebr$ary %-&: to e'0o$nd his !cheme for the e"ac$ation of the Je(ish 0o0$lation of ermany $nder a Rgoods
"o$cherR system. /ef$gees recei"ed by other nations (o$ld recei"e "o$chers from the erman go"ernment re0resenting the "al$e of 0art of
their erman 0ossessions. 6he "al$e of these "o$chers (o$ld be taken o$t in erman trade. 6he 0ro0osal (as t$rned do(n. Many
commentators called it a Rransom !cheme.R (Bettmann4C)/B5!)

entral bankers meet in downtown 0anhattan, from left to right7 HFalmar (chacht *)resident of the @eichsbank., =enFamin
(trong *)resident of the <ederal @eserve =ank of ;ew #ork., 0ontagu ;orman *5overnor of the =ank of >ngland., and 0r.
@ist appear on the rooftop of the <ederal @eserve =ank of ;ew #ork headquarters in ;ew #ork ity in 4uly +,6B.
<or many years people believed & even today many continue to do so & that an economic cataclysm of the magnitude of the
5reat Depression could only have been the result of mysterious and ine?orable tectonic forces that governments were somehow
powerless to resist. ontemporaries frequently described the Depression as an economic earthquake, bliMMard, maelstrom,
deluge. 3ll these metaphors suggested a world confronting a natural disaster for which no single individual or group could be
blamed. To the contraryKthe 5reat Depression was not some act of 5od or the result of some deep8rooted contradictions of
capitalism but the direct result of a series of misFudgments by economic policy makers, some made back in the +,6As, others
after the first crises set in & by any measure the most dramatic sequence of collective blunders ever made by financial officials.
Who then was to blame2 The first culprits were the politicians who presided over the )aris )eace onference. They burdened a
world economy still trying to recover from the effects of war with a gigantic overhang of international debts. 5ermany began
the +,6As owing some O+6 billion in reparations to <rance and =ritain! <rance owed the 'nited (tates and =ritain OB billion in
war debts, while =ritain in turn owed OG billion to the 'nited (tatesKDealing with these massive claims consumed the energies
of financial statesmen for much of the decade and poisoned international relations. 0ore important, the debts left massive fault
lines in the world financial system, which cracked at the first pressure. The second group to blame were the leading central
bankers of the eraK0ontagu ;orman, =enFamin (trong, HFalmar (chacht, and >mile 0oreau. >ven though they, especially
(chacht and ;orman, spent much of the decade struggling to mitigate some of the worst political blunders behind reparations
and war debts, more than anyone else they were responsible for the second fundamental error of economic policy in the +,6As7
the decision to take the world back onto the gold standard. 5old supplies had not kept up with prices! and the distribution of
gold bullion after the war was badly skewed, with much of it concentrated in the 'nited (tates. The result was a dysfunctional
gold standard that was unable to operate as smoothly and automatically as before the war. The problem of inadequate gold
reserves was compounded when >urope went back to gold at e?change rates that were grossly misaligned, resulting in constant
pressure on the =ank of >ngland, the linchpin of the worlds" financial system, and a destructive and petty feud between =ritain
and <rance that undermined international cooperation. The quartette of central bankers did in fact succeed in keeping the world
economy going but they were only able to do so by holding '.(. interest rates down and by keeping 5ermany afloat on
borrowed money. It was a system that was bound to come to a crashing end. Indeed, it held the seeds of its own destruction.
>ventually the policy of keeping '.(. Interest rates low to shore up the international e?changes precipitated a bubble in the '.(.
stock market. =y +,6B, the <ed was thus torn between two conflicting obFectives7 to keep propping up >urope or to control
speculation on Wall (treet. It tried to do both and achieved neither. Its attempts to curb speculation were too halfhearted to
bring stocks back to earth but powerful enough to cause a collapse in lending to 5ermany, driving most of central >urope into
depression and setting in train deflationary forces throughout the rest of the world. >ventually in the last week of 1ctober +,6,,
the bubble burst, plunging the 'nited (tates into its own recession. The '.(. stock market bubble thus had a double effect. 1n
the way up, it created a squeeMe in international credit that drove 5ermany and other parts of the world into recession. 3nd on
the way down, it shook the '.(. economy. The stresses and strains of trying to keep the limping gold standard going may have
made some sort of financial shakeout inevitable. It was, however, not necessary for the crisis to metastasiMe into a worldwide
catastrophe. >uropean central bankers had been dealing with financial crises for more than a century. They had long absorbed
the lesson that while most of the time the economy works very well left in the care of the invisible hand , during panics, that
hand seems to lose its grip. 0arkets, particularly financial markets, became unthinkingly fearful. To reestablish sanity and
restore some sort of equilibrium in these circumstances required a very visible head to guide the indivisible hand. In a word, it
required leadership. 3fter +,6,, responsibility for world monetary affairs ended up in the hands of a group of men who
understood none of this, whose ideas about the economy were at best outmoded and at worst plain wrong. (trong died in +,6/.
His successor, 5eorge Harrison, tried his best to fill his shoes but did not have the personality or the stature to assume control.
Instead, authority at the <ed shifted to a group of ine?perienced and ill8informed timeservers, who believed that the economy
would automatically return to an even keel, that there was nothing to be done to counteract deflationary forces e?cept wait them
out. They failed to fulfill even the most basic central banker"s responsibility7 to act as lender of last resort and support the
banking system at a time of panic. ;orman and (chacht both understood that a financial system in freefall requires active
central bank intervention. =ut their two central banks, the =ank of >ngland and the @eichsbank, were both chronically short of
gold and had no room for maneuver. 3s a consequence, for all of ;orman"s enormous prestige and (chacht"s creativity, they
were both hamstrung by the dictates of the gold standard sand were forced to remain locked in with the 'nited (tates, deflating
as it did. The only central banker outside the <ed with enough gold to act independently was 0oreau at the =anque de <rance.
=ut having stumbled inadvertently into a position of financial dominance, he seemed more intent on using <rance"s newfound
strength for political rather than economic ends. 3nd so what began as modest and corrective recessions in the 'nited (tates
and 5ermany were transformed by sheer folly and shortsightedness into a worldwide catastrophe.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. EA+8EA-
=y the end of +,-A, the =anque de <rance had begun to understand that this accumulation of gold was harming the rest of the
world by starving it of reserves. It was especially damaging because of the idiosyncrasies of the <rench banking system. In
most countries, banks worked to make every dollar of gold support a multiple of that amount in currency and credit. The <rench
banking system, however, was unusually inefficient in putting its bullion to use. 3s a result, the newly arrived OEAA million of
gold was translated into less than O6EA million in circulating currency. <rench officials claimed that there was little they could
do about this buildup, that the high demand for gold in <rance was a consequence of the rural character of the country or the
innate thriftiness and risk aversion of its citiMenry. In fact, it was clear that during +,-A, the =anque under >mile 0oreau had
been very consciously and deliberately offsetting & the technical term was steriliMing & the natural tendency of an influ? of gold
to e?pand the currency, lest it lead to inflation. With prices around the world collapsing, this may sound strange, but it was a
symptom of how badly scarred he and other <rench officials had been by the currency crises of +,6G and +,6C. @nkno%n to
most people much of the gold that had supposedly flo%n into 6rance %as actually sitting in Fondon. Bullion %as so
hea!y C a se!enteen2inch cube %eighs about a ton C that instead of shipping crates of it across hundreds of miles from one
country to another and paying high insurance costs central banks had taken to =earmarking? the metal that is keeping
it in the same !ault but simply re2registering its o%nership. Thus the decline in Britain(s gold reser!es and their
accumulation in 6rance and the @nited States %as accomplished by a group of men descending into the !aults of the
Bank of *ngland loading some bars of bullion onto a lo% %ooden truck %ith small rubber tires trundling them thirty
feet across the room to the other %all and offloading them though not before attaching some %hite name tags indicating
that the gold no% belong to the Ban"ue de 6rance or the 6ederal :eser!e Bank. That the %orld %as being sub5ect to a
progressi!ely tightening s"ueeze on credit 5ust because there happened to be too much gold on one side of the !ault and
not enough on the other pro!oked Ford d(#bernon Britain(s ambassador to >ermany after the %ar and no% an elder
statesmen2economist to exclaim =This depression is the stupidest and most gratuitous in history.? 3s the <rench hoard
kept piling up during the summer and fall of +,-A & and with it tensions between =ritain and <rance & the <rench went through
the motions of proposing remedies. The return of <rench gold policy to the forefront of economic debate was too much for
;orman.% & &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. -B/8-B,
1ver the previous decade, he P0ontagu ;ormanQ and the heads of the three other maFor central banks had been part of what the
newspapers had dubbed the most e?clusive club in the world.% ;orman, =enFamin (trong of the ;ew #ork <ederal @eserve
=ank, HFalmar (chacht of the @eichsbank, and >mile 0oreau of the =anque de <rance had formed a quartet of central bankers
who had taken on the Fob of reconstructing the global financial machinery after the <irst World War. =ut by the middle of
+,-+, ;orman was the only remaining member of the original foursome. (trong had died in +,6/ at the age of fifty8five,
0oreau had retired in +,-A, and (chacht had resigned in a dispute with his own government in +,-A and was flirting with 3dolf
Hitler and the ;aMi )arty. 3nd so the mantle of leadership of the financial world had fallen on the shoulders of this colorful but
enigmatic >nglishman with his waggish% smile, his theatrical air of mystery, his :an Dyke beard, and his conspiratorial
costume7 broad8brimmed hat, flowing cape, and sparkling emerald tie pin. <or the world"s most important central banker to
have a nervous breakdown as the global economy sank yet deeper into the second year of an unprecedented depression was
truly unfortunate. )roduction in almost every country had collapsed & in the two worst hit, the 'nited (tates and 5ermany, it
had fallen GA percent. <actories throughout the industrial world & from the car plants of Detroit to the steel mills of the @uhr,
from the silk mills of Iyons to the shipyards of Tyneside & were shuttered or working at a fraction of capacity. <aced with
shrinking demand, businesses had cut prices by 6E percent in the two years since the slump had begun. 3rmies of the
unemployed now haunted the towns and cities of the industrial nations. In the 'nited (tates, the world"s largest economy, some
/ million men and women, close to +E percent of the labor force, were out of work. 3nother 6.E million men in =ritain and E
million in 5ermany, the second and third largest economies in the world, had Foined the unemployment lines. 1f the four great
economic powers, only <rance seemed to have been somewhat protected from the ravages of the storm sweeping the world, but
even it was now beginning to slide downward. 5angs of unemployed youths and men with nothing to do loitered aimlessly at
street corners, in parks, in bars and cafes. 3s more and more people were thrown out of work and unable to afford a decent
place to live, grim Ferry8built shantytowns constructed of packing cases, scrap iron., grease drums, tarpaulins, and even of motor
car bodies had sprung up in cities such as ;ew #ork PityQ and hicago & there was even an encampment in entral )ark.
(imilar makeshift colonies littered the fringes of =erlin, Hamburg, and Dresden. In the 'nited (tates, millions of vagrants,
escaping the blight of inner8city poverty, had taken to the road in search of some kind & any kind & of work. 'nemployment led
to violence and revolt. In the 'nited (tates, food riots broke out in 3rkansas, 1klahoma, and across the central and
southwestern states. In =ritain, the miners went out on strike, followed by the cotton mill workers and the weavers. =erlin was
almost in a state of civil war. During the elections of (eptember +,-A, the ;aMis, playing on the fears and frustrations of the
unemployed and blaming everyone else & the 3llies, the ommunists, and the 4ews & for the misery of 5ermany, gained close to
C.E million votes, increasing their seats in the @eichstag from +6 to +AB and making them the second largest parliamentary party
after the (ocial Democrats. 0eanwhile in the streets, ;aMi and ommunist gangs clashed daily. There were coups in )ortugal,
=raMil, 3rgentina, )eru, and (pain.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. 68G
The humiliating spectacle of 3nglo8(a?on bankers dictating to their politicians infuriated <rench public opinion. The )arisian
paper &e )etit Ble* declared that >urope shall not become a vast field of e?ploitation with its only government a vast bankers"
combine.% >dwin 4ames of the New 3ork Times reported that many <renchmen were convinced that 3merica"s only purpose is
to make some more money out of >urope"s misfortunes, and that instead of helping <rance get reparations, the 3mericans are
working on (hylock lines for the preliminary loan.% In the 'nited states, as highly respected a newspaper as the (pringfield
4ep*(lican commented, In the lean years that follow an e?hausting war, financers outrank generalsK;o loan, no Dawes plan.
;o Dawes plan, no settlement. ;o settlement, no peace in >uropeK% =y the beginning of 3ugust P+,6GQ the bankers had won.
The only concession the <rench were able to e?tract was to delay their withdrawal from the @uhr by a year. 5ermany was
invited to send a delegation to finaliMe the arrangements. 1n 3ugust -, the 5erman delegation, led by hancellor PWilhelmQ
0ar? and including 5ustav (tresemann, now foreign minister! <inance 0inister Hans Iuther! (ecretary of (tate (chubert! and
(chacht, arrived at the Iondon @itM. The first plenary session took place on 3ugust E & the first formal meeting between the
respective heads of the 5erman and <rench governments since the <ranco8)russian war of +/BA. <or the ne?t ten days, as the
interminable wrangling began, the conference staggered from one crisis to another, constantly verging on the edge of collapse.
The procedure for declaring a default specified that sanctions could be imposed only in the event of a flagrant% failure on the
part of 5ermany to fulfill its obligations. The 5ermans demanded a definition of flagrant. That bickering consumed a day. The
<rench had agreed to withdraw from the @uhr after a year. The 5ermans wanted to know when the year would begin, and
further demanded that the evacuation be completed within a years. <inally, on 3ugust +G, the definitive terms were submitted to
the 5erman delegation, who were granted the night to accept or reFect them. The 5ermans gathered in one of the rooms at the
@itM for an all8night session. >ach of them spoke his mind. 3s dawn arrived, the chancellor went around the room with a last
poll. 3ll voted for acceptance, e?cept for (chacht, who said, in his harsh <risian accent, We cannot accept the terms & we can
never fulfill them.% He insisted that the Dawes )lan"s failure to reduce the total level of reparations was its fatal flaw. =ut it
was (tresemann who had the final word. We must get the <rench out of the @uhr. We must free the @hineland. We must
accept.% 1n the surface, the Dawes )lan appeared to be the turning point for >urope. The wrangling over reparations, which
had consumed the energy of officials for the last five years, seemed to be over. In (eptember, the loan that formed the basis of
the plan was successfully floated in ;ew #ork and Iondon. It started a boom in lending to 5ermany by 3merican banks that
was to fuel a recovery in its economy for the ne?t several years and bring stability to the new currency. P1wen D.Q #oung, the
true architect of the PDawesQ plan, had believed that in the climate of bitterness and recrimination prevailing in +,6G, >urope
would be able to improvise its way toward an eventual solution only by avoiding confronting its problems head8on. The plan
had therefore very deliberately swept a whole series of issues under the carpet. The total bill for reparations remained
unspecified. 3s a result, resentment within 5ermany continued to fester Fust below the surface. 0oreover, the new 5erman
prosperity depended on what 9eynes described as a great circular flow of paper% across the 3tlantic7 The 'nited (tates lend
money to 5ermany, 5ermany transfers its equivalent to the 3llies, the 3llies pay it back to the 'nited (tates government.
;othing real passes & no one is a penny the worse. The engravers" dies, the printers" forms are busier. =ut no one eats less, no
one works more.% ;o one was willing to predict what would happen once the music stopped. ;evertheless, the initial fanfare
associated with the plan did catapult harles Dawes, hitherto a relatively obscure financier, to fame and fortune. In the summer
of +,6G, oolidge selected him to be his running mate! Dawes was elected vice president of the 'nited (tates that autumn. <or
having bought time for >urope and at least created the illusion that the ontinent"s battles over money were finally over, he was
awarded the +,6E ;obel )riMe for peace.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. 6+G86+C
To understand the role of central bankers during the 5reat Depression, it is first necessary to understand what a central bank is
and a little about how it operates. entral banks are mysterious institutions, the full details of their inner workings so arcane that
very few outsiders, even economists, fully understand them. =oiled down to its essentials, a central bank is a bank that has been
granted a monopoly over the issuance of currency. This power gives it the ability to regulate the price of credit W interest rates
W and hence to determine how much money flows through the economy. Despite their role as national institutions determining
credit policy for their entire countries, in +,+G most central banks were still privately owned. They therefore occupied a strange
hybrid Mone, accountable primarily to their directors, who were mainly bankers, paying dividends to their shareholders, but given
e?traordinary powers for entirely nonprofit purposes. 'nlike today, however, when central banks are required by law to promote
price stability and full employment, in +,+G the single most important, indeed overriding, obFective of these institutions was to
preserve the value of the currency. 3t the time, all maFor currencies were on the gold standard, which tied a currency in value to
a very specific quantity of gold. The pound sterling, for e?ample, was defined as equivalent to ++- grains of pure gold, a grain
being a unit of weight notionally equal to that of a typical grain taken from the middle of an ear of wheat. (imilarly, the dollar
was defined as 6-.66 grains of gold of similar fineness. (ince all currencies were fi?ed against gold, a corollary was that they
were all fi?ed against one another. Thus there were ++-U6-.66 or OG./C dollars to the pound. 3ll paper money was legally
obligated to be freely convertible into its gold equivalent, and each of the maFor central banks stood ready to e?change gold
bullion for any amount of their own currencies. 5old had been used as a form of currency for millennia. 3s of +,+-, a little over
O- billion, about a quarter of the currency actually circulating around the world, consisted of gold coins, another +E percent of
silver, and the remaining CA percent of paper money. 5old coinage, however, was only a part, and not the most important part,
of the picture. 0ost of the monetary gold in the world, almost two8thirds, did not circulate but lay buried deep underground,
stacked up in the form of ingots in the vaults of banks. In each country, though every bank held some bullion, the bulk of the
nation$s gold was concentrated in the vaults of the central bank. This hidden treasure provided the reserves for the banking
system, determined the supply of money and credit within the economy, and served as the anchor for the gold standard.
While central banks had been granted the right to issue currency W in effect to print money W in order to ensure that that
privilege was not abused, each one of them was required by law to maintain a certain quantity of bullion as backing for its paper
money. These regulations varied from country to country. <or e?ample, at the =ank of >ngland, the first OBE million equivalent
of pounds that it printed were e?empt, but any currency in e?cess of this amount had to be fully matched by gold. The <ederal
@eserve *the <ed., on the other hand, was required to have GA percent of all the currency it issued on hand in gold W with no
e?emption floor. =ut varied as these regulations were, their ultimate effect was to tie the amount of each currency automatically
and almost mechanically to its central banks$ gold reserves. In order to control the flow of currency into the economy, the
central bank varied interest rates. It was like turning the dials up or down a notch on a giant monetary thermostat. When gold
accumulated in its vaults, it would reduce the cost of credit, encouraging consumers and businesses to borrow and thus pump
more money into the system. =y contrast, when gold was scarce, interest rates were raised, consumers and businesses cut back,
and the amount of currency in circulation contracted.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. ++8+6

Ieft7 Iord D$3bernon, =ritish 3mbassador to 5ermany *+,6A8+,6E.
@ight7 Wilhelm 0ar? *+/C-8+,GC., hancellor of 5ermany *+,6-8+,6E, +,6C8+,6/. who agreed to the Dawes )lan in 3ugust +,6G
=ecause the value of a currency was tied, by law, to a specific quantity of gold and because the amount of currency that could
be issued was tied to the quantity of gold reserves, governments had to live within their means, and when strapped for cash,
could not manipulate the value of the currency. Inflation therefore remained low. 4oining the gold standard became a badge of
honor,% a signal that each subscribing government had pledged itself to a stable currency and orthodo? financial policies. =y
+,+G, fifty8nine countries had bound their currencies to gold. <ew people realiMed how fragile a system this was, built as it was
on so narrow a base. The totality of gold ever mined in the whole world since the dawn of time was barely enough to fill a
modest two8story town house. 0oreover, new supplies were neither stable nor predictable, coming as they did in fits and starts
and only by sheer coincidence arriving in sufficient quantities to meet the needs of the world economy. 3s a result, during
periods when new gold finds were lean, such as between the alifornia and 3ustralian gold rushes of the +/EAs and the
discoveries in (outh 3frica in the +/,As, prices of commodities fell across the world. The gold standard was not without its
critics. 0any were simply cranks. 1thers, however, believed that allowing the growth of credit to be restricted by the amount of
gold, especially during periods of falling prices, hurt producers and debtors W especially farmers, who were both. The most
famous spokesman for looser money and easier credit was Williams 4ennings =ryan, the populist congressman from the farm
state of ;ebraska. He campaigned tirelessly to break the privileged status of gold and to e?pand the base upon which credit was
created by including silver as a reserve metal. 3t the Democratic convention of +/,C he made one of the great speeches of
3merican history W a wonderfully overripe flight of rhetoric delivered in that deep commanding voice of his W in which,
addressing >astern bankers, he declared, #ou came to tell us that the great cities are in favor of the gold standard! we reply that
the great cities rest upon our broad and fertile plains. =urn down your cities and leave our farms, and your cities will spring up
again as if by magic. =ut destroy our farms and the grass will grow in the city. . . . #ou shall not press down upon the brow of
labor this crown of thorns. #ou shall not crucify mankind upon a cross of gold.% It was a message whose time had come and
gone. Ten years before he delivered that speech, two gold prospectors in (outh 3frica, while out for a (unday walk on a farm in
the Witwatersrand, stumbled across a rocky formation that they recogniMed as gold8bearing reef. It proved to be an outcrop of
the largest goldfield in the world. =y the time of =ryan$s speech, gold production had Fumped EA percent, (outh 3frica had
overtaken the 'nited (tates as the world$s largest producer, and the gold drought was over. )rices for all goods, including
agricultural commodities, once again began to rise. =ryan won the Democratic nomination then and twice more, in +,AA and
+,A/, but he was never elected president. Though prices rose and fell in great cycles under the gold standard due to ebbs and
flows in the supply of the precious metal, the slope of these curves was gentle and at the end of the day prices returned to where
they began. While it may have succeeded in controlling inflation, the gold standard was incapable of preventing the sort of
financial booms and busts that were, and continue to be, such a feature of the economic landscape. These bubbles and crises
seem to be deep8rooted in human nature and inherent to the capitalist system. =y one count there have been si?ty different crises
since the early seventeenth century W the first documented bank panic can, however, be dated to 3.D. -- when the >mperor
Tiberius had to inFect one million gold pieces of public money into the @oman financial system to keep it from collapsing. >ach
of these episodes differed in detail. (ome originated in the stock market, some in the credit market, some in the foreign e?change
market, occasionally even in the world of commodities. (ometimes they affected a single country, sometimes a group of
countries, very occasionally the whole world. 3ll, however, shared a common pattern7 an eerily similar cycle from greed to fear.
<inancial crises would generally begin innocently enough with a surge of healthy optimism among investors. 1ver time,
reinforced by cavalier attitudes to risk among bankers, this optimism would transform itself into overconfidence, occasionally
even into a mania. The accompanying boom would go on for much longer than anyone e?pected. Then would come a sudden
shock W a bankruptcy, a surprisingly large loss, a financial scandal involving fraud. Whatever the event, it would provoke a
sudden and dramatic shift in sentiment. )anic would ensue. 3s investors were forced to liquidate into a falling market, losses
would mount, banks would cut back their loans, and frightened depositors would start pulling their money out of banks. If all
that happened during these periods of so8called distress was that foolish investors and lenders lost money, no one else would
have cared. =ut a problem in one bank raised fears of problems at other banks. 3nd because financial institutions were so
interconnected, borrowing large amounts of money from one another even in the nineteenth century, difficulties in one area
would transmit themselves through the entire system. It was precisely because crises had a way of spreading, threatening to
undermine the integrity of the whole system, that central banks became involved. In addition to keeping their hands on the levers
of the gold standard, they therefore acquired a second role W that of forestalling bank panics and other financial crises.
The central banks had powerful tools to deal with these outbursts W specifically their authority to print currency and their ability
to marshal their large concentrated holdings of gold. =ut for all of this armory of instruments, ultimately the goal of a central
bank in a financial crisis was both very elusive W to reestablish trust in banks.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. +-8+E
In +,-+, HFalmar (chacht had been interviewed by the 3merican Fournalist Dorothy Thompson. If Hitler comes to power, the
;aMis can"t run the country financially, economically. Who will run it2% she asked. I will,% replied (chacht. The ;aMis
cannot rule, but I can and will rule through them.% It had become clear to him even then that it was only a matter of time before
Hitler would become chancellor. (chacht would later claim that he never allowed himself to fall under Hitler"s spell and that
because Hitler needed him, he was able to maintain a certain degree of independence. This is not apparent in a creepy letter he
wrote to Hitler after the 3ugust elections, congratulating him on his victory and regretting that he was not already chancellor7
#our movement is carried internally by so strong a truth and necessity that victory in one form or another cannot elude you for
long. During the time of the rise of your movement you did not let yourself be led astray by false godsKIf you remain the man
that you are the success cannot elude you for long.% =ut the main purpose of the letter was to urge Hitler to avoid becoming
entangled in economic ideology & for (chacht realiMed that if he wanted to run ;aMi economic policy, he would have to
counteract some of the anticapitalist sloganeering of the party"s left. 3t this stage he believed that its virulently anti8(emitic
ragings were restricted to a lunatic fringe. He ended by saluting Hitler with a vigorous Heil.% 1ver the ne?t few months, as the
;aMis maneuvered to undermine successive governments in the @eichstag, (chacht became a prominent supporter of the
movement and a maFor fund8raiser for the party. In ;ovember, he was one off twenty8tour industrialists, including the steel
magnate <ritM Thyssen and the arms manufacturer 5ustav 9rupp, who signed a public letter urging :on Hindenburg to appoint
Hitler chancellor. In an interview carried in newspapers around the world, (chacht declared that Hitler was the only man fit for
the hancellorship.% <inally, in 4anuary +,--, the president bowed to necessity and appointed the =ohemian corporal% as
chancellor. Two months later, on 0arch +C, +,--, (chacht was back at the @eichsbank, after a three8year hiatus. Hitler, who
showed little interest in economics, had two overriding obFectives & to combat unemployment and to find the money to rearm.
The details of how to achieve these goals he left to (chacht, who in those early years was given almost complete control over
economic policy & in addition to being president of the @eichsbank, he became minister of the economy in 3ugust +,-G. Hitler
would later confess that he thought (chacht a man of quite astonishing abilityKunsurpassed in the art of getting the better of
the other party. =ut it was Fust his consummate skill in swindling other people which made him indispensable at the time.%
Displaying the inventive genius that distinguished him as the most creative central banker of his era, immediately upon taking
office, (chacht threw the whole baggage of orthodo? economics overboard. He embarked on a massive program of public
works financed by borrowing from the central bank and printing money. It was a remarkable e?periment in what would come to
be known as 9eynesian economics even before 0aynard 9eynes had fully elaborated his ideas. 1ver the ne?t few years, as the
5erman economy e?perienced an enormous inFection of purchasing power, it underwent a remarkable rebound. 'nemployment
fell from C million at the end of +,-6 to +.E million four years later. Industrial production doubled over the same period.
(chacht also renegotiated the terms of 5ermany"s massive foreign debts, ruthlessly playing off its creditors against one other,
particularly the =ritish and the 3mericans.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. G/A8G/+
1ne day into office, the very first action that @oosevelt took was to close every bank in the country. Invoking an obscure
provision of the +,+B Trading with the >nemy 3ct, designed to prevent gold shipments to hostile powers, he imposed a bank
holiday until Thursday, 0arch ,. (imultaneously, he suspended the e?port or private hoarding of all gold in the 'nited (tates.
To the surprise of many, 3mericans adapted to life without banks remarkably well & the initial reaction was not chaos but
cooperation. (torekeepers liberally e?tended credit, while doctors, lawyers, and pharmacists continued to provide services in
return for personal I1's. Harvard 'niversity allowed its students to obtain meals on creditK>ven ta?i dancers at 0anhattan"s
@oseland dance hall on =roadway agreed to take I1's for the ++ cents that they charged per dance & provided their customers
could produce bankbooks showing evidence of funds. 0ore than a hundred cities and towns, including 3tlanta, @ichmond,
9no?ville, ;ashville, and )hiladelphia, issued their own scrip. The Dow hemical ompany coined magnesium into alternative
coins. That prominent undergraduate newspaper, the Daily )rincetonian rose to the occasion by assuming the role of central
bank of )rinceton and issuing OEAA of its own currency, in denominations of 6E cents, which local merchants agreed to accept &
a reflection of how adaptable and elastic the notion of money can be. 1ther places resorted to barter. In Detroit, the olonial
Department (tore agreed to accept farm produce in e?change for goods & a dress went for three barrels of (aginaw =ay herring,
three pairs of shoes for a EAA8pound sow, and other merchandise went for fifty crates of eggs or +/A pounds of honey. In
0anhattan, the promoters of the 5olden 5lobe amateur bo?ing tournament announced that fans would be admitted in return for
anything assessed to be worth EA cents & that night the bo? office took in hats, shoes, cigars, combs, soap, chisels, kettles, sacks
of potatoes, and foot balm. There were, of course, some disruptions. In Detroit, now in its fourth week without banks,
merchants stopped e?tending credit, food disappeared from the shelves, and the ity of Detroit defaulted on its bondsKTourists
and traveling salesmen around the country found themselves stranded. In <lorida, the 3merican >?press office agreed to cash
checks up to a limit of OEA and was besieged by five thousand tourists. The first official task for the new secretary of state,
ordell Hull, was to placate the diplomatic corps in Washington, who argued that their money was entitled to immunity from
sequestration and should be immediately releasedKThe biggest problem was not cash but change. ;ickels for use on the
subway and on trolley and bus lines were so scarce that an officer of the Irving Trust ompany declared that a nickel famine%
was in effectK1n (unday, 0arch E, the day after the inauguration, William Woodin, the new secretary of the treasury, began
organiMing a team of e?perts to put together a bank rescue package.%
& &ords of Finance" The Bankers ho Broke the orld by Iiaquat 3hamed, p. GE+8GE-
5nternational Bankers @ o"ernment )fficials
#Lalmar !chacht, the President of the /eichsbank (ermany>s central bank), "isits President .ranklin D. /oose"elt at the White #o$se in
Washington, D.C., 8.!.7. on May =, %-&&. Photo sho(s, left to rightB Colonel James 7. 8li$, Military 7ide to the White #o$seC #ans L$ther,
7mbassador from ermanyC #Lalmar !chachtC President /oose"eltC and Ca0tain Walter Dernon, White #o$se 2a"al 7ide.
(Bettmann4C)/B5!)

Left 0hotoB #Lalmar !chacht, the President of the /eichsbank, a00ears (ith 2a1i ermany>s dictator 7dolf #itler.
/ight 0hotoB 5srael>s .inance Minister BenLamin 2etanyah$ (right) (atches 5srael>s Prime Minister 7riel !haron (left) greet !tanley .ischer, the
ne( o"ernor of the Bank of 5srael.
Bro(n Brothers #arriman 0artner 7"erell #arriman chats (ith 5srael>s Prime Minister olda Meir at the !horeham #otel in Washington, D.C.
on !e0tember *+, %-=-. Both #arriman and Meir ser"ed as an ambassador to the !o"iet 8nion. 7"erell #arriman>s brother /oland #arriman,
along (ith Prescott !. B$sh, (as a director of 8nion Banking Cor0oration, a bank in 2e( 3ork City that stored 2a1i erman financier .rit1
6hyssen>s asset of 9&,,,,,,,, in %-A%. (PhotoB olda Meir Photo Collection at the 8ni"ersity of Wisconsin at Mil(a$kee Libraries)

Wall !treet financier Bernard Bar$ch meets (ith President .ranklin Delano /oose"elt in %-&& (left) and President D(ight Eisenho(er (right).
G6his b$siness of lending blood money is one of the most thoro$ghly sordid, cold blooded, and criminal that (as e"er
carried on, to any considerable e'tent, amongst h$man beings. 5t is like lending money to sla"e traders, or to
common robbers and 0irates, to be re0aid o$t of their 0l$nder. 7nd the man (ho loans money to go"ernments, so
called, for the 0$r0ose of enabling the latter to rob, ensla"e and m$rder their 0eo0le, are among the greatest "illains
that the (orld has e"er seen.H P Lysander !0ooner (%:,:;%::+), from his book (o "reason (%:+,)
President erald .ord meets (ith international bankers at the White #o$se in %-+< to disc$ss the Gfiscal crisisH of 2e( 3ork City. .rom left to
rightB L. William !eidman, J.P. Morgan @ Co. chairman Ellmore C. Patterson, Citicor0 chairman Walter Wriston, 8.!. !ecretary of the 6reas$ry
William !imon, President erald .ord, Chase Manhattan Bank chairman Da"id /ockefeller, and .ederal /eser"e chairman 7rth$r B$rns.
E"eryone in this 0hoto e'ce0t for L. William !eidman is or (as a member of the Co$ncil on .oreign /elations.
President Jimmy Carter greets Da"id /ockefeller (left), chairman of the board of Chase Manhattan Bank, in 70ril %-:,.
(White #o$se 0hotoC !o$rceB ,emoirs by Da"id /ockefeller)
Da"id /ockefeller (right), chairman of the board of Chase Manhattan Bank, a00ears (ith Fing #$ssein of Jordan on his Chase
Manhattan Let. (PhotoB ,emoirs by Da"id /ockefeller)
Da"id /ockefeller (right), chairman of the board of Chase Manhattan Bank, chats (ith Prime Minister of 5srael olda Meir at a
ban?$et. (PhotoB ,emoirs by Da"id /ockefeller)
Da"id /ockefeller (right), chairman of the board of Chase Manhattan Bank, shakes hands (ith President of Egy0t 7n(ar !adat in
Cairo in Jan$ary %-+A. (PhotoB ,emoirs by Da"id /ockefeller)
President /ichard M. 2i'on meets )ith arious businessmen0 including #hairman of the board of #iticorp 1alter B! 1riston 2left
side of table in the background0 second from left of man )ith head turned to his left30 and other members of the (ational
#ommission on %roductiity in "he 1hite House #abinet 4oom during 195061954! (PhotoB 6$fts 8ni"ersity Library)
Walter B. Wriston 2left30 chairman of the board of #iticorp0 chats )ith 7!8! %resident 'erald 4! 9ord at a party!
(PhotoB 6$fts 8ni"ersity Library)
Walter B! 1riston0 chairman of the board of #iticorp0 meets )ith 7!8! %resident 4onald 4eagan0 7!8! :ice %resident 'eorge
H!1! Bush 2rear right30 7!8! 8ecretary of the "reasury .on 4egan 2rear left30 &lan 'reenspan 2far right30 and other members of
%resident 4eagan;s Economic %olicy &disory Board! Wriston, B$sh, /egan, and reens0an are (or (ere) members of the
Co$ncil on .oreign /elations. (PhotoB 6$fts 8ni"ersity Library)
Left to /ightB Pa$l W. McCracken, 7lan reens0an, President /onald /eagan, eorge P. !ch$lt1, and Citicor0 Chairman Walter B. Wriston
meet 0ri"ately d$ring a meeting of the Economic Policy 7d"isory Board in the )"al )ffice, ca. %-:%. E"eryone e'ce0t for /onald /eagan is or
(as a member of the Co$ncil on .oreign /elations. 2%hoto: 6$fts 8ni"ersity Library)
Clock(ise, left to rightB eorge P. !h$lt1, Citicorp chairman 1alter B! 1riston0 unidentified man0 "reasury 8ecretary .on 4egan0 .aid
8tockman 2<30 %aul ,c#racken0 &lan 'reenspan0 and 7nidentified person meet priately! 2%hoto: 6$fts 8ni"ersity Library)
/etired Citicor0 chairman Walter B. Wriston meets (ith President eorge #.W. B$sh and in the Dice PresidentNs )ffice in the White #o$se.
Both men (ere members of the Co$ncil on .oreign /elations. 2%hoto: 6$fts 8ni"ersity Library)
!ecretary of the 6reas$ry /obert /$bin (left), Da"id /ockefeller (center), and 75 Chairman and CE) Ma$rice reenberg meet 0ri"ately (hile
President Bill Clinton deli"ers a s0eech in the backgro$nd on !e0tember %A, %--:. (PhotoB Co$ncil on .oreign /elations 7nn$al /e0ort)
Left to rightB 8.!. !enator #illary /odham Clinton, !ir E"elyn de /othschild, former President Bill Clinton, and Lady Lynn .orester de
/othschild attend Lady Lynn .orester de /othschild>s 0arty at the )rangery Fensington Palace in London, reat Britain on J$ly &, *,,& to
celebrate the 0$blication of 8.!. !enator #illary /odham Clinton>s a$tobiogra0hy +iing History.
(PhotoB htt0B44(((.life.com4image4:%:==A%<)
President Bill Clinton is flanked by the ne( 6reas$ry !ecretary La(rence !$mmers and the o$tgoing 6reas$ry !ecretary /obert /$bin at the
White #o$se on May %*, %---. /obert /$bin, (ho is a director of Citigro$0, (as a former 0artner and chairman of oldman !achs, a
0rominent banking firm in 2e( 3ork City. (/on !achs4C2P4!ygma4Corbis)
President eorge W. B$sh and Citigro$0 banker /obert /$bin (left), the former 6reas$ry !ecretary, former Partner of oldman !achs, and
the chairman of the e'ec$ti"e committee of Citigro$0, look on before B$sh makes a keynote address at the 7sia;Pacific Economic Coo0eration
(7PEC) s$mmit in !hanghai, Comm$nist China on )ctober *,, *,,%. (Bobby 3i04/e$ters4C)/B5!)
President eorge W. B$sh (left) a00oints #enry Pa$lson, the Chairman and CE) of oldman !achs, to ser"e as the !ecretary
of the 6reas$ry in *,,=.
8.!. !ecretary of the 6reas$ry #enry Pa$lson (left) shakes hands (ith John 6hain, the CE) of 2e( 3ork !tock E'change ro$0 as Jeffrey /.
5mmelt (second from left), Chairman and CE) of eneral Electric Com0any, Charles !ch(ab (center), Chairman and CE) of Charles !ch(ab
Cor0oration, and James Dimon (standing behind 6hain), Chairman and CE) of JPMorgan Chase and Com0any looks on d$ring a meeting at
eorgeto(n 8ni"ersity in Washington, D.C. on March %&, *,,+. Pa$lson and Dimon are members of the Co$ncil on .oreign /elations.
(Photo by Chi0 !omode"illa4etty 5mages)
8.!. !ecretary of the 6reas$ry #enry Pa$lson (right), the former Chairman and CE) of oldman !achs, talks to Jean;Cla$de 6richet,
President of the E$ro0ean Central Bank (ECB) d$ring the + s$mmit in Essen, ermany on .ebr$ary %,, *,,+. 6he + finance ministers and
central bank go"ernors disc$ssed the de"elo0ment of global economy for *,,+. Pa$lson is a member of the Co$ncil on .oreign /elationsC
6richet has attended se"eral Bilderberg Meetings. (Photo by /al0h )rlo(ski4etty 5mages)
#$ngarian;born international banker eorge !oros (left) greets 8.!. !enator #illary Clinton (D;23) after she introd$ced him at
the 6ake Back 7merica Conference in Washington, D.C. on J$ne &, *,,A. eorge !oros is a member of the Co$ncil on .oreign
/elations. (Photo by Matthe( Ca"ana$gh4etty 5mages)
Democratic Party 0residential candidate !enator Barack )bama (center) is flanked by former .ederal /eser"e Chairman Pa$l 7. Dolcker (left)
and Citigro$0 director and former 6reas$ry !ecretary /obert E. /$bin as he meets (ith economic ad"isors at Bank 8nited Center in Coral
ables, .lorida on !e0tember %-, *,,:. Pa$l 7. Dolcker and /obert E. /$bin are members of the Co$ncil on .oreign /elations.
(7.P4etty 5mages)
Democratic Party 0residential candidate 8.!. !enator Barack )bama s0eaks at a f$nd;raising e"ent at !te"en and J$dy l$ckstern>s home on
70ril -, *,,+. 5nternational banker eorge !oros is seated to the right of the stairs. =eorge Soros is a member of the Council on 'oreign
)elations and a fre%uent !ilderberg Meetings participant. (PhotoB Michael Ed(ards42e( 3ork Maga1ine)
8.!. President Barack )bama (left) shakes hands (ith international banker Jamie Dimon, the Chairman and CE) of JP Morgan Chase, d$ring
a meeting of b$siness leaders at a hotel in Washington, D.C. on March %*, *,,-. @amie +imon is a member of the Council on 'oreign
)elations and a member of the $rilateral Commission. (/e$ters)
5nternational Bankers @ 6errorists

#Lalmar !chacht (right), the President of the /eichsbank, (alks (ith 7dolf #itler, the .$hrer of 2a1i ermany, on May <, %-&A.
(PhotoB htt0B44germanhistorydocs.ghi;dc.org4s$bUimage.cfmQimageUidV%-=A@lang$ageVgerman)

Left 0hotoB Bro(n Brothers #arriman @ Co. 0artner 7"erell #arriman sits bet(een British Prime Minister Winston Ch$rchill (left) and !o"iet
Commissar Josef !talin (second from right) in %-A*. #arriman (as a member of !k$ll @ Bones at 3ale 8ni"ersity and the Co$ncil on .oreign
/elations. 6he man on the far right is !o"iet .oreign Minister Dyachesla" Moloto". (PhotoB Library of Congress)
/ight 0hotoB !o"iet Premier 2ikita Fhr$shche" (left) and John McCloy, former President of the World Bank and Chairman of Chase Manhattan
Bank, are seen s(imming in a s(imming 0ool together at 2ikita Fhr$sche">s ho$se in the !o"iet 8nion.
(!o$rceB "he 1ise ,en: 8i= 9riends and "he 1orld "hey ,ade by Walter 5saacson and E"an 6homas)
Da"id /ockefeller (left), President of Chase Manhattan Bank, and his da$ghter 2e"a /ockefeller (second from left) greet !o"iet
Premier 2ikita Fhr$shche" (right) at the Fremlin in Mosco(, !o"iet 8nion on J$ly *-, %-=A. +avid )ockefeller attended the
March /0A6 !ilderberg Meetings held in Billiamsburg, Cirginia, ".S.*.
(PhotoB ,emoirs by Da"id /ockefeller4Wide World Photos)
Chase Manhattan Bank Chairman and CE) Da"id /ockefeller (left) "isits /ed China>s .oreign Minister Cho$ Enlai in Peking in %-+&.
(PhotoB ,emoirs by Da"id /ockefeller)
To become a global banking leader hase would have to confront the reality that much of the world was dominated by
governments fundamentally opposed to democratic principles and to the operation of the free market. 3s a practical necessity,
then, if hase was to e?pand internationally, we would have to learn how to deal with regimes that were autocratic, totalitarian,
and anticapitalist in their orientation and policies. >ven though I was totally unsympathetic to these regimes, I believed the bank
should work with them. Throughout my hase career I never hesitated to meet with the leaders of my country"s most militant
and obdurate ideological adversaries, and with rulers whose despotic and dictatorial style I personally despised, from Houari
=oumedienne of 3lgeria to 0obutu (ese (oko PsicQ of Xaire, from 5eneral 3ugusto )inochet of hile to (addam Hussein of
Iraq. I met them all. I talked at some length with 0arshal Tito of #ugoslavia, )resident ;icolae eausescu of @omania,
5eneral WoFciech 4aruMelski of )oland, and 5eneral 3lfredo (troessner of )araguay. I sat for e?tended discussions with all the
modern leaders of racist (outh 3frica7 Henrik :erwoerd, =.4. :orster, ).W. =otha, and, later, the more enlightened <. W. de
9lerk. I persevered through lengthy meetings with Xhou >nlai and other senior members of the hinese ommunist hierarchy
while the ultural @evolution still raged. I debated virtually every leader of the (oviet 'nion from ;ikita 9hrushchev through
0ikhail 5orbachev, and, even more recently, confronted <idel astro during his +,,C visit to ;ew #ork. ritics from both the
left and the right have vilified me for doing this. Indeed, mine has not been a particularly popular or well8understood position.
0y critics claim that David @ockefeller has never met a dictator he didn"t like.% =ut at no time in more than four decades of
private meetings with foreign leaders have I ever deferred to their point of view when I disagreed with them. 1n the contrary, I
have used these meetings to point out respectfully but firmly the flaws in their systems as I saw them and to defend the virtues of
my own. I pursued these opportunities because I believed that even the most entrenched authoritarian systems would succumb
eventually to the superior values of our system.% & %emoirs by David @ockefeller, p. 666866-
World Bank President James D. Wolfensohn (left) meets (ith /ed China>s President #$ Jintao at the reat #all of the Peo0le in BeiLing on
May &,, *,,A. (Sinh$a Photo)
Lloyd Blankfein (left), Chairman and CE) of oldman !achs, "isits /ed China>s Dice Premier Wang Iishan (/) in BeiLing on December %,
*,,-. Lloyd Blankfein is a member of the Co$ncil on .oreign /elations. (Sinh$a4#$ang Jing(en)
htt0B44ne(s.'inh$anet.com4english4*,,-;%*4,%4contentU%*<+%&<*.htm
!tanley .ischer (left), the .irst De0$ty Managing Director of the 5nternational Monetary .$nd (5M.), 0re0ares to shake hands (ith Palestine
Liberation )rgani1ation (PL)) terrorist 3asser 7rafat d$ring a 0ress conference in the lobby of the 5M. b$ilding in Washington, D.C. on
Jan$ary *%, *,,,. !tanley .ischer is a member of the Co$ncil on .oreign /elations and a member of the 6rilateral Commission.
(Pa$l J. /ichards47.P4etty 5mages)
7rab terrorist 3asser 7rafat (right) s0eaks at a Loint 0ress conference (ith World Bank President James Wolfensohn (left) after a signing
ceremony at the World Bank in Washington, D.C. on May %, %--=. 6he World Bank a00ro"ed a 9*, million credit loan to hel0 Galle"iateH the
economic crisis in a1a and the West Bank territories of GPalestineH. (Joyce 2altchayan47.P4etty 5mages)
5nternational BankersB Modern Moneychangers
Peter . Peterson (left), the Chairman and CE) of Lehman Brothers, recei"es an a(ard from eorge W. Ball, the !enior
Partner of Lehman Brothers at a ban?$et on 2o"ember %&, %-+-. Peter . Peterson and eorge W. Ball (ere members of the
Co$ncil on .oreign /elations, an internationalist organi1ation in 2e( 3ork City, in %-+-.
(PhotoB eorge W. Ball Pa0ers, !eeley . M$dd Man$scri0t Library at Princeton 8ni"ersity)
#. Donald Cam0bell (left), the President of Chase 2ational Bank, stands beside Winthro0 W. 7ldrich, the Chairman of Chase 2ational Bank, in
2e( 3ork City in J$ly %-A<. Both men (ere members of the Co$ncil on .oreign /elations. (PhotoB #erbert ehr46ime Life)
#eads of 2ational City Bank William . Brady Jr. (left), ordon !. /entschler (center) and W. /andol0h B$rgess sit at a table
for a 0ortrait at their office in 2e( 3ork City in December %-A<. 7ll three men (ere members of the Co$ncil on .oreign
/elations. (PhotoB #erbert ehr46ime Life)
Prescott !. B$sh (far right) (as the chairman of the e'ec$ti"e committee of the 2ational War .$nd in the s0ring of %-A< d$ring World War 55.
.rom left to rightB $nkno(n, $nkno(n, $nkno(n, Bernard Bar$ch, $nkno(n, $nkno(n, 2ational City Bank Chairman ordon /entschler,
$nkno(n, $nkno(n, 2ational City Bank banker William . Brady Jr., /oland #arriman, Chase 2ational Bank Chairman Winthro0 7ldrich, John
D. /ockefeller Jr., and Bro(n Brothers #arriman 0artner Prescott !. B$sh.
(!o$rceB "he Bush 9amily: 9our 'enerations of History in %hotographs by James !0ada)
Morgan, !tanley @ Co. 0artners (L;/) Perry E. #all, 7. 2orthey Jones, .rederick 7. ). !ch(ar1, /obert a$nt, Charles /.
Beattie, !her(ood #all, J$dson Mc#ester, J. C. James and Bert Dickery meet at their office in 2e( 3ork City in J$ly %-A<.
Perry E. #all and .rederick 7.). !ch(ar1 (ere members of the Co$ncil on .oreign /elations. (PhotoB #erbert ehr46ime Life)
Bro(n Brothers #arriman @ Co. 0artners (from left to right) 6hatcher M. Bro(n, /ay Morris, #. D. Pennington, Prescott !. B$sh,
6homas McCance, and Fnight Woolley 0ose for the camera at their office in 2e( 3ork City in J$ly %-A<. /ay Morris, Prescott !.
B$sh, and Fnight Woolley (ere members of !k$ll @ Bones at 3ale 8ni"ersity. 6hatcher M. Bro(n and 6homas McCance (ere
members of Wolf>s #ead at 3ale 8ni"ersity. (PhotoB #erbert ehr46ime Life)
Chase Manhattan Bank chairman John McCloy sits beside Da"id /ockefeller (left) and eorge Cham0ion (standing).
7s a high commissioner to West ermany, McCloy granted clemency to 2a1i cor0orate financiers and (ar criminals #Lalmar
!chacht, 7lfried Fr$00, and .rit1 6hyssen (the man (ho (rote a book called G5 Paid #itlerH). Cham0ion and /ockefeller (o$ld
go on to ser"e as chairman of Chase Manhattan (no( 0art of JP Morgan Chase). McCloy and Cham0ion (ere members of the
Co$ncil on .oreign /elations. Both McCloy and /ockefeller ser"ed as Chairman of the Co$ncil on .oreign /elations.
/ockefeller is a member of the Co$ncil on .oreign /elations and the 6rilateral Commission.
Bro(n Brothers #arriman 0artners (from left to right) E. /oland #arriman, Prescott B$sh, Fnight Woolley, and /obert Lo"ett
disc$ss financial matters at the Bro(n Brothers #arriman office on J$ly *:, %-=A. 6he $lf of 6onkin incident took 0lace d$ring
the first (eek of 7$g$st %-=A.
Left to rightB Peter . Peterson, John McCloy, Da"id /ockefeller, #enry Fissinger, and Cyr$s Dance a00ear at the #arold Pratt
#o$se. Peterson, McCloy, and /ockefeller once ser"ed as chiefs of international banks.
(PhotoB Co$ncil on .oreign /elations 7nn$al /e0ort)
Morgan, !tanley @ Co. 0resident #arold !tanley (left) chats (ith J.P. Morgan 0artners eorge Whitney (center) and /$ssell C. Leffing(ell at
the Mono0oly Committee hearing in Washington, D.C. on December *,, %-&-. 7ll three men (ere members of the Co$ncil on .oreign
/elations. #arold !tanley (as a member of !k$ll @ Bones at 3ale 8ni"ersity. (PhotoB Library of Congress Prints and Photogra0hs Di"ision)
Blackstone ro$0 bankers Peter . Peterson (left) and !te0hen !ch(ar1man a00ear at a 0arty together. Peter . Peterson is the former
Chairman of the Co$ncil on .oreign /elations and former Chairman and CE) of Lehman Brothers. Both men are members of the Co$ncil on
.oreign /elations. !te0hen !ch(ar1man is a member of !k$ll @ Bones at 3ale 8ni"ersity.
6hree of the nationNs leading b$sinessmen are sho(n at the st$dio in 2e( 3ork City on 2o"ember %:, %-&: from (hich they s0oke d$ring an
2BC;s0onsored broadcast in (hich b$siness and financial leaders of the 8nited !tates, England and Canada 0raised the 7nglo;7merican;
Canadian trade 0acts. Left to right are 7lfred P. !loan, Chairman of the Board of eneral MotorsC erard !(o0e, President of the eneral
Electric Com0any, and Winthro0 7ldrich, Chairman of the Board of the Chase 2ational Bank. 7ll three men (ere members of the Co$ncil on
.oreign /elations. (Bettmann4C)/B5!)
Left to rightB Winthro0 W. 7ldrich, Chairman of the Board of Chase 2ational Bank, and 0resident of the !tate Charities 7id 7ssn., Walter !.
ifford, Chairman of the Board of 7merican 6ele0hone and 6elegra0h Co., and a fo$nder of the .$nd in %-&:, and #enri C. Br$nie, President
of the Em0ire 6r$st Com0any and President of the f$nd, a00ear at a 0arty in 2e( 3ork City on 70ril *=, %-A:. Winthro0 W. 7ldrich and Walter
!. ifford (ere members of the Co$ncil on .oreign /elations. (Bettmann4C)/B5!)

Left 0hotoB 5nternational banker 6homas W. Lamont, (ho became the chairman of J. P. Morgan and Com0anyNs board of directors, (alks in
front of the ill$strio$s b$siness mog$l John D. /ockefeller Jr. at a 0arty in circa %-A,. (Bettmann4C)/B5!)
/ight 0hotoB 2e( 3orkers at /elief Conference. B$sinessmen entered the White #o$se in Washington, D.C. on !e0tember %<, %-&*, (here
they (ere (elcomed by President #oo"er, are (left to right)B Walter ifford, President of the 7merican 6ele0hone and 6elegra0h Com0anyC
#ar"ey ibson, Chairman of the 2e( 3ork Emergency 8nem0loyment /elief Committee and 6homas W. Lamont of J.P. Morgan @ Com0any.
7fter their greeting by the President, the trio of 0rominent 2e( 3orkers attended the o0ening session of the Welfare and /elief Mobili1ation
conference in Washington, D.C. (Bettmann4C)/B5!)

Left 0hotoB eorge !oros (left) a00ears (ith Da"id /ockefeller.
Winthro0 7ldrich (left), 7cting Mayor of 2e( 3ork City Jose0h D. McFee (center), and Charles E. Mitchell (right), the latter t(o members of a
banking consorti$m (hich had ref$sed to e'tend f$rther credits to the city, are sho(n in 2e( 3ork City on December %, %-&* as they left 2e(
3ork City for 7lbany to confer (ith acting go"ernor #erbert Lehman, on a 0ro0osed s0ecial legislati"e session to consider city finances.
7ldrich and Mitchell (ere members of the Co$ncil on .oreign /elations. (Bettmann4C)/B5!)
Chase Manhattan Cor0orationNs e'ec$ti"e management team in %-+A consists of (standing from left) E'ec$ti"e Dice Presidents John C. #aley
and John 7. #oo0er, Dice Chairman Leonor .. Loree, 55, and eorge 7. /oeder, Jr., E'ec$ti"e Dice Presidents William !. )gden and Barry !.
!$lli"an, and (seated from left) President Willard C. B$tcher and Chairman Da"id /ockefeller. (Bettmann4C)/B5!)
Jacob !chiff a00ears (ith his family. #is da$ghter .rieda !chiff Warb$rg and her h$sband .eli' Warb$rg are standing behind Jacob. .eli'
Warb$rg took o"er F$hn Loeb @ Co. (hen Jacob !chiff died. #e also o(ned the Manhattan Bank (hich (as to merge (ith the /ockefellers>
Chase Bank in %-<<. !olomon Loeb is seated in the front ro(, second from left. .eli' Warb$rg (as a member of the Co$ncil on .oreign
/elations. Jacob !chiff 0ro"ided at least 9*, million to the !o"iets to finance the Bolshe"ik /e"ol$tion.
7bby 7ldrich and her h$sband John D. /ockefeller Jr. stand (ith their children in !eal #arbor, Maine in %-*%. 7bby 7ldrich>s father (as
!enator 2elson 7ldrich. .rom left to rightB La$rence, Babs, John 555, Da"id ((ith his mother 7bby 7ldrich), Winthro0, and 2elson.
6he Warb$rg Brothers a00ear together on 7$g$st *%, %-*-, on the e"e of the reat De0ression. .rom left to rightB Pa$l
Warb$rg, .eli' Warb$rg, Ma' Warb$rg, .rit1 Warb$rg, and 7by Warb$rg. (!o$rceB "he 1arburgs by /on Cherno()
6he 0artners of F$hn, Loeb @ Co. sit in front of a 0ortrait of Jacob !chiff d$ring the %-=,s. .rom left to rightB ilbert W. Fahn,
John M. !chiff, and .rederick M. Warb$rg. ilbert W. Fahn (as the son of )tto FahnC John M. !chiff and .rederick M. Warb$rg
(ere Jacob !chiffNs grandsons. Both !chiff and Warb$rg (ere members of the Co$ncil on .oreign /elations. 7ccording to John
!chiff, his grandfather 0ro"ided 9*, million to hel0 finance the Bolshe"ik /e"ol$tion.
)tto #. Fahn, s0okesman for F$hn, Loeb @ Co., 0ri"ate bankers of 2e( 3ork, sho(n (ith three 0artners of the firm, at the o0ening of the
in?$iry into the affairs of F$hn, Loeb @ Co., by the !enate Banking and C$rrency Committee at Washington, D.C., J$ne *+, %-&&. Fahn (as
the first (itness to testify. .rom left to rightB Percy M. !te(art, )tto #. Fahn, Lie$tenant Colonel !ir William eorge Eden Wiseman, Chief of
the British !ecret !er"ice in the 8nited !tates d$ring the World WarC BenLamin J. B$tten(ieser. Fahn and B$tten(ieser (ere members of the
Co$ncil on .oreign /elations, an internationalist organi1ation in 2e( 3ork City. (W Bettmann4C)/B5!)
6he English !0eaking 8nion tendered a l$ncheon to former "ice;0resident 6homas /. Marshall and Mrs. Marshall on their recent "isit to
London on May &%, %-**. 5n the gro$0 sho(n here are Mr. Marshall, MaLor eneral !eely, Mrs. Marshall, and 8.!. 7mbassador to reat
Britain #ar"ey. 7t the e'treme right is )tto #. Fahn, 0rominent 7merican Je(ish financier. (W Bettmann4C)/B5!)
(PhotoB 9inance and Empire: 8ir #harles &ddis0 19616194> by /oberta 7llbert Dayer)
7 conference takes 0lace in Baden Baden, ermany in )ctober %-*-. /eichsbank President #Lalmar !chacht is seated in the center table in
the rear. (PhotoB 9inance and Empire: 8ir #harles &ddis0 19616194> by /oberta 7llbert Dayer)
(PhotoB 9inance and Empire: 8ir #harles &ddis0 19616194> by /oberta 7llbert Dayer)
!ir Charles 7ddis (left) a00ears (ith Lord Montag$ 2orman, the o"ernor of the Bank of England
(PhotoB 9inance and Empire: 8ir #harles &ddis0 19616194> by /oberta 7llbert Dayer)
Lord Montag$ 2orman, the o"ernor of the Bank of England, and his assistant !ir Charles 7ddis attend the first meeting of the board of
directors of the Bank for 5nternational !ettlements in Basle JBaselK, !(it1erland in May %-&,.
(PhotoB 9inance and Empire: 8ir #harles &ddis0 19616194> by /oberta 7llbert Dayer)
International bankers attend The (econd hina onsortium meeting in ;ew #ork ity in 1ctober +,6A. Ieft to right7 <rederick
W. (tevens, <rederick W. 3llen, Henri 0aMot, harles >. 0itchell, @ene Thion de la haume, 4ohn 3. 3bbott, =urnett Walker,
5eorges )icot, 0ortimer I. (chiff, Thomas W. Iamont, (ir harles 3ddis, 9inpei Takeuchi, W.>. Ieveson, 4. @oss Tilford,
(ydney <. 0ayers, 0alcolm D. (impson, 3lbert H. Wiggin, @. Inchinomiya, and @.. Witt. harles >. 0itchell, 0ortimer I.
(chiff, Thomas W. Iamont, and 3lbert H. Wiggin were members of the ouncil on <oreign @elations. <rederick W. 3llen was
a member of (kull N =ones at #ale 'niversity.
*)hoto7 Finance and Empire" Sir Charles Addis+ ,51,0,567 by @oberta 3llbert Dayer.
Bro(n Brothers #arriman @ Co. 0artners /obert Lo"ett (left) and /obert D. /oosa sit inside /oosa>s office at Bro(n Brothers
#arriman @ Co. b$ilding in 2e( 3ork City on May A, %-=+.
eorge !. Moore 2left30 #hairman of 9irst (ational #ity Bank0 and 1alter B! 1riston0 %resident and #E- of 9irst (ational #ity
Bank0 laugh together in 1965! Both men )ere members of the #ouncil on 9oreign 4elations! 2%hoto: 6$fts 8ni"ersity Library)

Left 0hotoB /ichard #olbrooke (left) talks to eorge !oros at the #arold Pratt #o$se. (C./ 7nn$al /e0ort)
/ight 0hotoB Da"id /ockefeller listens as Leslie elb (left) talks to eorge !oros (right) at the #arold Pratt #o$se.
(PhotoB C./ 7nn$al /e0ort)
.ormer !ecretary of the 6reas$ry C. Do$glas Dillon talks to Peter . Peterson at a meeting at the #arold Pratt #o$se.
(PhotoB C./ 7nn$al /e0ort)
Co$ncil on .oreign /elations (C./) Chairman Peter . Peterson a00ears (ith C./ #onorary Chairman Da"id /ockefeller at
the #arold Pratt #o$se in 2e( 3ork City on !e0tember *=, %--<. Peter . Peterson is the former Chairman and CE) of
Lehman BrothersC Da"id /ockefeller is the former Chairman and CE) of Chase Manhattan Bank (no( 0art of JP Morgan
Chase). (PhotoB C./ 7nn$al /e0ort)
Citigro$0 director and former 6reas$ry !ecretary /obert /$bin (left), former 75 Chairman Ma$rice reenberg (center), and
Carlyle ro$0 Chairman Lo$is D. erstner Jr. (right) meet 0ri"ately. (PhotoB C./ 7nn$al /e0ort)

Da"id /ockefeller (left) talks to former President of 6he World Bank James Wolfensohn. (PhotoB C./ 7nn$al /e0ort)
2e( 3ork !tock E'change CE) John 7. 6hain meets (ith Xho$ Siaoch$an, o"ernor of the Peo0le>s Bank of China (PB)C), at
the PB)C office in BeiLing in )ctober *,,<. (PhotoB 2e( 3ork !tock E'change)

LeftB James Wolfensohn and Da"id /ockefeller celebrate at a 0arty.
/ightB James Wolfensohn "isits /$ssia>s President Dladimir P$tin, a former FB agent.
Left to rightB De$tsche Bank Chief E'ec$ti"e Josef 7ckermann, #!BC #oldings ro$0 Chairman !te0hen reen, /oyal Bank of
Canada (/BC) Chief E'ec$ti"e ordon 2i'on, Bank of 2o"a !cotia Chief E'ec$ti"e /ick Wa$gh and .ormer 8.!. .ederal
/eser"e Chairman Pa$l Dolcker ans(er ?$estions at a ne(s conference at the !0r$ce Meado(s ro$nd table on lobal Banking
in Calgary, Canada on !e0tember <, *,,:. (/e$ters)
Christian 2oyer (right), o"ernor of the Bank of .rance, gathers (ith Pa$l Dolcker (second from right), former Chairman of the
.ederal /eser"e, Pa$l Desmarais Jr. (second from left), Chairman and co;Chief E'ec$ti"e of Po(er Cor0oration of Canada and
#enri;Pa$l /o$ssea$ (right), former President and Chief E'ec$ti"e of Caisse de de0ot et 0lacement d$ I$ebec, 0rior to a
s0eech at the 5nternational Economic .or$m of the 7mericas in Montreal, Canada on J$ne -, *,,:. (/e$ters)
.ederal /eser"e Board Chairman Ben Bernanke (left) talks to Jean;Cla$de 6richet, President of the E$ro0ean Central Bank
(ECB), d$ring the + s$mmit in Essen, ermany on .ebr$ary %,, *,,+. 6he + finance ministers and central bank go"ernors
disc$ssed the de"elo0ment of global economy for *,,+. (Photo by /al0h )rlo(ski4etty 5mages)
7"erell #arriman a00ears (ith 6homas W. Lamont (left) and 7llen Ward(ell (right) at a /$ssian War /elief dinner in %-A%. 7ll
three men (ere members of the Co$ncil on .oreign /elations.
Left to rightB Mario Draghi, the o"ernor of the Bank of 5taly, Jean;Cla$de 6richet, the President of the E$ro0ean Central Bank
(ECB), and 5taly>s .inance Minister 6ommaso Padoa;!chio00a share a Loke d$ring the + s$mmit in Essen, ermany on
.ebr$ary %,, *,,+. 6he three men in this 0hotogra0h (ent to the Bilderberg Meetings together in *,,%, *,,*, and *,,A.
(Photo by /al0h )rlo(ski4etty 5mages)

E$ro0ean Central Bank President Jean;Cla$de 6richet (left) chats (ith 5M. Managing Director /odriogo De /ato at the
beginning of the *, finance ministers and central bank go"ernors> meeting in Berlin on 2o"ember *,, *,,A.
(Photo by !ean all$04etty 5mages)
E$ro0ean Central Bank President Jean;Cla$de 6richet (L) and De$tsche Bank Chief E'ec$ti"e Josef 7ckermann take 0art in the
5nternational Monetary Conference (5MC) in Barcelona, !0ain on J$ne &, *,,:. (/e$ters)
.rom left, ChinaNs central bank go"ernor Xho$ Siaoch$an, Bank of 5taly o"ernor Mario Draghi and E$ro0ean Central Bank
President Jean;Cla$de 6richet smile at the end of a 0ress conference on the occasion of the Ath #igh;le"el !eminar of Central
Banks in the East 7sia;Pacific /egion and the E$ro 7rea, in /ome, 5taly on J$ne *+, *,,:. (7P Photo)
.rom left to right, .inance Minister of .rance Christine Lagarde, 8.!. .ederal /eser"e Chairman Ben Bernanke, o"ernor of 5talyNs Central
Bank Mario Draghi, and 8.!. 6reas$ry !ecretary 6im eithner arri"e for the start of the ro$0 of *, meeting at 5nternational Monetary .$nd
head?$arters in Washington, D.C. on 70ril *&, *,%,. (J. !cott 700le(hite47P)
.ederal /eser"e Chairman Ben Bernanke, left, looks o"er doc$ments (hile 5talian Central Bank o"ernor Mario Draghi, center, talks (ith 8!
!ecretary of the 6reas$ry 6im eithner d$ring the ;*, Meeting of .inance Ministers and Central Bank at the World Bank head?$arters in
Washington, D.C. on .riday, 70ril *&, *,%,. (7P Photo4Cliff )(en)
Mario Draghi (left), o"ernor of the Banca d>5talia, and E$ro0ean Central Bank President Jean;Cla$de 6richet attend a o"erning Co$ncil
meeting in .rankf$rt, ermany on * .ebr$ary *,,=.
Jean;Cla$de 6richet (left), o$tgoing President of the E$ro0ean Central Bank (ECB), hands o"er a h$ge bell to his s$ccessor Mario Draghi
d$ring a fare(ell celebration for 6richet at the 7lte )0er in .rankf$rt am Main, ermany on )ctober %-, *,%%. Mario Draghi officially
s$cceeded 6richet as 0resident of the E$ro0ean Central Bank by 2o"ember %. (/al0h )rlo(ski4etty 5mages E$ro0e)
Prime Minister of 5taly Mario Monti (right) s0eaks (ith E$ro0ean Central Bank 0resident Mario Draghi (left) d$ring a meeting of
e$ro1one finance ministers at the E8 Co$ncil b$idling in Br$ssels on Monday, March %*, *,%*. (7P Photo4Dirginia Mayo)
.ormer 5sraeli Minister of Defense Moshe Dayan listens to the 0reeminent .rench Je(ish banker Baron Edmond de /othschild
d$ring their meeting in 6el 7"i", 5srael. Baron Edmond de /othschild (as a member of the 6rilateral CommissionC his
grandfather (as Edmond de /othschild, the Gfather of modern 5srael.H
.rom left to rightB Do$glas Dillon, /obert E. Christie Jr., Pa$l 2it1e, and Dillon, /ead @ Co. 0artner Clarence Dillon 0re0are to attend a banking
and c$rrency hearing in Washington D.C. on )ctober A, %-&&. Do$glas Dillon (o$ld ser"e as President John .. Fennedy>s 6reas$ry
!ecretary. Pa$l 2it1e (o$ld ser"e as !ecretary of the 2a"y $nder President Lyndon B. Johnson. Do$glas Dillon, Pa$l 2it1e, and Clarence
Dillon (ere members of the Co$ncil on .oreign /elations. (PhotoB 9rom Hiroshima to 'lasnost by Pa$l #. 2it1e)
7merican b$sinessman Warren B$ffett (left) a00ears (ith Lloyd C. Blankfein, the Chairman and CE) of oldman !achs.
(PhotoB htt0B440ostcards.blogs.fort$ne.cnn.com4tag4lloyd;blankfein4)
John /eed, left, and !anford Weill, center, then the chief e'ec$ti"es of Citigro$0, (elcome /obert /$bin to the Citi board in %---. #e became
chairman of the e'ec$ti"e committee, b$t only last year did it begin to meet fre?$ently. (/ichard Dre(47ssociated Press)

Left 0hotoB /obert /$bin, the former 8.!. 6reas$ry !ecretary, s0eaks at a l$ncheon in #ong Fong on 2o"ember %A, *,,=. /$bin (as
s0eaking to an a$dience of bankers as 0art of CitibankNs RLegacies of Leadershi0R seminar series. (Mike Clarke47.P4etty 5mages)
/ight 0hotoB oldman !achs bankers #enry Pa$lson (left) and Jon !. Cor1ine, the c$rrent o"ernor of 2e( Jersey, 0ose at the oldman
!achs head?$arters in 2e( 3ork City in this Monday, J$ne %<, %--:, file 0hoto. (7ssociated Press)
.ormer President of .ederal /eser"e Bank of 2e( 3ork E. erald Corrigan (left) and (formerQ) President of the World Bank James
Wolfensohn (right) celebrate as former .ederal /eser"e Chairman Pa$l Dolcker holds a 0la?$e. 7ll three men are members of the Bretton
Woods Committee. Wolfensohn and Dolcker are members of the Co$ncil on .oreign /elationsC Corrigan (as a member of the Co$ncil on
.oreign /elations.
Michael Bloomberg (left), President of the World Bank James Wolfensohn (center), and Dernon Jordan hold an a(ard gi"en to Wolfensohn at
the 8nited 2ations 7mbassadors Dinner in 2e( 3ork City on )ctober *=, *,,,. (Photo by Chris #ondros42e(smakers)
(tephen (chwarMman and =ruce Wasserstein meet together in 1ctober 6AA/. =oth men are members of the ouncil on <oreign
@elations. (tephen (chwarMman is a member of (kull N =ones at #ale 'niversity.
Ieft to right7 4) 0organ hase hairman and >1 4ames Dimon, IaMard <reres (enior 0anaging Director :ernon >. 4ordan
4r., ;ew #ork ity 0ayor 0ichael =loomberg, and 3merican >?press o. hairman and >1 9enneth henault. 3ll four men
are members of the ouncil on <oreign @elations. *)hoto7 ;ew #ork (ocial Diary.
4amie Dimon *center., hairman and >1 of 4)0organ hase bank, talks with Iloyd =lankfein *left., hairman and >1
5oldman (achs bank, and =ank of 3merica >1 =rian 0oynihan before testimony in front of the <inancial risis Inquiry
ommission in Washington, D.. on 4anuary +-, 6A+A. *@euters.
4)0organ hase hairman and >1 4amie Dimon *@. talks with 5oldman (achs hairman and >1 Iloyd =lankfein before
testifying in front of the <inancial risis Inquiry ommission in Washington, D.. on 4anuary +-, 6A+A. 4amie Dimon and
Iloyd =lankfein are members of the ouncil on <oreign @elations. *@euters.
<rom left to right, Iloyd =lankfein, hairman and >1 of 5oldman (achs 5roup, 4amie Dimon, hairman and >1 of
4)0organ hase, 4ohn 0ack, hairman of 0organ (tanley, and =rian 0oynihan, >1 of =ank of 3merica are sworn in before
their testimony at the <inancial risis Inquiry ommission *<I. and its first public hearing in Washington, D.. on 4anuary
+-, 6A+A. *@euters.
Iloyd =lankfein, *I., hairman and >1 of 5oldman (achs 5roup, testifies before the <inancial risis Inquiry ommission in
Washington, D.. on 4anuary +-, 6A+A. 4amie Dimon, *6I., hairman and >1 of 4)0organ hase, 4ohn 0ack, *-I.,
hairman of 0organ (tanley, and =rian 0oynihan, *@., >1 of =ank of 3merica, await their turn to speak before the
commission. *@euters.
British Prime Minister Da"id Cameron (&rd L) meets (ith (.rom L) #. .$rlong Bald(in, Chairman of 27!D7I )MSC Jamie
Dimon, Chairman and CE) of JP Morgan ChaseC Bob Felly, Chairman and CE) of Bank of 2e( 3ork MellonC James orman,
Chairman and CE) of Morgan !tanleyC and 2igel !hein(ald, British 7mbassador to the 8.!., at the 27!D7I market in 2e(
3ork City on J$ly *%, *,%,. (/e$ters)
Lloyd Blankfein (center), Chairman and CE) of oldman !achsC !te"e Ballmer (left), CE) of MicrosoftC and Da"id /$benstein
(right), fo$nder of the Carlyle ro$0, attend a meeting of b$siness leaders (ith 8.!. President Barack )bama and Comm$nist
China>s President #$ Jintao in the Eisenho(er E'ec$ti"e )ffice B$ilding at the White #o$se in Washington, D.C. on Jan$ary %-,
*,%%. Lloyd Blankfein and Da"id /$benstein are members of the Co$ncil on .oreign /elations. (/e$ters)
Charles Prince (left), former Chairman of the board of Citigro$0, and /obert /$bin, former chairman of the board of Citigro$0 and former
Partner of oldman !achs, are s(orn in at the .inancial Crisis 5n?$iry Commission hearing on Ca0itol #ill in Washington, D.C. on 70ril :,
*,%,. Prince a0ologi1ed for Citigro$0>s fail$re to 0re0are for the financial crisis, at the same time as he defended the third;largest 7merican
bankNs si1e and conglomerate nat$re. Charles Prince and /obert /$bin are members of the Co$ncil on .oreign /elations. (/e$ters)
Ch$ck Prince (left), former chairman of the board and CE) at Citigro$0 5nc. and /obert /$bin, former chairman of the E'ec$ti"e Committee of
the Board of Directors at Citigro$0 5nc., talk 0rior to testifying before the .inancial Crisis 5n?$iry Commission on Ca0itol #ill in Washington, DC
on 70ril :, *,%,. 6he in?$iry commission is in"estigating the ca$ses, incl$ding s$b0rime lending, that lead to the global financial colla0se that
began in the fall of *,,:. (PhotoB Chi0 !omode"illa4etty 5mages 2orth 7merica)
Lloyd Blankfein, the Chairman and CE) of oldman !achs banking firm in 2e( 3ork City, testifies before the !enate #omeland
!ec$rity and o"ernmental 7ffairs 5n"estigations !$bcommittee hearing on RWall !treet and the .inancial CrisisB 6he /ole of
5n"estment BanksR on Ca0itol #ill in Washington, D.C. on 70ril *+, *,%,. (/e$ters)

Jamie Dimon (left), chairman of the board of JP Morgan Chase bank, and Lloyd Blankfein, chairman of the board of oldman
!achs bank, lea"e the White #o$se after they met (ith 8.!. President Barack )bama on March *+, *,,-.
eorge !oros, chairman of !oros .$nd Management LLC, is s(orn in to testify before a 8.!. #o$se )"ersight and o"ernment
/eform Committee hearing on the reg$lation of hedge f$nds, on Ca0itol #ill in Washington, D.C. on 2o"ember %&, *,,:.
(/e$ters)
!oros .$nd Management Chairman eorge !oros testifies on Ca0itol #ill in Washington, D.C. on 2o"ember %&, *,,:, before
the #o$se )"ersight and o"ernment /eform hearing on R#edge .$nds and the .inancial MarketR. (7P Photo)
E$ro0ean Central Bank President Jean;Cla$de 6richet attends a Loint ne(s conference follo(ing a s$mmit to disc$ss the international financial
crisis at the Elysee Palace in Paris on )ctober A, *,,:. E$ro0ean leaders "o(ed at the start of an emergency s$mmit on !at$rday to do (hat
they co$ld to fend off a financial crisis that sno(balled o$t of Wall !treet and is no( hitting banks in E$ro0e. (/e$ters)
E$ro0ean Central Bank (ECB) President Jean;Cla$de 6richet gest$res as he gi"es a 0ress conference on in .rankf$rt am Main, ermany on
7$g$st +, *,,:. (7.P4etty 5mages)
GPermit me to iss$e and control the money of a nation, and 5 care not (ho makes its la(s.H
P 7mschel Mayer /othschild (%++&;%:<<), in %:&:
.ederal /eser"e Chairman Ben Bernanke (center) 0oses (ith o"ernor of the Bank of England !ir Mer"yn 7llister Fing (left) and E$ro0ean
Central Bank President Jean;Cla$de 6richet for a 0hoto d$ring the + meeting in 6okyo, Ja0an on .ebr$ary -, *,,:. 7ll three men ha"e
attended the Bilderberg Meetings at least once. (/e$ters)
.ederal /eser"e Chairman !ir 7lan reens0an (center) meets (ith the President of the E$ro0ean Central Bank Jean;Cla$de 6richet (right)
and o"ernor of the Bank of England !ir Mer"yn 7llister Fing at the beginning of the *, finance ministers and central bank go"ernorsN
meeting in Berlin on 2o"ember %-, *,,A. 7ll three men ha"e attended the Bilderberg Meetings. (Photo by !ean all$04etty 5mages)
Prominent International Bankers % &inanciers
Dartners of @.D. Morgan E Co.;
John Pier0ont Morgan !r.
.o$nding Partner of J.P.
Morgan @ Co.
J.P. GJackH Morgan Jr.
Chairman of the board of
J.P. Morgan @ Co., 5nc.
(%-%&;%-A&)
#enry P. Da"ison
.ormer Partner of J.P.
Morgan @ Co.
Le(is 6. Preston
Chairman of J.P. Morgan
@ Co. (%-:,;%-:-)
Dennis Weatherstone
Chairman of J.P. Morgan
@ Co. (%--,;%--<)
6homas W. Lamont
Partner of J.P. Morgan @
Co. (%-%%;%-A:)
/$ssell C. Leffing(ell
Partner of J.P. Morgan @
Co. (%-*&;%-<,)
eorge Whitney
Partner of J.P. Morgan @
Co. (%-*,;%-<<)
#arold !tanley
Partner of J.P. Morgan @
Co. (%-*:;%-&<)
#enry !. Morgan
Partner of J.P. Morgan @
Co. (%-*:;%-&<)
Dartners and Chairmen of =oldman Sachs E Co.;
Marc$s oldman
.o$nder and Partner of
oldman, !achs @ Co.
(%:=-;%-,A)
Charles E. !alt1man
Partner of oldman,
!achs @ Co. (%-<=;%-+&)
John L. Weinberg
Partner (%-<=;%--,) and
!enior Chairman (%--,;
*,,%) of oldman, !achs
@ Co.
#enry #. .o(ler
Partner of oldman,
!achs @ Co. (%-=-;%-:%)C
!ecretary of the 6reas$ry
(%-=<;%-=:)
John C. Whitehead
Partner of oldman,
!achs @ Co. (%-<<;%-:A)
John L. 6hornton
President of oldman
!achs @ Co. (%---;*,,&)
/obert E. /$bin
Partner of oldman,
!achs @ Co. (%-+%;%--*)C
!ecretary of the 6reas$ry
(%--<;%---)
!te0hen .riedman
Partner of oldman,
!achs @ Co. (%-+&;%--*)C
Chairman of oldman
!achs @ Co. (%--,;%--A)
#enry M. Pa$lson Jr.
Chairman and CE) of
oldman !achs (%---;
*,,=)C !ecretary of the
6reas$ry (*,,=;*,,-)
Lloyd C. Blankfein
Chairman and CE) of
oldman !achs
(*,,=;0resent)
Charles E. Mitchell
Chairman of the board of
2ational City Bank of 2e(
3ork (%-*-;%-&&)
James #. Perkins
Chairman of the board of
2ational City Bank of 2e(
3ork (%-&&;%-A,)
ordon !. /entschler
Chairman of the board of
2ational City Bank of 2e(
3ork (%-A,;%-A:)
William . Brady Jr.
Chairman of the board of
2ational City Bank of 2e(
3ork (%-A:;%-<*)
#o(ard C. !he0erd
Chairman of the board of
2ational City Bank of 2e(
3ork (%-<*;%-<-)
Walter B. Wriston
Chairman of Citibank
(%-+,;%-:A)
John !. /eed
Chairman and CE) of
Citibank (%-:A;%--:)
!anford 5. Weill
Chairman (%--:;*,,=)
and CE) (%--:;*,,&) of
Citigro$0
Charles ). Prince 555
Chairman (*,,=;*,,+)
and CE) (*,,A;*,,+) of
Citigro$0
/ichard D. Parsons
Chairman of the board of
Citigro$0 (*,,-;*,%*)
7lbert #. Wiggin
Chairman of the board of
Chase 2ational Bank
(%-%:;%-&,)
Winthro0 W. 7ldrich
Chairman of the board of
Chase 2ational Bank
(%-&A;%-<&)
John J. McCloy
Chairman of the board of
Chase Manhattan Bank
(%-<<;%-=%)
eorge Cham0ion
Chairman of the board of
Chase Manhattan Bank
(%-=%;%-=-)
Willard C. B$tcher
Chairman and CE) of
Chase Manhattan Bank
(%-:%;%--,)
Da"id /ockefeller
Chairman and CE) of
Chase Manhattan Bank
(%-=-;%-:%)
William B. #arrison Jr.
Chairman and CE) of JP
Morgan Chase
(*,,%;*,,=)
Jamie Dimon
Chairman of CE) of JP
Morgan Chase
(*,,+;0resent)
C. Do$glas Dillon
Chairman of the board of
Dillon, /ead @ Co.
(%-A=;%-<&)
2icholas .. Brady
Chairman and CE) of
Dillon, /ead @ Co.
(%-:*;%-::)C !ecretary of
the 6reas$ry (%-::;%--&)
John #. $tfre$nd
Chairman of the board
and CE) of !alomon
Brothers, 5nc. (%-:%;
%--%)
Walter D. !hi0ley
Chairman of the board of
Chemical Bank (%-:&;
%--%, %--A;%--=)
John P. Birkel$nd
Chairman and CE) of
Dillon, /ead @ Co. (%-::;
%--&)C Chairman of !BC
Warb$rg Dillon /ead 5nc.
(%--A;%--+)
.rank 7. Danderli0
President of 2ational City
Bank J2e( 3ork CityK
(%-,-;%-%-)
/obert #.B. Bald(in
Partner of Morgan !tanley
@ Co. (%-<:;%-=<, %-=+;
%-+<)
W. 7"erell #arriman
B.7. 3ale %-%&
Partner of Bro(n Brothers
#arriman @ Co.
(%-&%;%-A=)
/obert 7. Lo"ett
B.7. 3ale %-%:
Partner of Bro(n Brothers
#arriman @ Co. (%-&%;
%-A,, %-A=;%-A+, %-A-;
%-<,, %-<&;%-:=)
Prescott !. B$sh
B.7. 3ale %-%+
Partner of Bro(n Brothers
#arriman @ Co.
(%-&%;%-+*)
E. /oland #arriman
B.7. 3ale %-%+
Partner of Bro(n Brothers
#arriman @ Co.
(%-&%;%-+:)
Fnight Woolley
B.7. 3ale %-%+
Partner of Bro(n Brothers
#arriman @ Co.
(%-&%;%-:*)
Pierre Jay
B.7. 3ale %:-*
Chairman of the board of
.id$ciary 6r$st Com0any
(%-&,;%-A<)
7rtem$s L. ates
B.7. 3ale %-%:
President of 2e( 3ork
6r$st Co. (%-*-;%-A%)
!am$el /. Bertron
B.7. 3ale %::<
President of Bertron,
riscom @ Com0any, 5nc.,
international financiers
(%-%*;%-&:)
6homas Cochran
B.7. 3ale %:-A
Partner of J.P. Morgan @
Co. (%-%+;%-&=)
!. Parker ilbert Jr.
Partner of J.P. Morgan @
Co. (%-&%;%-&:)
/obert D. /oosa
Partner of Bro(n Brothers
#arriman @ Co.
(%-=<;%--&)
eorge !. Moore
Chairman of the board of
.irst 2ational City Bank of
2e( 3ork (%-=+;%-+,)
#enry C. 7le'ander
Chairman of Morgan
$aranty 6r$st Co. of
2e( 3ork (%-<-;%-=<)
6homas !. ates Jr.
Chairman of Morgan
$aranty 6r$st Co. of
2e( 3ork (%-=<;%-+,)
J$ni$s !0encer Morgan
Partner of eorge
Peabody @ Com0any
Jlater renamed J.!.
Morgan @ Co.K in London
.eli' . /ohatyn
eneral Partner of La1ard
.reres @ Co. (%-=,;%--+)C
8.!. 7mbassador to
.rance (%--+;*,,,)
Br$ce Wasserstein
Chairman and CE) of
La1ard .reres JbankK
(*,,%;*,,-)
Fenneth M. Jacobs
Chairman and CE) of
La1ard (*,,-;0resent)
Dernon E. Jordan Jr.
!enior Managing Director
of La1ard .reres
(*,,,;0resent)
.ranklin D. /aines
Partner of La1ard .reres
@ Co. (%-:<;%--%)C
Chairman and CE) of
.annie Mae (%---;*,,A)
eorge W. Ball
!enior Partner of Lehman
Brothers (%-=-;%-:*)
Peter . Peterson
Chairman and CE) of
Lehman Brothers
(%-+&;%-:A)
/ichard !. .$ld Jr.
Chairman and CE) of
Lehman Brothers
(%--A;*,,:)
7rth$r .. /yan
Chairman and CE) of
Pr$dential .inancial
(%--A;*,,:)
E. !tanley )>2eal
Chairman and CE) of
Merrill Lynch @ Co.
(*,,&;*,,+)
.ranco Bernabe
.ormer Dice Chairman of
/othschild E$ro0e
Peter D. !$therland
Chairman of oldman
!achs 5nternational
J. Martin 6aylor
Chief E'ec$ti"e of
Barclays 0lc (%--&;%--:)
Marc$s 7gi$s
Chairman, Barclays Bank
0lc (*,,+;*,%*)
#enry /. Fra"is
.o$nding Partner of
Fohlberg Fra"is /oberts
@ Co. J2e( 3ork CityK
(%-:+;0resent)
.rank . Xarb
eneral Partner of La1ard
.reres @ Co. (%-++;%-::)
J$les !. Bache
#ead of J.!. Bache @ Co.
Jbanking firm in 2e( 3ork
CityK (%:-*;%-AA)
Donald B. Marron
Chairman and CE) of
PaineWebber 5nc. Jno(
0art of 8B!K (%-:,;*,,,)
James D. /obinson 555
Chairman and CE) of
7merican E'0ress Co.
(%-++;%--&)
Fenneth 5. Chena$lt
Chairman and CE) of
7merican E'0ress Co.
(*,,%;0resent)
'eads of Central Banks
6homas #. McFittrick
President of the Bank for
5nternational !ettlements
(%-A,;%-A=)
#Lalmar !chacht
President of the
/eichsbank (%-*&;%-&,,
%-&&;%-&-)
Montag$ C. 2orman
o"ernor of the Bank of
England (%-*,;%-AA)
!ir Mer"yn 7llister Fing
o"ernor of the Bank of
England (*,,&;*,%&)
Mark J. Carney
o"ernor of the Bank of
England (*,%&;0resent)C
o"ernor of the Bank of
Canada (*,,:;*,%&)
Jean;Cla$de 6richet
President of E$ro0ean
Central Bank
(*,,&;*,%%)C o"ernor of
Ban?$e de .rance
(%--&;*,,&)
Mario Draghi
President of E$ro0ean
Central Bank (*,%%;
0res.)C o"ernor of Banca
d>5talia (*,,=;*,%%)
Farl )tto Pohl
JermanyK
President of the De$tsche
B$ndesbank (%-:,;%--%)
Carlo 7. Ciam0i
o"ernor of Banca d>5talia
(%-+-;%--&)
William McC. Martin Jr.
Chairman of the .ederal
/eser"e (%-<%;%-+,)
BenLamin !trong
President of the .ederal
/eser"e Bank of 2e(
3ork (%-%A;%-*:)
eorge L. #arrison
President of the .ederal
/eser"e Bank of 2e(
3ork (%-*:;%-A,)
7llan !0ro$l
President of the .ederal
/eser"e Bank of 2e(
3ork (%-A%;%-<=)
7lfred #ayes
President of the .ederal
/eser"e Bank of 2e(
3ork (%-<=;%-+<)
Pa$l 7dol0h Dolcker
Chairman of the .ederal
/eser"e (%-+-;%-:+)C
President of the .ederal
/eser"e Bank of 2e(
3ork (%-+<;%-+-)
E. erald Corrigan
President of the .ederal
/eser"e Bank of 2e(
3ork (%-:<;%--&)
William J. McDono$gh
President of the .ederal
/eser"e Bank of 2e(
3ork (%--&;*,,&)
6imothy .. eithner
President of the .ederal
/eser"e Bank of 2e(
3ork (*,,&;*,,-)C
!ecretary of the 6reas$ry
(*,,-;*,%&)
William C. D$dley
President of the .ederal
/eser"e Bank of 2e(
3ork (*,,-;0resent)
Michael #. Mosko(
President of the .ederal
/eser"e Bank of Chicago
(%--A;*,,+)
Christine Lagarde
Managing Director of the
5nternational Monetary
.$nd (*,%%;0resent)
John P. Li0sky
.irst De0$ty Managing
Director of 5nternational
Monetary .$nd
(*,,=;*,%%)
7nne ). Fr$eger
.irst De0$ty Managing
Director of the
5nternational Monetary
.$nd (*,,%;*,,=)
/ichard D. Erb
De0$ty Managing Director
of the 5nternational
Monetary .$nd
(%-:A;%--A)
L$c Coene
o"ernor, 2ational Bank
of Belgi$mC Director of
Bank for 5nternational
!ettlements (*,%%;0res.)
Per Jacobbson
Managing Director of 5M.
(%-<=;%-=&)
Pierre;Pa$l !ch(eit1er
Managing Director of 5M.
(%-=&;%-+&)
Jac?$es de Larosiere
Managing Director of 5M.
(%-+:;%-:+)
/odrigo de /ato
Managing Director of 5M.
(*,,A;*,,+)
Domini?$e !tra$ss;Fahn
Managing Director of 5M.
(*,,+;*,%%)
E$gene /. Black
President of 6he World
Bank (%-A-;%-=*)
eorge D. Woods
President of 6he World
Bank (%-=&;%-=:)
/obert !. Mc2amara
President of 6he World
Bank (%-=:;%-:%)
7.W. Cla$sen
President of 6he World
Bank (%-:%;%-:=)
Barber B. Conable
President of 6he World
Bank (%-:=;%--%)
Jelle XiLlstra
Chairman of the Board
and President of the Bank
for 5nternational
!ettlements (%-=+;%-:%)
Willem .. D$isenberg
Chairman of the Board
and President of the Bank
for 5nternational
!ettlements (%-::;%--,,
%--A;%--+)
7lfons Der0laetse
Chairman of the Board
and President of the Bank
for 5nternational
!ettlements (%--+;%---)
8rban BYckstrZm
Chairman of the Board
and President of the Bank
for 5nternational
!ettlements (%---;*,,*)
7.#.E.M. G2o$tH Wellink
Chairman of the Board
and President of the Bank
for 5nternational
!ettlements (*,,*;*,,=)
International (e)ish Bankers % &inanciers
E"elyn de /othschild
Jreat BritainK
former Chairman of 2.M.
/othschild @ !ons
(London)
Edmond de /othschild
(yo$nger) J.ranceK
Je(ish banker
$y de /othschild
Jacob /othschild
!ir !iegm$nd Warb$rg
Jreat BritainK
Je(ish banker
Mayer 7mschel
/othschild

Lionel 2athan /othschild
2athan Meyer /othschild
.o$nder of 2.M.
/othschild @ !ons
(London)
Edmond de /othschild
(elder)
financier of the Xionist
mo"ement

Lord Walter /othschild
7$g$st Belmont !r.
/othschild agent and Ci"il
War financierC Chairman
of the Democratic
2ational Committee
(%:=,;%:+*)
Jose0h !eligman
2e( 3ork City financier
d$ring the Ci"il War
Jacob #. !chiff
Partner of F$hn, Loeb @
Co. Jbank in 2e( 3ork
CityK and Bolshe"ik
/e"ol$tion financier
Pa$l M. Warb$rg
Dice Chairman of the
.ederal /eser"e
(%-%=;%-%:)C Partner of
F$hn, Loeb @ Co.

Ma' M. Warb$rg
#ead of M.M. Warb$rg @
Co. Jbanking firm in
#amb$rg, ermanyK
Ma$rice /. reenberg
Chairman and CE) of
7merican 5nternational
ro$0 (%-:-;*,,<)
!eymo$r G!yH !ternberg
Chairman and CE) of
2e( 3ork Life 5ns$rance
Co. (%--+;*,,:)
Da"id M. /$benstein
.o$nder of the Carlyle
ro$0
!te0hen 7. !ch(ar1man
Chairman and CE) of
6he Blackstone ro$0
(%-:<;0resent)
Bernard Bar$ch
Chairman of the War
5nd$stries Board (%-%:;
%-%-) $nder 8.!.
President Woodro(
Wilson
James D. Wolfensohn
President of the World
Bank (%--<;*,,<)
/obert B. Xoellick
President of 6he World
Bank (*,,+;*,%*)
Jacob .renkel
o"ernor of the Bank of
5srael (%--%;*,,,)
!tanley .ischer
o"ernor of the Bank of
5srael (*,,<;*,%&)
eorge !oros
Chairman of !oros .$nd
Management (%--=;0res.)
E$gene Meyer
Chairman of the .ederal
/eser"e (%-&,;%-&&)
7rth$r .rank B$rns
Chairman of the .ederal
/eser"e (%-+,;%-+:)
!ir 7lan reens0an
Chairman of the .ederal
/eser"e (%-:+;*,,=)
Ben !halom Bernanke
Chairman of the .ederal
/eser"e (*,,=;*,%A)
7nthony M. !olomon
President of the .ederal
/eser"e Bank of 2e(
3ork (%-:,;%-:A)
eorge Bl$menthal
Partner of La1ard .reres
@ Co. (%:-&;%-,A)C
!enior Partner of La1ard
.reres @ Co. (%-,A;%-*<)
.rank 7ltsch$l
Partner of La1ard .reres
@ Co. (%-%=;%-A<)
#erbert #. Lehman
Partner of Lehman
Brothers (%-,:;%-%A,
%-%-;%-*:)
/obert Lehman
Partner of Lehman
Brothers (%-*<;%-=-)
7lbert !tra$ss
Dice Chairman of the
.ederal /eser"e
(%-%:;%-*,)
.eli' Warb$rg
Partner of F$hn, Loeb @
Co. (%:-=;%-&+)
)tto #. Fahn
Partner of F$hn, Loeb @
Co. (%:-+;%-&A)
Mortimer L. !chiff
Partner of F$hn, Loeb, @
Co. (%-,,;%-&%)
.rederick M. Warb$rg
Partner of F$hn, Loeb @
Co. (%-&%;%-+&)
BenLamin J. B$tten(ieser
Partner of F$hn, Loeb @
Co. (%-&*;%-++)
International !ankers and 'inanciers
5nternational BankersB
John Pier0ont Morgan !r. P .o$nding Partner of J.P. Morgan @ Co.
John Pier0ont GJackH Morgan Jr. P Chairman of the board of J.P. Morgan @ Co., 5nc. (%-%&;%-A&)
#enry P. Da"ison P .ormer Partner of J.P. Morgan @ Co.
6homas W. Lamont (C./) P Partner of J.P. Morgan @ Co. (%-%%;%-A:)C Chairman of J.P. Morgan @ Co. (%-A&;%-A:)
/$ssell C. Leffing(ell (C./) P Partner of J.P. Morgan @ Co. (%-*&;%-<,)C Chairman of J.P. Morgan @ Co. (%-A:;%-<,)
eorge Whitney (C./) P Partner of J.P. Morgan @ Co. (%-*,;%-<<)C Chairman of J.P. Morgan @ Co. (%-<,;%-<<)
#arold !tanley (C./, !@B) P Partner of J.P. Morgan @ Co. (%-*:;%-&<)C President of Morgan, !tanley @ Co. (%-&<;%-A%)
#enry !. Morgan P Partner of J.P. Morgan @ Co. (%-*:;%-&<)
Le(is 6. Preston (C./) P Chairman of J.P. Morgan @ Co. JMorgan $aranty 6r$st Co. of 2e( 3orkK (%-:,;%-:-)
Dennis Weatherstone (C./) P Chairman of J.P. Morgan @ Co. JMorgan $aranty 6r$st Co. of 2e( 3orkK (%--,;%--<)
Marc$s oldman P .o$nder and Partner of oldman, !achs @ Co. (%:=-;%-,A)
Charles E. !alt1man (C./, /!) P Partner of oldman, !achs @ Co. (%-<=;%-+&)
John L. Weinberg (C./) P Partner of oldman, !achs @ Co. (%-<=;%--,)C !enior Chairman of oldman, !achs @ Co. (%--,;*,,%)
#enry #. .o(ler (C./) P Partner of oldman, !achs @ Co. (%-=-;%-:%)C !ecretary of the 6reas$ry (%-=<;%-=:)
John C. Whitehead (C./, 6C, BM) P Partner of oldman, !achs @ Co. (%-<<;%-:A)
John L. 6hornton (C./, BM) P President of oldman !achs @ Co. (%---;*,,&)
/obert E. /$bin (C./, BM) P Partner of oldman, !achs @ Co. (%-+%;%--*)C !ecretary of the 6reas$ry (%--<;%---)C Chairman of the board of
Citigro$0 (*,,+)C Co;Chairman of the Co$ncil on .oreign /elations (*,,+;0resent)
!te0hen .riedman (C./, 6C, BM) P Partner of oldman, !achs @ Co. (%-+&;%--*)C Chairman of oldman !achs @ Co. (%--,;%--A)
#enry M. Pa$lson Jr. (C./, BM) P Chairman and CE) of oldman !achs (%---;*,,=)C !ecretary of the 6reas$ry (*,,=;*,,-)
Lloyd C. Blankfein (C./, BM) P Chairman and CE) of oldman !achs (*,,=;0resent)
Charles E. Mitchell (C./) P Chairman of the board of 2ational City Bank of 2e( 3ork (%-*-;%-&&)
James #. Perkins (C./) P Chairman of the board of 2ational City Bank of 2e( 3ork (%-&&;%-A,)
ordon !. /entschler (C./) P Chairman of the board of 2ational City Bank of 2e( 3ork (%-A,;%-A:)
William . Brady Jr. (C./) P Chairman of the board of 2ational City Bank of 2e( 3ork (%-A:;%-<*)
#o(ard C. !he0erd (C./) P Chairman of the board of 2ational City Bank of 2e( 3ork (%-<*;%-<-)
Walter B. Wriston (C./, BM) P Chairman of Citibank4Citicor0 (%-+,;%-:A)
John !. /eed (C./, BM) P Chairman and CE) of Citibank (%-:A;%--:)
!anford 5. Weill (C./) P Chairman (%--:;*,,=) and CE) (%--:;*,,&) of Citigro$0
Charles ). Prince 555 (C./) P Chairman (*,,=;*,,+) and CE) (*,,A;*,,+) of Citigro$0
/ichard D. Parsons (C./) P Chairman of the board of Citigro$0 (*,,-;*,%*)
7lbert #. Wiggin (C./) P Chairman of the board of Chase 2ational Bank (%-%:;%-&,)
Winthro0 W. 7ldrich (C./) P Chairman of Chase 2ational Bank (%-&A;%-<&)C 8.!. 7mbassador to reat Britain (%-<&;%-<+)
John McCloy (C./, BM) P Chairman of Chase Manhattan Bank (%-<<;%-=%)C President of the World Bank (%-A+;%-A-)
eorge Cham0ion (C./) P Chairman of the board of Chase Manhattan Bank (%-=%;%-=-)
Da"id /ockefeller (C./, 6C, BM, BC) P Chairman and CE) of Chase Manhattan Bank (%-=-;%-:%)
Willard C. B$tcher (C./) P Chairman and CE) of Chase Manhattan Bank (%-:%;%--,)
William B. #arrison Jr. (C./) P Chairman and CE) of JP Morgan Chase (*,,%;*,,=)
Jamie Dimon (C./, 6C) P Chairman of CE) of JP Morgan Chase (*,,+;0resent)
C. Do$glas Dillon (C./, BM) P Chairman of the board of Dillon, /ead @ Co. (%-A=;%-<&)C 8.!. !ecretary of the 6reas$ry (%-=%;%-=<)
2icholas .. Brady (C./, BM) P Chairman and CE) of Dillon, /ead @ Co. (%-:*;%-::)C !ecretary of the 6reas$ry (%-::;%--&)
John #. $tfre$nd (C./) P Chairman of the board and CE) of !alomon Brothers, 5nc. (%-:%;%--%)
Walter D. !hi0ley (C./, 6C) P Chairman of the board of Chemical Bank (%-:&;%--%, %--A;%--=)
John P. Birkel$nd (C./) P Chairman and CE) of Dillon, /ead @ Co. (%-::;%--&)C Chairman of !BC Warb$rg Dillon /ead 5nc. (%--A;%--+)
.rank 7. Danderli0 P President of 2ational City Bank J2e( 3ork CityK (%-,-;%-%-)C Chairman of the Economic Cl$b of 2e( 3ork (%-%=;%-%:)
/obert #.B. Bald(in (C./) P President of Morgan !tanley @ Co. (%-+&;%-:*)C Partner of Morgan !tanley @ Co. (%-<:;%-=<, %-=+;%-+<)
7"erell #arriman (C./, !@B) P Partner of Bro(n Brothers #arriman @ Co. (%-&%;%-A=)C 8.!. 7mbassador to !o"iet 8nion (%-A&;%-A=)C 8.!.
!ecretary of Commerce (%-A=;%-A:)C o"ernor of 2e( 3ork (%-<<;%-<:)
/obert 7. Lo"ett (C./, !@B) P Partner of Bro(n Brothers #arriman @ Co. (%-&%;%-A,, %-A=;%-A+, %-A-;%-<,, %-<&;%-:=)C 8.!. !ecretary of
Defense (%-<%;%-<&)
Prescott !. B$sh (!@B) P Partner of Bro(n Brothers #arriman @ Co. (%-&%;%-+*)C 8.!. !enator (%-<*;%-=&)
E. /oland #arriman (C./, !@B) P Partner of Bro(n Brothers #arriman @ Co. (%-&%;%-+:)
Fnight Woolley (C./, !@B) P Partner of Bro(n Brothers #arriman @ Co. (%-&%;%-:*)
Pierre Jay (C./, !@B) P Chairman of the board of .id$ciary 6r$st Com0any (%-&,;%-A<)
7rtem$s L. ates (C./, !@B) P President of 2e( 3ork 6r$st Co. (%-*-;%-A%)
!am$el /. Bertron (C./, !@B) P President of Bertron, riscom @ Com0any, 5nc., international financiers (%-%*;%-&:)
6homas Cochran (!@B) P Partner of J.P. Morgan @ Co. (%-%+;%-&=)
!. Parker ilbert Jr. (C./) P Partner of J.P. Morgan @ Co. (%-&%;%-&:)
/obert D. /oosa (C./, 6C, BM, /!) P Partner of Bro(n Brothers #arriman @ Co. (%-=<;%--&)
eorge !. Moore (C./) P Chairman of the board of .irst 2ational City Bank of 2e( 3ork (%-=+;%-+,)
#enry C. 7le'ander (C./) P Chairman of Morgan $aranty 6r$st Co. of 2e( 3ork (%-<-;%-=<)
6homas !. ates Jr. (C./) P Chairman of Morgan $aranty 6r$st Co. of 2e( 3ork (%-=<;%-+,)
J$ni$s !0encer Morgan P Partner of eorge Peabody @ Com0any Jlater renamed J.!. Morgan @ Co.K in LondonC father of J.P. Morgan !r.
.eli' . /ohatyn (C./, 6C) P eneral Partner of La1ard .reres @ Co. (%-=,;%--+)C 8.!. 7mbassador to .rance (%--+;*,,,)
Br$ce Wasserstein (C./) P Chairman and CE) of La1ard .reres (*,,%;*,,-)
Fenneth M. Jacobs (BM) P Chairman and CE) of La1ard (*,,-;0resent)
Dernon E. Jordan, Jr. (C./, 6C, BM) P !enior Managing Director of La1ard .reres (*,,,;0resent)
.ranklin D. /aines (C./, 6C, BM, /!) P Partner of La1ard .reres @ Co. (%-:<;%--%)C Chairman and CE) of .ederal 2ational Mortgage
7ssociation J.annie MaeK (%---;*,,A)
eorge W. Ball (C./, 6C, BM) P !enior Partner of Lehman Brothers (%-=-;%-:*)C 8nder 8.!. !ecretary of !tate (%-=%;%-==)
Peter . Peterson (C./, 6C, BM) P Chairman and CE) of Lehman Brothers (later Lehman Brothers F$hn Loeb @ Co.) (%-+&;%-:A)C
Chairman of the Co$ncil on .oreign /elations (%-:<;*,,+)C 8.!. !ecretary of Commerce (%-+*;%-+&)
/ichard !. .$ld Jr. (C./) P Chairman and CE) of Lehman Brothers (%--A;*,,:)
7rth$r .. /yan (C./, 6C) P Chairman and CE) of Pr$dential .inancial (%--A;*,,:)
E. !tanley )>2eal (C./) P Chairman and CE) of Merrill Lynch @ Co. (*,,&;*,,+)
.ranco Bernabe (BM) P former Dice Chairman of /othschild E$ro0e
Peter D. !$therland (6C, BM) P Chairman of oldman !achs 5nternational
J. Martin 6aylor (6C, BM) P Chief E'ec$ti"e of Barclays 0lc (%--&;%--:)
Marc$s 7gi$s (BM) P Chairman, Barclays Bank 0lc (*,,+;*,%*)
#enry /. Fra"is (C./, BM) P .o$nding Partner of Fohlberg Fra"is /oberts @ Co. (%-:+;0resent)
.rank . Xarb (C./) P eneral Partner of La1ard .reres @ Co. (%-++;%-::)
J$les !. Bache (C./) P #ead of J.!. Bache @ Co. Jbanking firm in 2e( 3ork CityK (%:-*;%-AA)
Donald B. Marron (C./) P Chairman and CE) of PaineWebber 5nc. Jno( 0art of 8B!K (%-:,;*,,,)
James D. /obinson 555 (C./, BM) P Chairman and CE) of 7merican E'0ress Co. (%-++;%--&)
Fenneth 5. Chena$lt (C./) P Chairman and CE) of 7merican E'0ress Co. (*,,%;0resent)
Central BankersB
6homas #. McFittrick (C./) P President of the Bank for 5nternational !ettlements (%-A,;%-A=)
#Lalmar !chacht P President of the /eichsbank (%-*&;%-&,, %-&&;%-&-)
Montag$ C. 2orman P o"ernor of the Bank of England (%-*,;%-AA)
!ir Mer"yn 7llister Fing (BM) P o"ernor of the Bank of England (*,,&;*,%&)
Mark J. Carney (BM) P o"ernor of the Bank of England (*,%&;0resent)C o"ernor of the Bank of Canada (*,,:;*,%&)
Jean;Cla$de 6richet (BM) ; President of E$ro0ean Central Bank (*,,&;*,%%)C o"ernor of Ban?$e de .rance (%--&;*,,&)
Mario Draghi (BM) P President of E$ro0ean Central Bank (*,%%;0res.)C o"ernor of Banca d>5talia (*,,=;*,%%)
Farl )tto Pohl (BM) P President of the De$tsche B$ndesbank (%-:,;%--%)
Carlo 7. Ciam0i (BM) P o"ernor of Banca d>5talia (%-+-;%--&)
William McChesney Martin Jr. (C./) P Chairman of the .ederal /eser"e (%-<%;%-+,)
BenLamin !trong (C./) P President of the .ederal /eser"e Bank of 2e( 3ork (%-%A;%-*:)
eorge L. #arrison (C./, !@B) P President of the .ederal /eser"e Bank of 2e( 3ork (%-*:;%-A,)
7llan !0ro$l (C./, BC) P President of the .ederal /eser"e Bank of 2e( 3ork (%-A%;%-<=)
7lfred #ayes (C./, /!) P President of the .ederal /eser"e Bank of 2e( 3ork (%-<=;%-+<)
Pa$l 7. Dolcker (C./, 6C, BM) P Chairman of the .ederal /eser"e (%-+-;%-:+)C President of .ederal /eser"e Bank of 2e( 3ork (%-+<;%-+-)
E. erald Corrigan (C./, 6C, BM) P President of the .ederal /eser"e Bank of 2e( 3ork (%-:<;%--&)
William J. McDono$gh (C./, 6C, BM) P President of the .ederal /eser"e Bank of 2e( 3ork (%--&;*,,&)
6imothy .. eithner (C./, 6C, BM) P President of the .ederal /eser"e Bank of 2e( 3ork (*,,&;*,,-)C !ecretary of the 6reas$ry (*,,-;*,%&)
William C. D$dley (C./, 6C) P President of the .ederal /eser"e Bank of 2e( 3ork (*,,-;0resent)
Michael #. Mosko( (C./, BM) P President of the .ederal /eser"e Bank of Chicago (%--A;*,,+)
Christine Lagarde (BM) P Managing Director of the 5nternational Monetary .$nd (*,%%;0resent)
John P. Li0sky (C./, BM) P .irst De0$ty Managing Director of 5nternational Monetary .$nd (*,,=;*,%%)
7nne ). Fr$eger (C./) P .irst De0$ty Managing Director of the 5nternational Monetary .$nd (*,,%;*,,=)
/ichard D. Erb (C./) P De0$ty Managing Director of the 5nternational Monetary .$nd (%-:A;%--A)
L$c Coene (6C, BM) P o"ernor, 2ational Bank of Belgi$mC Director of Bank for 5nternational !ettlements (*,%%;0resent)
Per Jacobbson (BM) P Managing Director of the 5nternational Monetary .$nd (%-<=;%-=&)
Pierre;Pa$l !ch(eit1er (BM) P Managing Director of the 5nternational Monetary .$nd (%-=&;%-+&)
Jac?$es de Larosiere (BM) P Managing Director of the 5nternational Monetary .$nd (%-+:;%-:+)C o"ernor of Ban?$e de .rance (%-:+;%--&)
/odrigo de /ato (BM) P Managing Director of the 5nternational Monetary .$nd (*,,A;*,,+)
Domini?$e !tra$ss;Fahn (BM) P Managing Director of the 5nternational Monetary .$nd (*,,+;*,%%)
E$gene /. Black (C./, BM) P President of 6he World Bank (%-A-;%-=*)
eorge D. Woods (BM) P President of 6he World Bank (%-=&;%-=:)
/obert !. Mc2amara (C./, 6C, BM) P President of 6he World Bank (%-=:;%-:%)
7.W. Cla$sen (6C, BM) P President of 6he World Bank (%-:%;%-:=)
Barber B. Conable (C./, BM) P President of 6he World Bank (%-:=;%--%)
Jelle XiLlstra (BM) P Chairman of the Board and President of the Bank for 5nternational !ettlements (%-=+;%-:%)
Willem .. GWimH D$isenberg (BM) P Chairman of the Board and President of the Bank for 5nternational !ettlements (%-::;%--,, %--A;%--+)C
President of the Central Bank of 2etherlands JDe 2ederlandsche BankK (%-:*;%--+)
7lfons Der0laetse (BM) P Chairman of the Board and President of the Bank for 5nternational !ettlements (%--+;%---)
8rban BYckstrZm (BM) P Chairman of the Board and President of the Bank for 5nternational !ettlements (%---;*,,*)
7.#.E.M. G2o$tH Wellink (BM) P Chairman of the Board and President of the Bank for 5nternational !ettlements (*,,*;*,,=)
2oteB
C./ V Co$ncil on .oreign /elations, 6C V 6rilateral Commission, BM V Bilderberg Meetings, BC V Bohemian Cl$b, !@B V !k$ll and Bones
Je(ish Bankers and .inanciersB
E"elyn de /othschild Jreat BritainK (BM) P former Chairman of 2.M. /othschild @ !ons (London)
Edmond de /othschild (yo$nger) J.ranceK (6C, BM) P Je(ish banker and financier d$ring the Dietnam War
$y de /othschild
Jacob /othschild P c$rrent head of the /othschild family
!ir !iegm$nd Warb$rg Jreat BritainK (BM) P Je(ish banker
Mayer 7mschel /othschild P fo$nder of the /othschild dynasty
Lionel 2athan /othschild
2athan Meyer /othschild P .o$nder of 2.M. /othschild @ !ons (London)
Edmond de /othschild (elder) P financier of the Xionist mo"ement
Lord Walter /othschild
7$g$st Belmont !r. P /othschild agent and Ci"il War financierC Chairman of the Democratic 2ational Committee (%:=,;%:+*)
Jose0h !eligman P 2e( 3ork City financier d$ring the Ci"il War
Jacob #. !chiff P Partner of F$hn, Loeb @ Co. Jbank in 2e( 3ork CityK and Bolshe"ik /e"ol$tion financier
Ma' M. Warb$rg P #ead of M.M. Warb$rg @ Co. Jbanking firm in #amb$rg, ermanyK
Ma$rice /. reenberg (C./, 6C, BM, BC) P Chairman and CE) of 7merican 5nternational ro$0 (%-:-;*,,<)
!eymo$r G!yH !ternberg (C./) P Chairman and CE) of 2e( 3ork Life 5ns$rance Co. (%--+;*,,:)
Da"id M. /$benstein (C./, 6C) P .o$nder of the Carlyle ro$0
!te0hen 7. !ch(ar1man (C./, !@B) P Chairman and CE) of 6he Blackstone ro$0 (%-:<;0resent)
Bernard Bar$ch P Chairman of the War 5nd$stries Board (%-%:;%-%-) $nder 8.!. President Woodro( WilsonC Democratic Party financier
James D. Wolfensohn (C./, BM) P President of the World Bank (%--<;*,,<)
/obert B. Xoellick (C./, 6C, BM) P President of 6he World Bank (*,,+;*,%*)
Jacob 7. .renkel (6C) P o"ernor of the Bank of 5srael (%--%;*,,,)
!tanley .ischer (C./, 6C, BM) P o"ernor of the Bank of 5srael (5srael>s central bank) (*,,<;*,%&)C .irst De0$ty Managing Director of the
5nternational Monetary .$nd (%--A;*,,%)
Pa$l M. Warb$rg (C./) P Dice Chairman of the .ederal /eser"e (%-%=;%-%:)C Partner of F$hn, Loeb @ Co. (%-,*;%-%A)
7lbert !tra$ss (C./) P Dice Chairman of the .ederal /eser"e (%-%:;%-*,)
E$gene Meyer (C./) P Chairman of the .ederal /eser"e (%-&,;%-&&)
7rth$r .rank B$rns (C./, 6C) P Chairman of the .ederal /eser"e (%-+,;%-+:)C 8.!. 7mbassador to West ermany (%-:%;%-:<)
!ir 7lan reens0an (C./, 6C, BM) P Chairman of the .ederal /eser"e (%-:+;*,,=)
Ben !halom Bernanke (BM) P Chairman of the .ederal /eser"e (*,,=;*,%A)
7nthony M. !olomon (C./, 6C, BM) P President of the .ederal /eser"e Bank of 2e( 3ork (%-:,;%-:A)
eorge Bl$menthal (C./) P Partner of La1ard .reres @ Co. (%:-&;%-,A)C !enior Partner of La1ard .reres @ Co. (%-,A;%-*<)
.rank 7ltsch$l (C./) P Partner of La1ard .reres @ Co. (%-%=;%-A<)
#erbert #. Lehman (C./) P Partner of Lehman Brothers (%-,:;%-%A, %-%-;%-*:)
/obert Lehman (C./) P Partner of Lehman Brothers (%-*<;%-=-)
.eli' M. Warb$rg (C./) P Partner of F$hn, Loeb @ Co. (%:-=;%-&+)
)tto #. Fahn (C./) P Partner of F$hn, Loeb @ Co. (%:-+;%-&A)C #olly(ood financier
Mortimer L. !chiff (C./) P Partner of F$hn, Loeb, @ Co. (%-,,;%-&%)
.rederick M. Warb$rg (C./) P Partner of F$hn, Loeb @ Co. (%-&%;%-+&)
BenLamin J. B$tten(ieser (C./) P Partner of F$hn, Loeb @ Co. (%-&*;%-++)
eorge !oros (C./, 6C, BM) P Chairman of !oros .$nd Management (%--=;0resent)
2oteB
C./ V Co$ncil on .oreign /elations, 6C V 6rilateral Commission, BM V Bilderberg Meetings, BC V Bohemian Cl$b, !@B V !k$ll and Bones
Dominique (trauss89ahn *center., Managing Girector of the &nternational Monetary 6und H&M6I a member of the Socialist
+arty of 6rance and a 6rench )e%ish financier departs a ;ew #ork )olice Department precinct in ;ew #ork ity on (unday, 0ay
+E, 6A++. Dominique (trauss89ahn was accused of se?ually assaulting a hotel maid at (ofitel ;ew #ork Hotel, a lu?urious hotel in
;ew #ork ity, on (aturday, 0ay +G, 6A++! Dominique (trauss89ahn was arrested at 4ohn <. 9ennedy International 3irport in ;ew
#ork ity as he attempted to flee the 'nited (tates of 3merica. Dominique (trauss89ahn resigned as 0anaging Director of the
International 0onetary <und on 0ay +/, 6A++. *@euters.
The =ank 4ob
B# Bethan# *c+ean
,anit# &air
(anuar# -./.
One of the biggest disconnects on Wall Street today is between the way Goldman Sachs sees itself (theyre the smartest) and the
way everyone else sees Goldman (theyre the smartest, greediest, and most dangerous). Questioning .!.O. "loyd #lan$fein,
.O.O. Gary ohn, and .%.O. &avid 'iniar, among others, the author e()lores how their firm navigated the colla)se of
Se)tember *++,, why it has already set aside -./.0 billion for com)ensation this year, and which lines its accused of crossing.
0oldman Sachs C!E!1! +lo#d Blankfein and C!1!1! 0ar# Cohn2 in the boardroom of 0oldman$s head3uarters2 in 4e) 5ork Cit#!
Cohn 6)as al)a#s +lo#d$s gu#! I mean2 al)a#s27 sa#s a former 0oldman trader! 8Photograph b# Annie +eibo9it:;
+lo#d Blankfein<)ho )as born poor in the South Bron=2 put himself through 'ar9ard2 and became the C!E!1!
of 0oldman Sachs in -..>2 after -? #ears at the firm<is a histor# buff2 a la)#er2 a )ordsmith2 and something of
an armchair philosopher! 1n a @hursda# in 1ctober<the 9er# da# )hen the firm announced it had made AB!?
billion in profits so far this #ear<he speculates )hether 0oldman )ould ha9e sur9i9ed the financial
conflagration in the fall of -..B entirel# on its o)n2 )ithout an# kind of help2 implicit or e=plicit2 from the
go9ernment! 6I thought )e )ould2 but it )as a hell of a higher risk than I )as happ# )ith27 he sa#s2 sitting in his
C.thDfloor office in 0oldman$s old head3uarters2 at BE Broad Street2 in +o)er *anhattan! 6As a result of actions
taken Fb# the go9ernmentG2 )e )ere better off than )e other)ise )ould ha9e been! Has it dispositi9e? I don$t
kno)! I don$t think so I but I don$t kno)!7
'e adds2 6If #ou ask2 in m# heart of hearts2 do I think )e )ould ha9e failed I 7 'e pauses2 then pulls out his
trump card: at the height of the crisis2 Harren Buffett agreed to in9est AE billion in 0oldman Sachs!
Buffett2 the 9enerated 4ebraska in9estor2 is famousl# reluctant to put mone# into Hall Street firms! But he has a
long histor# )ith 0oldman! As a /.D#earDold he )ent to 4e) 5ork )ith his father2 a broker in 1maha2 and the#
stopped b# 0oldman Sachs to 9isit Sidne# Heinberg! As 0oldman$s leader from /JC. to /J>J2 Heinberg helped
build the firm into the po)erhouse it became! 6&or ?E minutes2 Heinberg talked to me as if I )ere a gro)nDup27
Buffett likes to recall! 6And on the )a# out he asked me2 KHhat stock do #ou like2 Harren?$7 In later #ears Buffett
liked to cite B#ron @rott2 )ho until recentl# )orked in 0oldman$s Chicago office2 as one of the fe) in9estment
bankers )orth his salt!
And so2 )hen @rott asked Buffett if he )ould be interested in in9esting in 0oldman during the frenetic da#s
after +ehman Brothers$ bankruptc#2 Buffett thought about it2 and on @uesda#2 September -C2 he and @rott
hammered out a deal! In a 9er# brief<and 9er# Buffett<call that afternoon )ith Blankfein2 @rott2 and then coD
president (on Hinkelried2 Buffett said he )ould in9est AE billion in e=change for a heft# /. percent di9idend
and rights to bu# additional stock o9er the ne=t fi9e #ears at a price of A//E a share! 6I$m taking m# grandkids
out to air# "ueen27 he told the 0oldman men! 6Call me and let me kno) )hat #ou )ant to do!7
0oldman accepted Buffett$s tough terms2 and thanks to the in9estment )as able to raise another AE!LE billion2
b# selling stock to other in9estors! Blankfein sa#s the firm could ha9e raised multiples of that but didn$t need
more mone#! And Buffett has said that )hile no one could e9er understand the balance sheet of an# Hall Street
firm2 he has confidence that Blankfein is both 9er# smart and 9er# conser9ati9e! But there )as another reason
he in9ested: 6If I didn$t think the go9ernment )as going to act2 I )ould not be doing an#thing this )eek27 he
e=plained to C4BC$s Beck# "uick! 6I might be tr#ing to undo things this )eek!7
Blankfein refers to this period as 6the fog of )ar27 and #et at BE Broad Street a clear stor# line has emerged from
almost e9er# le9el of the firm: it )as 0oldman$s muchDcelebrated culture and its superior abilit# to manage risk2
not the helping hand of the go9ernment2 that got it through the e9ents of fall -..B! Hhen I ask 0ar# Cohn2
0oldman$s chief operating officer2 and a9id ,iniar2 the firm$s chief financial officer2 if2 barring a financial
Armageddon2 0oldman )ould ha9e sur9i9ed )ithout all the 9arious forms of go9ernment inter9ention2 ,iniar
sa#s2 61es27 almost before I can finish the 3uestion! 6I think )e )ould not ha9e failed27 sa#s Cohn! 6He had
cash!7
I t$s hard to find an#one outside the firm )ho doesn$t see this as re9isionist histor#! Combine that )ith further
proof of 0oldman$s )orld9ie)<namel#2 the huge amount of mone# its people )ill earn this #ear 8A/>!L billion
has alread# been set aside for compensation2 )hich could translate into an a9erage of AL..2... per 0oldman
emplo#ee;<and #ou get rage! Hidespread rage! 6Complete crap27 sa#s a senior financier2 about 0oldman not
needing the go9ernment$s help! 6It is a bunch of bullshit27 sa#s a former 0oldman Sachs managing director!
E9en 4eel Mashkari2 a former 0oldman banker2 )ho became an assistant secretar# of the @reasur# last summer2
told 3he 4ew 1or$ 3imes that 6e9er# single Hall Street firm2 despite their protest toda#2 e9er# single one
benefited from our actions! And )hen the# get up there and sa#2 KHell2 )e didn$t need it2$ that$s bull!7
&actor in 0oldman$s political connections<t)o of the firm$s past four leaders ha9e ser9ed as @reasur#
secretaries2 )hile another source tells me about a 0DL meeting )here he counted -? to -B out of C- finance
officials in attendance as e=D0oldman men<and #ou get conspirac# theories on steroids! 6@'IS &IR* IS PURE
E,I+7 is a t#pical comment )hene9er a stor# about 0oldman is posted on the Internet2 )hich is almost e9er# da#
no)!
0oldman gets that it has a problemN people there are deepl# bothered b# the outcr#! 6@here is an embattled
feeling around the place27 sa#s someone )ho kno)s the firm )ell! @his is magnified2 perhaps2 because there has
al)a#s been a )hiff of sanctimon# about the firm! It not onl# )ants to make mone#N it )ants to be seen as a
force for good! Blankfein$s no) infamous comment to a reporter at the +ondon Sunday 3imes that he )as doing
60od$s )ork7 )as meant as a Ooke2 but there )as a ring of unintentional truth to it!
0oldman e=ecuti9es belie9e the# ha9e a publicDrelations problem2 not a substanti9e one! Hhen the firm had
@ARP mone#2 there )as a ban on using the corporate bo= at 5ankee Stadium2 and last fall Blankfein )ent on a
charm offensi9e that sho)cased his humble roots to the press!
Hhat 0oldman doesn$t get is that all the murk about the )a#s it has benefited from public mone# taps into a
deep fear that has long e=isted among those )ho think the# kno) 0oldman all too )ell! It$s a fear that2 as one
person puts it2 0oldman$s 6skill set7 is 6)alking bet)een the raindrops o9er and o9er again and getting a)a#
)ith it!7 It is a fear that 0oldman has the game rigged2 e9en if no one can e9er pro9e ho)2 not Oust because of its
political connections but also because of its immense si:e and po)er! And it is a belief that despite all the happ#
talk about clients and culture 8and2 bo#2 is there a lot of that; the 0oldman of toda# cares about one thing and
one thing onl#: making mone# for itself! Sa#s one highDle9el Hall Street e=ecuti9e2 6Hh# do #ou ha9e a
business? Because #ou ha9e a customer! 5ou ha9e to make an appropriate profit! But is it possible that 0oldman
has changed from a firm that had customers to a compan# that is Oust smart as shit and makes a shitload of
mone#?7
A Storied Firm
&ounded in /B>J2 0oldman Sachs2 in the earl# da#s2 )as a scrapp#2 (e)ish firm in a )orld of )hiteDshoe
in9estment banks 8such as (! P! *organ;2 )hich controlled all the 9aluable corporate clients! In /J-J2 0oldman
)as almost brought do)n b# a charming managerDpartner named Haddill Catchings2 )ho created )hat )as
kno)n as the 0oldman Sachs @rading Corporation<a stor# told in detail in 3he 5artnershi), b# Charles Ellis! It
)as essentiall# a trust )hich used debt to bu# other companies2 )hich used more debt to bu# still more
companies<in other )ords2 a ticking time bomb of debt2 in much the same )a# that modern trusts designed to
bu# mortgages became ticking time bombs of debt! Hhen the ine9itable collapse came2 the result tarnished
0oldman for decades!
@he firm$s reco9er# )as in large part due to Sidne# Heinberg2 )ho famousl# Ooined 0oldman as a Oanitor in
/J.L! Hhile Heinberg built the firm$s banking business2 0us +e9#2 a @ulane Uni9ersit# dropout2 de9eloped a
formidable sideline trading stocks and bonds! In /J>J he took o9er Heinberg$s Oob at the head of 0oldman!
Hhen he died2 from a stroke in /JL>2 Heinberg$s son (ohn and (ohn Hhitehead2 an IllinoisDborn2 'ar9ardD
educated Horld Har II 9eteran2 continued to transform 0oldman into a maOor pla#er in in9estment banking!
&or much of 0oldman$s histor#2 the t)o )orlds<the genteel2 plushDcarpeted one of banking and the roughDandD
tumble one of trading<e=isted in a kind of balance!
As the firm gre)2 it de9eloped a uni3ue culture2 characteri:ed b# impossibl# hard )ork2 lo#alt#2 secrec#2 and a
lack of flashiness! Senior e=ecuti9es there<unlike those at other firms<do not ha9e palatial offices )ith pri9ate
bathrooms! In the late /JL.s2 Hhitehead put )hat are still 0oldman$s /? Business Principles on paper! @he first:
61ur clients$ interests al)a#s come first!7
At one time2 outsiders could see this principle in action! In the era of hostile takeo9ers2 0oldman )ouldn$t do
them2 and the firm )as the last on Hall Street to start a business managing mone# for )ealth# indi9iduals2
because it didn$t think it should compete )ith the big mone#Dmanagement firms2 )hich )ere also clients of its
trading operation!
B# the earl# /JJ.s2 *organ Stanle# and 0oldman Sachs sat atop the pinnacle of Hall Street! But e9en then
0oldman had a m#sti3ue that *organ lacked!
Insiders and outsiders alike ha9e long struggled to define 0oldman Sachs$s secret sauce! It$s a blend of
impossibl# hard )ork2 intense competiti9eness2 and something that closel# appro=imates team)ork2 although
that makes the culture sound more touch#Dfeel# than it reall# is! 6@he firm is hardDknuckled and sharpDelbo)ed2
but that$s hidden in the 9el9et glo9e of team)ork and collegialit#27 a former managing director tells me!
@he place does not oo:e the smug satisfaction that often comes )ith great )ealth! Rather2 it oo:es an=iet#! I
)orked there as an anal#st for three #ears in the earl# J.s2 and I remember that most people couldn$t take
ad9antage of the long line of black cars that )aited until midnight outside BE Broad Street to take them home!
Instead2 the# had to call for cars2 because the# ne9er got out earl# enough! I also recall being told that ha9ing a
tan in the summer )as a bad sign2 because it meant that #ou )eren$t )orking hard enough! 5ou$ll often hear
0oldman people speak of 63uartilers27 because 0oldman di9ides its people into groups based on performance!
@he usage )ould be2 65ou don$t send a second 3uartiler to build a business!7
But2 of course2 not onl# the demands but the re)ards<in terms of both prestige and mone#<are bigger!
(enior partner (idney Weinberg in +,EB. <rom The ;ew #ork TimesU@edu?.
%rom left6 'enr# Paulson2 Stephen &riedman2 and (on Cor:ine2 /JJ?N all )ould rise to the top post at 0oldman!
%rom Saba7orbis.
*anaging partner 0usta9e 60us7 +e9# in /J>/! %rom 3he 4ew 1or$ 3imes78edu(.
The Meek Shall Not Inherit the Firm
In the earl# /JJ.s2 0oldman faced one of the biggest tests in its histor#! After big trading losses2 a result of a bet
on bonds gone bad in +ondon2 partners began 3uitting2 and #anking their capital from the firm! It )as 69er#
shak#27 recalls a former partner! 6@hose of us )ho made partner in /JJ? actuall# had to pa# Fmone# into the
partnership to make up for the lossesG! @he smart gu#s )ere all lea9ing!7
Into that leaderhip 9acuum stepped (on Cor:ine2 a fi=edDincome trader and a fierce belie9er that 0oldman
should be public! Hhereas *organ Stanle# had sold shares to the public in /JB>2 0oldman )as Hall Street$s last
pri9ate partnership! In ecember of that #ear it began to seriousl# debate the idea of going public2 according to
3he 5artnershi), but se9eral 3uestions seemed al)a#s to stop it: Hhat )ould happen to the culture if the firm
)ent public? And ho) )ould #ou di99# up the mone# in a fair )a#2 among ne) partners2 longtime partners2 and
former partners?
B# /JJB2 ho)e9er2 Cor:ine had persuaded the rest of the firm! But before the I!P!1! could get off the ground2 the
A?!> billion hedge fund +ong @erm Capital *anagement melted do)n2 causing a crisis on Hall Street!
+!@!C!*!$s massi9e bets )ere financed )ith an inordinate amount of debt2 and as the trades )ent bad2 all of Hall
Street2 )hich had lent mone# to +!@!C!*! and often copied its trades2 reeled! +ike those at other firms2
0oldman$s fi=edDincome trading operation2 )hich )as Cor:ine$s home2 faced huge losses! Cor:ine had alread#
pro9oked great resentment b# calling himself C!E!1! and acting unilaterall#2 e9en though 0oldman had al)a#s
been run b# its allDpo)erful e=ecuti9e committee! And so2 the committee of2 at that time2 fi9e men staged a coup
and forced Cor:ine out! @he# replaced him )ith 'enr# Paulson2 an Illinois nati9e )ho made his career at the
firm b# )inning in9estmentDbanking business! 8Ironicall# for Cor:ine2 0oldman finall# did sell shares to the
public2 at AEC apiece2 in the spring of /JJJ2 )hich meant that2 Oust as )ith other publicl# traded Hall Street
firms2 0oldman )as no longer pla#ing )ith partners$ capital2 but )ith shareholders$ mone#!;
Paulson is a )alking set of contradictions! A fiercel# competiti9e man2 he is also an a9id conser9ationist )ho
freaked out )hen birds )ould fl# into the glass )indo)s of BE Broad! 'e is a committed Christian Scientist2
)hose main talent both at 0oldman and in go9ernment )as a brutal pragmatism! 6'ank gets shit done27 as one
person tells me! And although Paulson$s intimidating presence and gra9ell# 9oice are no) )ell kno)n to
millions of Americans2 less 9isible is a strangel# endearing 3ualit#! *ost people )ho kno) him think that he
al)a#s tells the truth2 mainl# because he isn$t capable of the 9erbal slickness that is critical to dissembling! 6'e
didn$t )ant the cro)n2 but he )ore it )ell7 )as the )ord among some partners regarding Paulson$s tenure as
C!E!1!2 from /JJJ to -..>!
Brave New World
@he rise of +lo#d Blankfein2 )ho took o9er as C!E!1! in -..>2 is in part a testament to the ine=orable creep of
the po)er of mone# at 0oldman Sachs! uring the earl# #ears of Paulson$s reign2 the heirs apparent )ere his
coPchief operating officers2 (ohn @hain and (ohn @hornton! @hornton )as a classic 0oldman Sachs banker2 a
creati9e thinker )ho )as great )ith clients! But his critics sa# that he had some )eaknesses2 including a dislike
for the grung# details of management! In the end2 Paulson2 in a -..C meeting in his office2 told him he )ould
not become C!E!1! Someone close to @hornton2 though2 sa#s that he had alread# been making plans to lea9e
after he reali:ed Paulson2 )ho initiall# planned to ser9e as C!E!1! for onl# a fe) #ears2 )asn$t going an#)here!
And there )as something else! @hornton )as also discomfited b# )hat he felt )as a change at 0oldman: a
ne)found obsession )ith making mone# first and foremost! 'e belie9ed great institutions had to stand for
something more!
@hain2 on the other hand2 )as the 6good son27 as one 0oldman e=ecuti9e puts it! A former head of 0oldman$s
mortgage business )ho became the firm$s chief financial officer in /JJ?2 he kne) e9er# detail of ho) 0oldman
Sachs ran! 'e2 too2 had to rethink his future )hen Paulson decided to sta#! And some sa# his po)er base began
to erode as 0oldman$s ne) breed of traders made more and more mone#! A former managing director tells me
that if the old 0oldman made its mone# taking &ord public the ne) 0oldman made its mone# hedging the cost
of platinum for &ord! And that business )as run not b# (ohn @hain but b# +lo#d Blankfein! In -..C2 Paulson
decided to appoint @hain and Blankfein as coPchief operating officers2 but @hain sa) the hand)riting on the
)all! @he 4e) 5ork Stock E=change began recruiting him to be its C!E!1!2 and later that #ear he took the Oob!
1 ne of the most surprising things about Blankfein2 EE2 is ho) likable he is! Bald and on the short side2 he is selfD
deprecating and has a )icked sense of humor and a fondness for bad puns! 'e came to 0oldman 9ia (! Aron2 a
tough2 streetDsa99#2 highl# entrepreneurial commoditiesDtrading shop2 )hich 0oldman ac3uired in /JB/! 6I )as
in9isible for the first -? of m# -L #ears here27 Blankfein tells me! 6It$s not like I sought this out!7 But this humble
e=planation masks another side of Blankfein! 1ne does not amble one$s )a# to the top of 0oldman Sachs!
Internall#2 Blankfein is 9ie)ed as e=tremel# 6commercial27 )hich means2 in 0oldman parlance2 ha9ing a talent
for making mone#! 6Blankfein is Paulson on steroids27 sa#s one client2 referring to Blankfein$s competiti9eness2
e9en though he rarel# engages in a sho) of brute force! 6If Fformer +ehman C!E!1!G ick &uld is a machete2 then
+lo#d Blankfein is a S)iss Arm# knife7 is ho) Anthon# Scaramucci2 a former 0oldman 9ice president2 )ho no)
runs Sk#Bridge Capital2 e=plains Blankfein to me!
19er the #ears one criticism of Blankfein that has stuck is that he is not comfortable )ith people )ho aren$t his
gu#s! @hose 6gu#s7 are usuall# traders! 6@he group running 0oldman no) is not a 9er# di9erse group2 and that is
potentiall# 9er# damaging to the franchise27 sa#s a former partner! Chief operating officer Cohn gre) up at (!
Aron2 and if Blankfein$s more ruthless side is masked b# humor2 Cohn$s knuckles are usuall# on full displa#!
6Cohn is a lot like &uld27 another former 0oldman partner sa#s! 6'e is a tough2 aggressi9e trader!7 Sa#s a former
trader2 60ar# )as al)a#s +lo#d$s gu#! I mean2 always.7
Under the ne) leadership the culture of the firm seems to be changing! 1nce upon a time in the notDsoDdistant
past2 e9en a 0oldmanite )ouldn$t ha9e sniffed at a million dollars a #ear! But in recent #ears2 the numbers ha9e
become multiples of that! 81f course2 this is true across Hall Street2 but particularl# at 0oldman!; In -..L2
Blankfein made A>B!E million2 the most e9er for a Hall Street C!E!1! Cohn made A>L!E million! &air or not2
there$s a sense that the numbers matter because the ne) 0oldman cares about keeping up )ith the hedgeDfund
gu#s! 6E9er#one lo9es to hate 0oldman Sachs2 and 0oldman lo9es to hate the hedgeDfund communit#27 sa#s one
trader! 6@he#$9e gotten rich2 but the# ha9en$t gotten rich like +ouis or (ulian or 0eorge7 8legendar# hedgeDfund
managers +ouis Bacon2 (ulian Robertson2 and 0eorge Soros;!
Under Blankfein2 0oldman continued to gro) e=ponentiall#: b# -..L the firm$s re9enues )ere A?> billion2
nearl# three times that of -...! In large part2 this )as the result of a strateg#2 begun under Paulson but
embraced b# Blankfein2 in )hich 0oldman no longer sat on the sidelines2 dispensing ad9ice2 but rather in9ested
its o)n mone# alongside its clients$! 0oldman no) has a mone#Dmanagement businessN a large pri9ateDe3uit#
business2 meaning that )hile big bu#out funds are 0oldman$s clients the# are also its competitorsN and a
proprietar# trading business2 )hich e=ists specificall# to trade 0oldman$s capital on 0oldman$s behalf<so
hedgeDfund clients are also competitors! Across 0oldman$s man# trading businesses2 the line is fu::# as to )hen
the firm is acting for itself and )hen it is acting on behalf of clients!
Inside the Black Box
espite the public financial statements 0oldman files e9er# 3uarter2 no outsider can tell ho) the firm reall#
makes its mone#! 5ou cannot see into 6the black bo=7 of the trading empire! Blankfein sa#s that onl# about /.
percent of 0oldman$s profits come from purel# proprietar# trades2 but there is no )a# an# outsider can confirm
that independentl#! And2 an#)a#2 )hat$s in the black bo= is al)a#s changing2 so the numbers are rele9ant onl#
in the current moment! 60oldman changes the doughnut machine all the time27 sa#s independent anal#st
*eredith Hhitne#! 6It$s ne9er the same doughnut! Around the rest of the Street2 it$s al)a#s the same doughnut27
b# )hich she means that 0oldman constantl# adOusts its in9estment strategies2 as opposed to other banks2
)hich tend to be less responsi9e to the market! Blankfein uses the )ord 6nimble7 to describe 0oldman2 and it
indisputabl# is!
A side effect is that2 in a firm )here producing profits helps #ou rise2 banking has no) become an adOunct of the
trading business2 )here the real mone# is made! Ste9e Scherr2 a /LD#ear 0oldman 9eteran )ho helps run the
in9estmentDbanking business2 claims that he does not feel marginali:ed! 6@he )a# banking is thought about
)ithin the firm has changed27 he sa#s! 6Banking has taken on increasing presence as the sales force of the firm!7
In other )ords2 )hen 0oldman ad9ises a compan# that )ants to sell itself2 the 0oldman banker )ho )ins that
deal ma# also be able to bring 0oldman in as an in9estor2 or bring 0oldman traders in to sell the compan# a
hedge against a deterioration in a foreign currenc#2 and on2 and on!
But not e9er#one sees this in such a sunn# )a#! A former partner e=plains to me that in9estment banks ha9e
al)a#s had conflicts of interest! In his 9ie)2 those conflicts ha9e taken on a darker tone! &or e=ample2 a fe)
#ears ago2 0oldman$s bankers )ere told that the# should help sell more deri9ati9es! 6Sa# #ou ha9e a client )ith a
foreignDe=change problem! So #ou bring 0oldman$s foreignDe=change e=pert in2 and he gi9es #ou a price! I$m
gi9ing the client 0oldman$s pricing2 not necessaril# the best pricing2 because there$s a desk at 0oldman that$s
making mone# on it!7
@his gets to the heart of the complaints about 0oldman b# others on Hall Street2 )hich are often 3uite bitter!
Hhen Blankfein speaks of being 6so close to clients that #ou can see the pattern better than an#one else27 some
)orr# that this means his firm is using client information in )a#s that aren$t necessaril# in the clients$ best
interests 8though fe) in the business think 0oldman )ould cross the line into illegalit#;! In Street parlance2 a
6counterpart#7<i!e!2 the person on the other side of a trade2 as opposed to one #ou are representing<is like a
consenting adult2 and hence the line #ou$ll fre3uentl# hear: @he ne) 0oldman Sachs doesn$t ha9e clients<it has
counterparties!
@hese 3uestions are particularl# pronounced among hedge funds! 6People )orr# that the#$re in m# business2
and the#$re better than I am27 sa#s one mone# manager! Asks another hedgeDfund trader2 6Are the# the
5ankees? 4o2 the 5ankees actuall# loseQ 0oldman ne9er loses! And people sa# the# are a hedge fundQ @his ain$t
no hedge fund! 'edge funds lose mone#!7 Hhen I ask him if he does business )ith 0oldman2 ho)e9er2 he
replies2 61f course )e do business )ith them! He ha9e to! It$s like the *ob )ho picks up the garbage! 5ou pa#
their fees2 because #ou need #our garbage picked up!7
Trimming the Hedges
All of this e=plains )h# Hall Street lo9ed the battle bet)een hedgeDfund manager (im Chanos and 0oldman
Sachs e=ecuti9e *arc Spilker2 coDhead of the assetDmanagement di9ision! @he t)o are neighbors in the
'amptons and had a dispute o9er )idening a path that leads to the beach! Hhile the matter )as still being
litigated2 Spilker hired a )ork cre) to knock out hedges on Chanos$s propert#! Chanos2 )ho sa#s he paid
0oldman bet)een A?. million and AE. million in fees annuall#2 tried to complain to Blankfein! 1ne of his
lieutenants told Chanos that the C!E!1! )ouldn$t listen to his complaints o9er the issue2 and furthermore
0oldman didn$t like the )a# he2 Chanos2 )as handling this! Chanos sa) it as a tangible sign that2 at the ne)
0oldman2 clients no longer mattered! 'e pulled all his business )ithin t)o )eeks!
@o an# concerns about ho) 0oldman treats its clients Blankfein has a simple response2 )hich is that 0oldman$s
market share is still 4o! /! And )hile some sa# the# do business )ith 0oldman because the firm$s omnipresence
means the# ha9e to2 there is another reason2 )hich e9en its most bitter critics concede: 0oldman is better! Hh#
is that?2 I ask a hedgeDfund manager )ho has Oust finished his o)n heated e=planation about ho) he doesn$t
trust 0oldman! 6I can$t reall# tell #ou )h# it$s better! It$s Oust better27 he sa#s! 6It$s si= p!m! in 4e) 5ork Cit#2 and
0oldman )ill figure out ho) to get the right person in 'ong Mong<a gu# )e$9e ne9er spoken to<on the phone
to )alk us through e=actl# )hat )e )ant to kno)! 'e$ll be full# kno)ledgeable!7 'e laughs! 6@r# the same thing
)ith Citi! @he# can$t e9en figure out )hat the# kno)2 let alone ho) to take ad9antage of it!7
The Mortgage Mess
In a )eird )a#2 )hat happened at the start of the subprime crisis confirmed to people at 0oldman Sachs )hat
the# fundamentall# belie9ed about themsel9es<that the# reall# are better than e9er#bod# else on Hall Street!
But2 for man# on the outside2 it offered proof instead that 0oldman put protecting its o)n interests ahead of
protecting the interests of clients!
In ecember -..>2 about a #ear before an# other Hall Street firm started reali:ing the magnitude of the crisis2
0oldman began betting against the mortgage market! B# August -..L<)hich )as right after Chuck Prince2
then Citigroup$s C!E!1!2 famousl# said2 6As long as the music is pla#ing2 #ou$9e got to get up and dance7<
0oldman Sachs )as lea9ing the dance floor! @he firm had also begun to sell off tens of billions of dollars$ )orth
of the big loans on its books that had been used to finance le9eragedDbu#out deals! 6In retrospect2 there is not a
person )ho )ouldn$t ha9e sold )here )e )ere selling27 sa#s Ste9e Scherr! 'o) trueQ
0oldman simpl# sa) )hat e9er#one else could ha9e<and should ha9e<seen: the prices of the securities backed
b# mortgages2 and then of the big loans2 )ere declining! Each and e9er# da#2 0oldman rigorousl# books profits
and losses based on )here it can sell its positions! Because those 9alues )ere declining2 0oldman )as taking
losses in its mortgage business da# in and da# out! @his made the mortgage traders ner9ous! Sa#s a9id
+ehman2 a managing director in 0oldman$s mortgageDtrading group2 6Hhether the trade is subprime mortgages
or bananas2 if it$s not going #our )a#2 #ou ha9e to get smaller!7
E=cept that most of 0oldman$s competitors did no such thing! At other firms the mortgage traders tried to
protect their fiefdoms2 arguing that declines )ere temporar#! @he# held or e9en gre) their positions<and
refused to admit the# )ere losing mone#! oubts and )arnings seldom made it to top e=ecuti9es2 and e9en
)hen the# did2 the# )ere ignored in the desire to keep the good times rolling! 6@here$s people$s hopes and
pra#ers2 and then there$s the realit# of the market! 5ou can$t confuse the t)o27 sa#s Cohn toda#!
0oldman didn$t Oust sell the mortgage securities and stop doing business2 ho)e9er! After a no) famous meeting
in a9id ,iniar$s office on ecember /?2 -..>2 0oldman$s traders began to protect the firm against further
declines in the market! (ust as #ou can short the S%P E..2 the traders took short positions in an inde= that
tracked the price of mortgageDbacked securities! @he# also either sold assets the# o)ned to others at losses or
dramaticall# marked do)n the price on their o)n books!
In the aftermath of the crisis2 criticism erupted that 0oldman had continued to sell mortgageDbacked securities
to its clients )hile betting against those 9er# securities for its o)n account! Clearl#2 in the simplest terms
possible2 this is true: )hile 0oldman )as ne9er the biggest under)riter of C!!1!$s 8collaterali:ed debt
obligations<Hall Street$s 9ehicle of choice for mortgageDbacked securities;2 the firm did remain in the top fi9e
until the summer of -..L2 )hen the market crashed to a halt!
0oldman argues that the bu#ers of their C!!1!$s )ere themsel9es sophisticated in9estors )ho )ere capable of
making their o)n decisions! In other )ords2 the# )ere counterparties! 65ou don$t shut #our franchise do)n Oust
because #ou ha9e a 9ie) of a market27 sa#s Cohn! 6Hhen )e do an I!P!1!2 people don$t ask us our 9ie) of the
stock market!7 But a less generous interpretation )as gi9en in a recent *cClatch# 4e)spapers series2 )hich
3uotes an anal#st report that describes 0oldman as being 6solel# interested in pushing its dirt# in9entor# onto
unsuspecting and ob9iousl# gullible in9estors!7 8A 0oldman spokesperson sa#s2 6@he statement is not true! @he
*cClatch# series )as characteri:ed b# unsubstantiated claims2 innuendo2 and outright falsehoods!7 *cClatch#2
ho)e9er2 stands b# its )ork!; And so2 if the old 0oldman )as defined b# its refusal to do hostile takeo9ers2 the
ne) 0oldman is defined b# its skill at protecting its o)n interests!
Hith the benefit of hindsight2 there is another aspect of the stor# that ma# ultimatel# pro9e to be more
troubling2 and 0oldman has disclosed that it2 along )ith other financial institutions2 has recei9ed re3uests for
information from 69arious go9ernmental agencies7 relating to 6subprime mortgages2 and securiti:ations2
collaterali:ed debt obligations and s#nthetic products related to subprime mortgages!7
1ne ne) in9ention the Street created )as something called a s#nthetic C!!1!2 )hich )as sort of like making a
coin: #ou ha9e to ha9e t)o sides2 heads and tails2 long and short! In effect2 the person )ho has tails2 or is short2
makes small pa#ments to the person )ith heads as long as the securities that make up the C!!1! are
performing! If the# blo) up2 then a big pa#ment goes the other )a#!
In9estors in a C!!1! can choose to bu# a range of securities2 from )hat are supposedl# the safest all the )a#
do)n to the riskiest2 or e3uit#2 position! @he person )ho o)ns the e3uit# stands to make the most for taking the
greatest risk2 but onl# after e9er#one else gets paid! So if #ou o)ned the less risk# slices2 #ou might feel good if
the e3uit# o)ner )ere a smart gu# )ho onl# stood to get paid after #ou did!
E=cept that might not be the )a# it )orked2 because the e3uit# o)ner could also be the person )ho had the tails2
or short2 position! As se9eral sources ha9e described it to me2 the numbers could )ork so that the e3uit#
in9estor )ould do decentl# if the securit# performed<but make a fortune if it )ent bad!
@he e3uit# o)ner could also pla# a role in selecting the mortgages on )hich that C!!1! )as based! So
theoreticall# at least<and some suspect this is not Oust theoretical<the e3uit# o)ner could choose securities
that he thought had a good chance of going to hell! As one person sa#s2 this is akin to 6betting that #our o)n
house is going to burn do)n7 after #ou build it )ith highl# flammable materials!
@here are man# permutations of this trade! Some people belie9e that 0oldman engaged in 9ersions of it2 and
that it facilitated them for hedge funds! 0oldman defends this! 6He o)n e3uit#2 )e bu# a creditD default s)ap2
and )e are hedging oursel9es27 sa#s Cohn! As for selecting the collateral2 he sa#s2 6It$s no different! 1ur clients
are smart2 sophisticated institutions! @he# should kno) that$s the case!7
'e has a point! As long as no one e=plicitl# misrepresented )here their interests la#<and there is no e9idence of
that<supposedl# sophisticated in9estors ha9e a dut# to understand )hat the#$re bu#ing2 not to base their
decision on )hat the 6smart gu#7 is doing!
And if the mortgage market hadn$t collapsed<and there$s no )a# an#one could ha9e kno)n for sure that it
)ould<then these deals )ouldn$t ha9e been so profitable2 and no one )ould care! But )hen I ask one
kno)ledgeable person about )hat happened to some of the deals that 0oldman is rumored to ha9e done2 he
responds )ith one )ord: 6@orched!7 1r as another person sa#s about the bigger picture of the crisis2 60oldman$s
management team )as almost fla)less in its e=ecution! But ho) man# people needed go9ernment help because
of the things 0oldman sold them?7
Trade with the Taxa!er
As a lot of people kno) no)2 Hall Street firms are fragile entities2 needing the market to finance themsel9es!
Because it is cheaper for them to borro) shortDterm mone# than to borro) longDterm mone#2 during the bubble
#ears the# all2 to some degree2 began to rel# on shortDterm mone#<)hich the#$d use to bu# assets such as real
estate or entire companies that couldn$t be sold immediatel#! It$s as if #ou bought a house and the bank at an#
time had the right to demand pa#ment in full<tomorrow. 0oldman managed its balance sheet more
conser9ati9el# than man# of its peers2 and it gre) more conser9ati9e after Bear Stearns$s o9ernight lenders
pulled the plug in *arch -..B! B# the time the crisis hit BE Broad Street2 si= months later2 0oldman had A//?
billion in cash2 and 9er# little funding that needed to be paid off in less than /.. da#s!
@his is a big part of )h# 0oldman$s treasurer2 ?.D#earDold +i: Beshel2 sa#s that 6rumors of our death )ere
greatl# e=aggerated!7 She adds that the demands for cash ne9er gre) larger than )hat 0oldman had planned
for! 19erall2 the firm con9e#s an attitude of dispassion about the )hole affair! Hhen I ask 0ar# Cohn if he )as
)orried about 0oldman$s stock price2 )hich plunged from A-.L!LB in &ebruar# -..B to A?L!?/ in 4o9ember2 he
sa#s2 6It )asn$t scar# at all!7
6Complete and utter nonsense27 sa#s someone )ho kno)s Cohn )ell! Indeed2 a falling stock price can become a
selfDfulfilling prophec#2 because as the stock plummets2 confidence e9aporates! And as another highDle9el Hall
Street e=ecuti9e sa#s2 64o matter )hat the balance sheet sa#s2 if #ou can break confidence2 the mone# is going to
lea9e the institution!7 1r as another person )ho kno)s 0oldman )ell sa#s about the firm$s models2 6In an
en9ironment like that2 the model doesn$t mean shit!7
@here is e9idence that as the stock price tumbled in fall -..B the C.th floor of BE Broad Street )as not 3uite the
ha9en of calm 0oldman no) suggests! B# September /?2 the )eekend )hen +ehman )ent bankrupt2 (ohn *ack2
of *organ Stanle#2 and (ohn @hain2 b# then the C!E!1! of *errill +#nch2 )ere urging the Securities and
E=change Commission to ban shortDselling2 in )hich in9estors bet that a stock is going to decline! Blankfein )as
opposed! After all2 0oldman Sachs is a belie9er in the market2 in )hich stocks should go do)n as )ell as up2 and
in its trading business2 it regularl# shorts securities of all kinds!
But that )eek2 as the crisis escalated2 Blankfein changed his mind! Hhen *ack and Blankfein spoke on @uesda#2
Blankfein said2 65ou$re right! He ha9e to do something about this!7 'e then told S!E!C! chairman Christopher
Co=2 )hose agenc# can use emergenc# po)ers to ban a la)ful acti9it#2 that he )as for the ban! 6I$m for markets27
sa#s Blankfein2 )ho toda# describes the situation as 6trick#!7 6But )hen it felt like it had gotten abusi9e2 )hen it
)as free mone# to shortDsellers )ho )ere piling on2 it felt less like the market and more like it )as being
manipulated!7 'e adds2 6I crossed o9er!7
6It )as entirel# a 3uestion of )here #ou sit27 sa#s one person familiar )ith e9ents! 6If #ou thought the )olf )as at
#our door2 then #ou )ere for the ban! If not2 #ou had a principled 9ie)! It )as a direct measure of ho) panicked the
C!E!1! )as at that moment about losing his firm!7
&or all 0oldman$s tough talk2 )hen the market made a Oudgment on 0oldman itself2 the firm blinked! 8It is possible
that shortDsellers )ere illegall# manipulating the market2 although no e9idence of that has come to light!; 6I )ould
cop a plea to h#pocris# if #ou get rid of all the other charges27 sa#s Blankfein!
@he ban on shortDselling2 )hich )ent into effect on September /J2 -..B2 )as a sign that the go9ernment )as going to
do )hat it had to do to protect the nation$s financialDser9ices companies! But e9en that )asn$t enough to break the
fear2 and after a brief rebound 0oldman$s stock began falling again! @hat Saturda#2 @im 1$4eill2 a longtime Blankfein
confidant )ho has held a 9ariet# of roles at the firm2 called a9id 'eller2 a coDhead of the global securities di9ision2
and said2 6I think )e built a house that can )ithstand a Cat E hurricane! It looks like a Cat E hurricane!7
But the storm ne9er reall# hit2 because that Sunda# night2 0oldman and *organ Stanle# issued press releases: Hith
the blessing of the &ederal Reser9e2 the# )ere going to transform themsel9es into bankDholding companies! Because
such banks are regulated b# the &ed2 there is a U!S!Dgo9ernment seal of appro9al that comes )ith the designation2
and the fact that *organ and 0oldman )ere granted it so 3uickl# 8as +ehman had not been;<o9er a )eekend<)as a
solid sign to the market that the United States )ould not let them fail!
And later2 in 1ctober2 after Buffett$s in9estment2 0oldman took A/. billion more as part of @ARP! @hen2 in the middle
of the month2 the &ederal eposit Insurance Corporation began a program under )hich banks could issue debt
guaranteed b# the federal go9ernment! 0oldman e9entuall# issued A-B billion of such debt2 close to the limit of ACE
billion the &!!I!C! had set for it! As 0oldman ackno)ledged in its public filings2 the firm )as 6unable to raise
significant amounts of longDterm unsecured debt in the public markets2 other than as a result of the issuance of
securities guaranteed b# the &IC!7
*a#be it$s true that 0oldman didn$t need the go9ernment$s help2 but2 ne9ertheless2 the firm a9ailed itself of all the
help offered! Hhat seems lost on 0oldman e=ecuti9es is that 3uestioning the necessit# of that help from the safet# of
toda#$s 9antage point smacks of tr#ing to ha9e #our cake and eat it2 too! And )hen the# claim the# )ould ha9e done
things differentl# had the# anticipated the resulting criticism2 it )ould be tempting to gi9e them a taste of their o)n
medicine: 0oldman Sachs2 #ou$re a smart2 sophisticated in9estor<#ou did the tradeQ 4o) li9e )ith it!
In the )ake of the crisis2 one 0oldman e=ecuti9e made the decision not to li9e )ith an# of it an#more! In &ebruar#
-..J2 0oldman announced the surprising departure of (on Hinkelried! Because he had put his 4antucket mansion
on the market for AEE million and been allo)ed to cash out of a part of his interest in se9eral 0oldman SachsPrun
funds for A/J!L million2 there )as )idespread speculation that he )as caught in a cash s3uee:e!
@he e=planation gi9en b# people close to Hinkelried is2 in some )a#s2 more telling! Indeed2 he had kept almost all of
the mone# he had made in his -LD#ear career at 0oldman in the firm$s stock or in its pri9ateDe3uit# funds! As the
crisis intensified2 he )anted to raise cash2 in case2 60od forbid2 something happened to 0oldman27 as he confided to
one friend! Because the terms of Buffett$s in9estment forbade Cohn2 Hinkelried2 ,iniar2 and Blankfein from selling
J. percent of their holdings until three #ears after the deal2 0oldman<in effect2 in e=change for Hinkelried$s helping
to sa9e the firm b# agreeing to Buffett$s tough terms<allo)ed him to cash out of a part of the funds at a discount
from their 9alue at the time!
Bailing "#t A$I$%$&or %oldman'
Inside 0oldman2 there is an o9er)helming sense of pride in ho) the compan# )eathered the crisis2 and great
admiration for Blankfein! 6'e is the right man at the right time27 sa#s 1$4eill!
And some clients ha9e a ne) appreciation for 0oldman: 6Hhen the shit )as hitting the fan2 0oldman acted 9er#
responsibl#27 sa#s one client2 b# )hich he means it didn$t tr# to pre# on the )eakness of other firms! Another client
points out that )hile other firms stopped ans)ering their phones at the height of the crisis2 0oldman both dealt )ith
its o)n problems and tried to help clients deal )ith theirs!
It$s possible that )hat man# see as 0oldman$s re9isionist histor# )ouldn$t cause so much rage if it )eren$t for the
ta=pa#er bailout of the giant insurer American International 0roup2 )hich man# see simpl# as a 6backdoor bailout7
of A!I!0!$s creditors2 including 0oldman Sachs2 as Representati9e arrell Issa2 the ranking member of the Committee
on 19ersight and 0o9ernment Reform2 put it in a recent letter to the 4e) 5ork &ederal Reser9e! But the 3uestion
goes be#ond the mone# that changed hands!
@he bare facts are these: 0oldman bought )hat )as effecti9el# insurance from A!I!0! 8in the form of creditDdefault
s)aps; on some A-. billion )orth of slices of C!!1!$s made up of mortgage securities! @he deal )as structured so
that A!I!0! had to turn o9er cash in real time as the 9alue of the securities deteriorated! B# the summer of -..L2
A!I!0! and 0oldman had begun to fight bitterl# about ho) much cash A!I!0! o)ed! Because there )as a gap bet)een
)hat A!I!0! had paid and )hat 0oldman thought it )as o)ed2 0oldman bought additional insurance from other Hall
Street banks2 )hich )ould pa# off in the e9ent that A!I!0! defaulted on its obligations!
,iniar sho)s me a piece of paper2 )hich he calls his 6Bible!7 It la#s out )hat all of this looked like on the *onda#
night before the federal go9ernment stepped in to take o9er A!I!0! At that point2 the subprime securities had declined
in 9alue b# AJ!? billion! 0oldman had collected AL!E billion in cash from A!I!0!2 and it had another A-!J billion from
the other Hall Street banks! Since 0oldman had some small additional e=posure to A!I!0!2 the net effect of this )as
that 0oldman )as 6flat!7
,iniar )as much mocked for telling anal#sts on a September />2 -..B2 call that 0oldman$s e=posure to A!I!0! )as
6immaterial27 but under that narro) definition2 it$s true! Hhile #ou could argue about )hat )ould ha9e happened if
0oldman$s remaining A/. billion of A!I!0! securities had declined in 9alue follo)ing an A!I!0! bankruptc#2 the
3uestion probabl# )ould ha9e been moot2 because there ma# not ha9e been a financial s#stem at all!
After the go9ernment bailout of A!I!0!2 in order to end the collateral calls on the insurance giant2 the 4e) 5ork
&ederal Reser9e<)hose chairman at the time )as former 0oldman chairman Ste9e &riedman<decided to purchase
a sle) of the securities that A!I!0! had insured2 including A/? billion of those on )hich 0oldman had purchased
insurance! @he go9ernment<meaning ta=pa#ers<did so at full price2 although according to a recent Bloomberg
stor#2 there had been negotiations )ith A!I!0! to do so at a ?. percent discount! 0oldman sa#s that the 4e) 5ork &ed
broached the topic of a discount onl# once! @he firm$s response: a flat no! Hhile no one )ill e9er kno) )hat )ould
ha9e happened had A!I!0! gone under2 the essence of )hat did happen is perfectl# clear! As a recent report b# the
1ffice of the Special Inspector 0eneral for @ARP put it2 the decision to pa# full price 6effecti9el# transferred tens of
billions of dollars of cash from the 0o9ernment to A!I!0!$s counterparties!7 1r to put it another )a#: because
0oldman felt it )as o)ed its billions b# A!I!0!2 the firm took it from ta=pa#ers instead!
@he more interesting 3uestion ma# be the role that 0oldman pla#ed in A!I!0!$s near destruction! 0oldman sa#s that it
)as largel# an intermediar# bet)een A!I!0! and clients it )on$t name! So )hen2 after the go9ernment bailout and the
&ed$s decision to pa# full price2 it recei9ed AB billion from A!I!0!2 0oldman used that mone#2 plus the billions in
collateral it alread# held2 to purchase A!I!0!Dinsured securities from their o)ners and deli9er them to A!I!0!2 )hich
had )anted to take them in e=change for canceling the insurance!
But outsiders sa# 0oldman$s dealings )ith A!I!0! look more complicated than that! A memo )ritten b# (oseph
Cassano2 the former head of the A!I!0! financialDproducts di9ision2 sho)s that some of the securities 0oldman
insured )ith A!I!0! )ere created b# none other than 0oldman itself! (anet @a9akoli2 a structuredDfinance e=pert )ho
runs her o)n consulting firm in Chicago and )rote a book on C!!1!$s in -..C2 notes that 0oldman$s deals also
figure prominentl# in the list of C!!1!$s upon )hich other firms bought insurance! Hhich is )h#2 she sa#s2 60oldman
)as responsible for huge s#stemic risk2 and no) the#$re tr#ing to pretend the# )eren$t!7 &inall#2 on 4o9ember /L2 as
criticism mounted2 Blankfein issued a public apolog#: 6He participated in things that )ere clearl# )rong and ha9e
reason to regret!7
0oldman Sachs founder *arcus 0oldman2 earl# /J..s! ourtesy of6 Goldman Sachs.
A /J-J 0oldman stock certificate! %rom the collection of the 9useum of :merican %inance.
Wall Street (ers#s Main Street
An eDmail that made its )a# around Hall Street right after 0oldman announced its thirdD3uarter profits obser9ed2
6A/L Billion in comp 5earDtoDdate -..J 9s! A//B during the same period of -..B<4ot bad for a go9ernment
sponsored entit#Q7 @he eDmail concluded2 60lobal economic Armageddon and the near imminent failure of the
compan# )as clearl# the best thing that e9er happened to F0oldmanGQ7
0oldman$s press releases about its spectacular earnings ne9er mention go9ernment assistance of an# kind! In (une2
the firm paid back the A/. billion in @ARP funds it had taken! @a=pa#ers got a -C percent return! As for the A-/!>
billion in funds guaranteed b# the &!!I!C! that 0oldman still has outstanding2 a recent Congressional report
estimates that it )ill sa9e 0oldman A-!? billion o9er the life of the debt! But Cohn argues that that is actuall# costing
the firm2 in fees to the &!!I!C! and interest2 because it is e=cess li3uidit#! 8Hhen I repeat that to another Hall
Streeter2 he closes his e#es and sa#s2 6Please tell me 0ar# didn$t sa# that!7; Cohn also sa#s that issuing the &!!I!C!
debt )as 6the single biggest mistake )e made!7
In fairness2 one of the reasons 0oldman is making so much mone# is that2 )hile its remaining competitors huddled
in their bunkers2 0oldman got back to )ork! 6@he 0oldman Sachs team deser9es great credit to go through )hat the#
)ent through and get back on their feet and make mone#27 sa#s an obser9er!
But because so man# of 0oldman$s competitors )ere gone or disabled2 spreads<the difference bet)een the price at
)hich #ou sell and bu# a 9ariet# of securities<)ere )ider than the# had been in #ears2 meaning that 0oldman could
practicall# mint mone#! B# acting at the moment it did2 )ith +ehman out and *errill +#nch do)n for the count2 the
go9ernment enabled this situation! 6@he U!S! go9ernment un)ittingl# created an oligopol# in most markets2 and2 for
0oldman2 a near monopol# in some27 Scaramucci sa#s! 6@he# tied do)n Rockefeller and 0ates2 but the# un)ittingl#
unleashed 0oldmanQ7
@he other reason for 0oldman$s profits is that the go9ernment has flooded the s#stem )ith mone#2 not Oust the
mone# it used to rescue the financial s#stem but hundreds of billions more in stimulus2 in support of the housing
market2 and in the &ederal Reser9e$s purchases of securities! Anal#st *eredith Hhitne# calls 6go9ernment
manipulation7 the 6strongest2 most important theme of the capital markets in -..J!7 5ou cannot fault 0oldman for
taking ad9antage of that2 but it$s also true that2 as 4ational Economic Council director +arr# Summers said2 6there is
no financial institution that e=ists toda# that is not the direct or indirect beneficiar# of trillions of dollars of ta=pa#er
support for the financial s#stem!7
Ultimatel#2 the big 3uestion is this: o 0oldman$s profits signif# that good times are coming for the rest of the
countr#? (eff ,erschleiser2 a 0oldman partner )ho Ooined the firm from Bear Stearns2 sa#s that2 )hile *ain Street
ma# lag Hall Street2 ultimatel# the outcomes )ill be 6s#nched!7 And Blankfein professes no doubt! 6I$m charged )ith
managing and preser9ing the franchise for the good of shareholders2 and )hile I don$t )ant to sound highfalutin2 it is
also for the good of America27 he sa#s! 6I$m upDfront about that! I think a strong 0oldman Sachs is good for the
countr#!7
Hhen 0oldman repaid the A/. billion in @ARP funds2 Blankfein )rote a 9er# gracious letter to Representati9es Barne#
&rank and Spencer Bachus! 61ur return of the go9ernment$s in9estment does not2 in an# )a#2 end our obligations to
the public interest27 he )rote!
@he problem is that there are fe) concrete signs that 0oldman is acting in accordance )ith that patriotic letter! 1ne
place to look is the debate in Hashington2 !C!2 o9er deri9ati9es legislation! As it currentl# stands2 the billions of
dollars in profit in the deri9ati9es business are basicall# controlled b# the biggest dealers2 including (! P! *organ and
0oldman! Critics sa# that those profits are protected b# the opacit# of the market2 because no one can see the pricing!
It$s as if #our onl# source for the price of a share of IB* )ere )hate9er the dealer told #ou it )as! @oda#2 e9er#one2
but everyone, ad9ocates more transparenc# in the name of pre9enting the hidden tangle of risk that almost destro#ed
the financial s#stem! As Blankfein sa#s2 transparenc# is 6motherhood and apple pie!7
But the de9il is in the details! In )hat one person describes as 6handDtoDhand combat7 in the dark alle#s of !C!2
0oldman and the other big dealers are seeking e=emptions to some proposed ne) re3uirements that )ould help
shine a big spotlight on deri9ati9es trading<thereb# hoping to keep the market murk#! 6E9er# time )e go into a
member of Congress$s office2 the# alread# ha9e a 0oldman Sachs )hite paper on this27 mar9els another person )ho is
acti9e in Hashington! @he dealers2 including 0oldman2 argue that the# are tr#ing to preser9e their clients$ profits2 not
their o)n!
All in all2 0oldman e=ecuti9es seem to be gambling that the current mood2 in )hich the rest of us are rethinking the
s#stem that brought us to the 9er# edge2 and ma#be into the depths2 of a 9ast black pit2 )ill blo) o9er! And the# ma#
be right!
*ean)hile2 to steal a line from Blankfein$s boss 8+uke /-:?B;: &rom those )ho ha9e been gi9en much2 much )ill be
demanded!
Bethan! Mc)ean is a 'anity %air contributing editor!
(ource7 http7UUwww.vanityfair.comUbusinessUfeaturesU6A+AUA+Ugoldman8sachs86AA+A+2current)ageYC
5oldman"s (uccession <ight @oiled by Infamous 1p8>d
=y William D. ohan 0ar 6E, 6A+6 C7A+ )0 T
0ore often than not during the past +AA years, succession to the top Fob at 5oldman (achs *5(. has been a blood sport.
3 careful reading of former 5oldman employee 5reg (mith"s infamous ;ew #ork Times op8ed article 88 along with a twist of
conspiracy theory 88 suggests that the Fockeying to replace Iloyd =lankfein, who has been 5oldman"s chief e?ecutive officer
since 4une 6AAC, is well under way.
It"s also possible that (mith may have unwittingly, or perhaps wittingly, given a boost to one candidate previously thought to
have been out of the running7 4. 0ichael >vans, head of the firm"s global growth markets.
Despite what 5oldman would have you believe about how carefully orchestrated its leadership changes have always been, the
firm has rarely had an orderly succession. onsider the e?it of Waddill atchings, the first person from outside the family to run
5oldman (achs. In +,-A, partners (idney Weinberg and Walter (achs decided that atchings, whose creation of the 5oldman
(achs Trading orporation had by then cost the firm O+- million and nearly put it out of business, had to go.
6irm(s 3ear24ollapse
(achs first met with atchings in hicago to clip his wings, and atchings apologiMed for having taken gambles without the
approval of all partners. 3 few months later, (achs and his brother 3rthur decided to buy atchings out of his contract for
O6EA,AAA. We had made up our minds to ask him to retire,% Walter (achs recalled in an oral history in the +,EAs. This was
because it had become clear to us that we Fust didn"t think alike, that he had come as near ruining the name and the reputation of
the firm as any man could do.%
The (achses selected Weinberg to be the senior partner, and he went on to become one of the greatest investment bankers of his
generation. #et he, too, refused to leave the stage gracefully in favor of his successor, 5us Ievy. (o in the mid8 +,CAs, Ievy
forced Weinberg to move from 5oldman"s headquarters in downtown 0anhattan to an office in the (eagram"s =uilding in
0idtown. =ut even kept out of the day8to8day flow, Weinberg would not go quietly, and until his death in +,C, he made sure
Ievy knew that he was still responsible for pay and promotions at 5oldman.
3fter Ievy"s sudden death in +,BC 88 he suffered a stroke at a )ort 3uthority board meeting 88 the Two 4ohns% *4ohn Whitehead
and 4ohn Weinberg, son of (idney. succeeded him, although Whitehead thought he should have had the position alone. Things
went fairly smoothly after Whitehead retired and Foined the (tate Department, with Weinberg running the firm alone beginning
at the end of +,/G.
#et by the end of the decade, Weinberg 88 like his father before him 88 was sent packing to the (eagram"s =uilding to make way
for @obert @ubin and (teve <riedman to lead 5oldman, in December +,,A. @ubin and <riedman had grown impatient that
Weinberg would not leave gracefully. That partnership worked fine until @ubin left in 4anuary +,,- to Foin the =ill linton
administration, and then <riedman abdicated his position for health reasons. This set off a week of ferocious infighting in +,,G
at 5oldman (achs, with 4on orMine being named senior partner and Hank )aulson becoming his ;o. 6.
=ut orMine and )aulson never got along. orMine seemed eager to merge 5oldman with another Wall (treet firm, an idea
)aulson resisted. >ventually, in 4anuary +,,,, )aulson seiMed his opportunity to get the four votes he needed on 5oldman"s five8
member e?ecutive committee to remove orMine, a swift coup8 d"etat. Two of the four votes came from partners 4ohn Thornton
and 4ohn Thain 88 a longtime orMine ally. In e?change, )aulson promised the men that they would succeed him one day.
+romise 3ot ;ept
=ut )aulson reneged on that promise, deciding in the end that neither man had the right stuff to lead 5oldman. When )aulson
became Treasury secretary in 6AAC, he thought =lankfein, who had come from the trading floor, would be the better choice to
lead a firm so heavily dependent on trading revenue and profit.
The machinations inside 5oldman to succeed =lankfein are no less 9remlin8like than at other times in its history. Iately,
5oldman insiders have been positioning 5ary ohn, 5oldman"s E+8 year8old president and a longtime =lankfein ally, as the
obvious candidate to succeed =lankfein when the time comes. This is a relatively new development because many thought that
promoting ohn, another former trader, would conflict with 5oldman"s supposed new priority on being client8friendly and a
corporate good citiMen. =ut insiders note that ohn has become much more statesmanlike in the past year, and point to his high8
profile appearance at the World >conomic <orum in Davos, (witMerland, in 4anuary as evidence.
;o doubt ohn"s renaissance has miffed the uber8competitive >vans, a former 1lympic gold8medalist *in rowing. and a
5oldman vice chairman. >vans had been a serious contender for the top Fob, and in 6A+A was made co8chairman of 5oldman"s
internal =usiness (tandards review committee, which published a report on the firm"s role in the financial meltdown in 4anuary
6A++. However, insiders tell me, >vans"s ambitions and sharp elbows had upset a number of important colleagues, and his star
was falling.
>nter 5reg (mith with his bombshell. >vans has spent much of his 5oldman career at the Iondon office, where (mith worked,
and they certainly knew each other. In his op8ed article, (mith specifically cited =lankfein and ohn as responsible for the
deterioration of 5oldman"s culture during his almost +6 years at the firm. (mith made no mention of >vans.
The logical question is, who benefits from (mith"s embarrassing public indictment of 5oldman"s culture under the leadership of
=lankfein and ohn2 How about the 0achiavellian >vans, a former protege of )aulson"s who can be presented to the 5oldman
board 88 and to the public 88 as a worldly, client8 oriented, cleaner8than8clean savior and return of the old8school style
investment8banker at 5oldman2
Why doesn"t anyone call the 5reg (mith story what it is, the ne?t round of alpha war at the top of 5(2% one observer recently
e8mailed me. Why not, indeed.
*William D. ohan , a former investment banker and the author of 0oney and )ower7 How 5oldman (achs ame to @ule the
World,% is a =loomberg :iew columnist. The opinions e?pressed are his own..
(ource7 http7UUwww.bloomberg.comUnewsU6A+68A-86EUgoldman8s8succession8fight8roiled8by8infamous8op8ed.html
Iloyd =lankfein *left., chairman of the board of 5oldman (achs, greets Wang Lishan, :ice )remier of ommunist hina, in
=eiFing, ommunist hina on December +, 6AA,. *ZinhuaUHuang 4ingwen.
(!P! *organ % Compan# and @he 'ouse of *organ
5nternational banker John Pier0ont Morgan confronts a 0hotogra0her in May %-%,.
(PhotoB Library of Congress Prints and Photogra0hs Di"ision)
John Pier0ont Morgan (center) ga1es ferocio$sly at bystanders at the f$neral of 8.!. !enator John .airfield Dryden in %-%%.
John Pier0ont Morgan (center) arri"es at the P$Lo hearings in Washington, D.C. in December %-%* along (ith his da$ghter
Lo$isa !atterlee (left) and his son J.P. GJackH Morgan Jr. John Pier0ont Morgan died in /ome, 5taly on March &%, %-%&C John
Pier0ont Morgan (as born in #artford, Connectic$t, 8.!.7. on 70ril %+, %:&+.
5nternational banker John Pier0ont Morgan (ith his da$ghter Lo$isa !atterlee and son J.P. GJackH Morgan Jr. (PhotoB 6ime Life)
(PhotoB "he House of ,organ by /on Cherno()

John Pier0ont Morgan>s father and mother, J$ni$s !0encer Morgan (left, %:%&;%:-,) and J$liet Pier0ont Morgan
6he Morgan family>s home at Prince>s ate in London (PhotoB "he House of ,organ by /on Cherno()
Jack Morgan>s home (PhotoB "he House of ,organ by /on Cherno()

J.P. Morgan @ Co. 0artners in the early %-,,s (left to right)B #enry P. Da"ison, /$ssell C. Leffing(ell, 6homas W. Lamont,
eorge W. Perkins !r., and /obert Bacon (former 8.!. !ecretary of !tate)
Willard !traight, the Morgan agent in China, (alks (ith his heiress (ife, the former Dorothy Whitney.
(PhotoB "he House of ,organ by /on Cherno()
Wall !treet banker and Morgan agent Willard !traight (seated on the right) meets (ith William J. Calho$n, the 8.!. Minister to
China, and Chinese Colonel 6sat 6ing;Fan. (PhotoB "he House of ,organ by /on Cherno()
(PhotoB "he House of ,organ by /on Cherno()
(PhotoB "he House of ,organ by /on Cherno()
J.P. Morgan talks to another banker in )ctober %-,+, L$st before the Panic.
Left to rightB J.P. Morgan Jr., /ichard B$rdon !anderson #aldane J%st Disco$nt #aldane (%:<=;%-*:)K, and Fenneth M$ir Macken1ie (%:A<;
%-&,) stand together at the 8.!. Military 7cademy at West Point, 2e( 3ork on 7$g$st &,, %-%&, less than fo$r months before Congress
0assed the .ederal /eser"e 7ct. (!o$rceB 2e( 3ork 6imes, 7$g$st &%, %-%&4 Library of Congress Prints and Photogra0hs Di"ision)
=ut they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in
destruction and perdition. <or the love of money is the root of all evil.% & + Timothy C7 ,8+A *94:.
3merican banker 4ohn )ierpont 0organ (r., the head of 4.). 0organ N o. banking firm in ;ew #ork ity, and His @oyal 0aFesty
9ing >dward :II of 5reat =ritain attend a house party at the Harcourts" ;uneham )ark estate in 5reat =ritain in +,AB.
$he /017 Ball Street !ombing; 7 bomb blast occ$rs o$tside the #o$se of Morgan in do(nto(n Manhattan in 2e( 3ork City
on !e0tember %=, %-*,. (PhotoB "he House of ,organ by /on Cherno()
3lbert H. Wiggin *left. and 4.). 0organ 4r. *center. attend a Iiberty Day% parade.
*)hoto7 Iibrary of ongress )rints and )hotographs Division.
!enate Chairman erald P. 2ye and members of the #o$se of Morgan talk as the bankers again testified before the !enate M$nitions
Committee in Washington, D.C. on Jan$ary %=, %-&=. Left to rightB !enator erald P. 2ye of 2orth DakotaC 6homas W. Lamont, John Pier0ont
Morgan and eorge Whitney. (Bettmann4C)/B5!)
5nternational banker J.P. Morgan Jr. (seated), head of the greatest banking concern in the (orld, chats (ith John W. Da"is, right, his co$nselC
6homas W. Lamont, (second from left), his 0artnerC and !enator John J. 6o(nsend of Maryland, a member of the !enate Committee on
Banking and C$rrency, in Washington, D.C. on May *&, %-&& before .erdinand Pecora, co$nsel to the committee, o0ened the in"estigation
into the banking sit$ation. Da"is and Lamont (ere members of the Co$ncil on .oreign /elations. (Bettmann4C)/B5!)
6hese three Wall !treet notables, all 0artners of J.P. Morgan @ Com0any, a00ear before the !enate 5nterstate Commerce Committee on
March <, %-&+ to ans(er ?$estions in the committeeNs c$rrent in"estigation into railroad financing. Left to right in the gro$0B #arold !. !tanley,
eorge Whitney, and 6homas W. Lamont. !tanley, Whitney, and Lamont (ere members of the Co$ncil on .oreign /elations.
(Bettmann4C)/B5!)
With the merc$ry o"er -,, J.P. Morgan Jr. and his 0artners banished their coats as they listened to testimony d$ring the !enate in"estigation
of the #o$se of Morgan at Washington, D.C. on J$ne :, %-&&. /$ssell Leffing(ell, a Morgan 0artner is sho(n talking to Morgan. #arold
!tanley, another 0artner is at right. (Bettmann4C)/B5!)
5nternational banker J.P. Morgan Jr. a00ears before Congress in Washington, D.C. in %-&= d$ring his Congressional in"estigation. 7t left is
.rank Danderli0, President of the 2ational City Bank. 7t right is eorge Whitney. (Bettmann4C)/B5!)
7merican Delegation to E'0erts Conference 0artici0ants (left to right) 6homas W. Lamont, J.P. Morgan Jr., and )(en D. 3o$ng arri"ed in
Paris, .rance aboard the &$uitania. 6hey are here sho(n at the are !t. La1are train station in Paris. (Bettmann4C)/B5!)
John Pier0ont Morgan Jr. (right) and 6homas W. Lamont, 0artner, are ?$estioned by the !tate M$nitions Committee concerning financial
o0erations d$ring World War 5 in Washington, D.C. on Jan$ary +, %-&=. (Bettmann4C)/B5!)
Morgan Partners meet in the ca$c$s room of the !enate )ffice B$ilding in Washington, D.C. on May &%, %-&& as the Morgan #earing
reo0ened. Left to rightB J$ni$s !. Morgan, son of J.P. Morgan, #arold !tanley, eorge Whitney, 6homas W. Lamont, and .red !ch(art1 of the
Da"is La( .irm (co$nsel for Morgan). E"eryone e'ce0t for .red !ch(art1 (as a member of the Co$ncil on .oreign /elations.
(Bettmann4C)/B5!)
The 0organ bank, headquartered in the low fortress8like building at the Functure of Wall and =road streets, was commonly
referred to as the orner.% Directly across Wall (treet were the old (ub8Treasury =uilding and the '.(. 3ssay 1ffice! the ;ew
#ork (tock >?change and the =ankers Trust tower stood at the southwest and northwest corners of the intersection. 0ost of the
important ;ew #ork banks and investment firms were within a few hundred yards. 4.). 0organ N o. was truly at the financial
center of the nation and deserved its premium location. omparative underwriting statistics understated the powerful influence
of the firm, reflecting its standing at the summit of the financial community for over three decades. Its political connections
were at the highest levels in Washington and Iondon. &n a real sense the Morgan bank %as the gatekeeper controlling
access to the huge sums of capital needed by the biggest and best corporations and foreign go!ernments. @.S. Steel
>eneral Motors >eneral *lectric #.T.JT. >reat Britain 6rance and the list %ent on C %ere all Morgan clients.
=ankers regularly speculated as to how the orner would regard a proposal! 0organ"s support or reFection could make or break
a deal.% & The Am(assador from all Street" The Story of Thomas 8 &amont+ #8 )8 %organ2s Chief Exec*ti9e by >dward 0.
Iamont, p. 6-,
The year +,6B was a good one for TWI in garnering foreign decorations. >arlier in the year the 0organ bank had organiMed
several loans for Italian borrowers, including the ity of @ome and the giant industrial company )irelli. In December, 4.).
0organ N o. e?tended a credit of O6E million to the =anco d"Italia as part of an international loan for stabiliMing the lire as
Italy returned to the gold standard. 3t year8end royal awards were conferred on Iamont and 0organ, Iamont being appointed a
ommander of the 1rder of the (aints 0auritius and IaMarus. <or the year +,6B, Dow 4ones N o., the financial service,
reported that the 0organ firm was the leading syndicate manager of bond issues, with Fust over OEAA million to its credit.
;ational ity =ank and 9uhn, Ioeb were not far behind. (ince the war, foreign bond issues had comprised about a third of the
0organ8managed offerings. <irst 3ustria, then 5ermany, 5reat =ritain, =elgium, and now Italy had returned to the gold
standard over the last four years, and the 0organ partners e?pected that <rance would shortly follow suit. International loans
and credits, in which 0organ"s leadership had been instrumental, had buttressed the reserves of these countries as they tied their
currencies to gold. The 0organ partners believed that the bankers had played a very constructive role in strengthening the
world"s economies. =ut not all the foreign bonds being sold to 3merican investors were soundly based, especially some of the
(outh 3merican and =alkan government issues. In a talk before the International hamber of ommerce in Washington on
0ay 6, +,6B, Iamont warned investors to be careful7 I have in mind the reportsKof 3merican bankers and firms competing on
almost a violent scale for the purpose of obtaining loans in various foreign money markets overseas. ;aturally it is a tempting
thing for certain of the >uropean governments to find a horde of 3merican bankers sitting on their doorsteps offering them
moneyKThat sort of competition tends to insecurity and unsound practice.% The profit to bankers in the reckless underwriting
of foreign loans was at the public e?pense. Indeed, weak bank credits, such as advances to Iatin 3merican governments, might
well be paid off from the proceeds of bond issues sold to trusting investors whose losses came later. The pacesetter among the
bankers aggressively underwriting and selling foreign bonds with little investigation and dubious prospects was harles >.
0itchell, the affable and dynamic head of ;ational ity =ank and its investment affiliate. He and others like him paid little
heed to TWI"s warning.%
& The Am(assador from all Street" The Story of Thomas 8 &amont+ #8 )8 %organ2s Chief Exec*ti9e by >dward 0. Iamont, p.
6-/86-,
0ussolini had dispatched hundreds of aircraft, a large supply of arms, and at least EA,AAA troops to (pain to Foin <ranco"s
forces in their drive to overthrow the Ioyalist government, a topic TWI PThomas W. IamontQ had not brought up with the
Duce. #ou will ask why I did not throw (pain at his head.% (pain was a sore subFect,% said TWI, and it was unnecessary to
raise it. 0ussolini knew he had to find a way to get out of (pain. TWI had informed 3merican ambassador William )hillips
about his meeting with the Duce, and he was simply delighted, made much more of the matter than it deserved.% I had no
desire to see 0ussolini, but as he actually sent for me I could not, without discourtesy, decline to see him,% e?plained Iamont.
0ussolini was viewed with repugnance in the West after years of <ascist repression, the bloody conquest of >thiopia, military
support for <ranco, and the formation of the @ome8=erlin 3?is to collaborate with Hitler. =ond issues for Italy had been out of
the question for years, a full decade in the 0organ bank"s case. In +,-B TWI clearly was concerned about how others might
perceive his willingness to meet the brutal dictator he had once admired for making the trains run on time. =ut simply berating
0ussolini was counterproductive, he felt, and, as Famont had told his son =& %ould talk to any dictator in *urope or
gangster in #merica if & thought it %ould help.? =ack in his hotel in @ome, Iamont drafted a memorandum to
P5iovanniQ<ummi Pthe 0organ representative in @omeQ elaborating on his ideas to help Italy present itself to enlighten
3merican and =ritish opinion.% :isitors should study modern Italy & its public works, reclamation proFects, and social programs
to appreciate how the Italian people are committed to the pursuits of peace and prosperity.% It was not the first time TWI had
applied his own spin to shape public opinion.%
& The Am(assador from all Street" The Story of Thomas 8 &amont+ #8 )8 %organ2s Chief Exec*ti9e by >dward 0. Iamont, p.
GA,
;ote7 Thomas W. Iamont met with Italy"s dictator =enito 0ussolini in @ome, Italy on 3pril +C, +,-B.
Co$ncil on .oreign /elations members 6homas W. Lamont (left) and eorge Whitney (center) ad"ise J.P. GJackH Morgan Jr. in Jan$ary %-&=.
J.P. Morgan and his son J.P. Morgan Jr. (ere not members of the Co$ncil on .oreign /elations.
(PhotoB "he House of ,organ by /on Cherno()
J.P. GJackH Morgan Jr. a00ears (ith his sons J$ni$s !. Morgan (left) and #enry !. Morgan in %-&-. Both J$ni$s !. Morgan and #enry !.
Morgan (ere members of the Co$ncil on .oreign /elations. (PhotoB "he House of ,organ by /on Cherno()
6homas W. Lamont, eorge Whitney, Leonard Feyes (standing), J.P. Morgan Jr., John W. Da"is, and /$ssell C. Leffing(ell
a00ear at a !enate banking and c$rrency committee hearing in %-&&. E"eryone e'ce0t for Morgan and Feyes (as a member of
the Co$ncil on .oreign /elations.
J.P. GJackH Morgan Jr. ad"ises Fing eorge D5 of reat Britain (left) at an embassy tea garden 0arty in Washington D.C. in J$ne
%-&-. J.P. GJackH Morgan Jr.>s father (as J.P. Morgan. (PhotoB "he House of ,organ by /on Cherno()
Jack Morgan, Jessie Morgan (at Jack>s right), and 6eddy renfell ride aboard the #orsair boat (ith Mr. ardiner and Miss
Williams. (PhotoB "he House of ,organ by /on Cherno()
Co$nsel .erdinand Pecora (left) obser"es J.P. Morgan @ Co. 0artner J.P. GJackH Morgan Jr. as 8.!. !enator Carter lass,
(earing a hat, (alks to(ard his seat. (PhotoB "he House of ,organ by /on Cherno()
eorge Peabody, godfather and fo$nder of the #o$se of Morgan (PhotoB "he House of ,organ by /on Cherno()
3ny reform of Wall (treet practices came from pressure from the hinterlands, especially from the farming West, and was long
delayed by the close alliance of Wall (treet with the two maFor political parties, which grew up in +//A8+,AA. In this alliance, by
+,AA, the influence of 0organ in the @epublican )arty was dominant, his chief rivalry coming from the influence of a monopoly
capitalist, @ockefeller of 1hio. =y +,AA Wall (treet had largely abandoned the Democratic )arty, a shift indicated by the
passage of the Whitney family from the Democrats to the @epublican inner circles, shortly after they established a family
alliance with 0organ. In the same period, the @ockefeller family reversed the ordinary direction of development by shifting
from the monopoly fields of petroleum to ;ew #ork banking circles by way of the hase ;ational =ank. (oon family as well as
financial alliances grew up among the 0organs, Whitneys, and @ockefellers, chiefly through )ayne and 3ldrich family
connections. 6or almost fifty years from -..0 to -7/0 financial capitalism approximated a feudal structure in %hich t%o
great po%ers centered in 3e% Aork dominated a number of lesser po%ers both in 3e% Aork and in pro!incial cities. ;o
description of this structure as it e?isted in the +,6A"s can be given in a brief compass, since it infiltrated all aspects of 3merican
life and especially all branches of economic life. 3t the center were a group of less than a doMen investment banks, which were,
at the height of their powers, still unincorporated private partnerships. These included 4. ). 0organ! the @ockefeller family!
9uhn, Ioeb and ompany! Dillon, @ead and ompany! =rown =rothers and Harriman! and others. >ach of these was linked in
organiMational or personal relationships with various banks, insurance companies, railroads, utilities, and industrial firms. The
result was to form a number of webs of economic power of which the more important centered in ;ew #ork, while other
provincial groups allied with these were to be found in )ittsburgh, leveland, hicago, and =oston. 4. ). 0organ worked in
close relationship to a group of banks and insurance companies, including the <irst ;ational =ank of ;ew #ork, the 5uaranty
Trust ompany, the =ankers Trust, the ;ew #ork Trust ompany, and the 0etropolitan Iife Insurance ompany. The whole
ne?us dominated a network of business firms which included at least one8si?th of the two hundred largest nonfinancial
corporations in 3merican business. 3mong these were twelve utility companies, five or more railroad systems, thirteen
industrial firms, and at least five of the fifty largest banks in the country. The combined assets of these firms were more than
O-A billion. They included 3merican Telephone and Telegraph ompany, International Telephone and Telegraph, onsolidated
5as of ;ew #ork, the groups of electrical utilities known as >lectric =ond and (hare and as the 'nited orporation 5roup
*which included ommonwealth and (outhern, )ublic (ervice of ;ew 4ersey, and olumbia 5as and >lectric., the ;ew #ork
entral railway system, the :an (weringen railway system *3llegheny. of nine lines *including hesapeake and 1hio! >rie!
0issouri )acific! the ;ickel )late! and )ere 0arquette.! the (anta <e! the ;orthern system of five great lines *5reat ;orthern!
;orthern )acific! =urlington! and others.! the (outhern @ailway! 5eneral >lectric ompany! 'nited (tates (teel! )helps Dodge!
0ontgomery Ward! ;ational =iscuit! 9ennecott opper! 3merican @adiator and (tandard (anitary! ontinental 1il! @eading
oal and Iron! =aldwin Iocomotive! and others. The :ockefeller group %hich %as really a monopoly capitalist
organization in!esting only its o%n profits functioned as a financial capitalist unit in close cooperation %ith Morgan.
3llied with the country$s largest bank, the hase ;ational, it was involved as an industrial power in the various (tandard 1il
firms and the 3tlantic @efining ompany, but it controlled over half the assets of the oil industry, plus the O6 +U- billion assets in
hase ;ational =ank. 9uhn, Ioeb was chiefly interested in railroads, where it dominated the )ennsylvania, the 'nion )acific,
the (outhern )acific, the 0ilwaukee, the hicago ;orthwestern, the 9aty *0issouri89ansas8Te?as @ailroad ompany., and the
Delaware and Hudson. It also dominated the =ank of 0anhattan and the Western 'nion Telegraph ompany for a total of
almost O++ billion in assets. The 0ellon group centered in )ittsburgh dominated 5ulf 1il, 9oppers, 3lcoa, Westinghouse
>lectric, 'nion Trust ompany, the 0ellon ;ational =ank, 4ones and Iaughlin (teel, 3merican @olling 0ill, rucible (teel,
and other firms for total assets of about O-.- billion. It has been calculated that the 6AA largest nonfinancial corporations in the
'nited (tates, plus the fifty largest banks, in the mid8+,-A$s, owned -G percent of the assets of all industrial corporations, G/
percent of the assets of all commercial banks, BE percent of the assets of all public utilities, and ,E percent of the assets of all
railroads. The total assets of all four classes were almost O+AA billion, divided almost equally among the four classes. The four
economic power blocs which we have mentioned *0organ! @ockefeller! 9uhn, Ioeb and ompany! and 0ellon. plus du )ont,
and three local groups allied with these in =oston, leveland, and hicago, together dominated the following percentages of the
6EA corporations considered here7 of industrial firms E/ percent of their total assets, of railroads /6 percent, and utilities E/
percent. The aggregate value of the assets controlled by the eight power groups was about OC+,6AE million of the total assets of
O+,/,-E+ million in these 6EA largest corporations at the end of +,-E. The economic power represented by these figures is
almost beyond imagination to grasp, and was increased by the active role which these financial titans took in politics. 0organ
and @ockefeller together frequently dominated the national @epublican )arty, while 0organ occasionally had e?tensive
influence in the national Democratic )arty *three of the 0organ partners were usually Democrats.. These two were also
powerful on the state level, especially 0organ in ;ew #ork and @ockefeller in 1hio. 0ellon was a power in )ennsylvania and
du )ont was obviously a political power in Delaware. In the +,6A"s this system of economic and political power formed a
hierarchy headed by the 0organ interests and played a principal role both in political and business life. 0organ, operating on the
international level in cooperation with his allies abroad, especially in >ngland, influenced the events of history to a degree which
cannot be specified in detail but which certainly was tremendous.%
& Tragedy and Hope by arroll Luigley, p. E-A8E-6
=, Wall !treet, ne( Morgan bank head?$arters (PhotoB "he House of ,organ by /on Cherno()
1ffice of 4.). 0organ N o. in ;ew #ork ity in the early +,AAs
*)hoto7 Iibrary of ongress )rints and )hotographs Division.
6he Morgan $aranty 6r$st B$ilding at *& Wall !treet, on the corner of Wall !treet and Broad !treet, (as b$ilt in %-%& for J. Pier0ont
Morgan;;the year he died. R6he CornerR, or R6he #o$se of MorganR ser"ed, for years, as the head?$arters of the 0o(erf$l JP Morgan @
Com0any Bank (later the Morgan $aranty 6r$st Com0any). )n !e0tember %=, %-*,, the b$ilding (as the site of the Wall !treet Bombing.
&: 0eo0le (ere killed and A,, 0eo0le (ere inL$red by the bombing. 6he b$ilding recei"ed hea"y damage, (ith shra0nel entering the b$ilding
thro$gh its large (ide (indo(s. 6o this day, the damage to the limestone fa[ade is "isible on the o$tside of the b$ilding, as the com0any said it
(o$ld ne"er re0air the damage in defiance to those (ho committed the crime. 5n %-<+ the b$ilding (as linked to neighboring %< Broad !treet,
a A*;story to(er. 5n %-:-, JP Morgan mo"ed its o0erations to =, Wall !treet, a larger and more modern b$ilding t(o blocks to the east. 6he
b$ilding (as e'tensi"ely reno"ated in the %--,s as a training and conference facility for J.P. Morgan @ Co., destroying the grand banking hall.
6his b$ilding and %< Broad !treet (ere sold in *,,& for 9%,, million. 6he J.P. Morgan @ Com0any B$ilding (as designated a landmark by
the 2e( 3ork City Landmarks Preser"ation Commission in %-=<. J2ational /egister \+*,,:+A (%-+*)K (PhotoB .lickr)
Stanle! Fischer*
(e)ish Banker E=traordinaire?
!tanley .ischer (center) is recei"ed by 5srael>s Prime Minister 7riel !haron (left) and 5srael>s .inance Minister BenLamin
2etanyah$ in the Prime Minister>s office in Jer$salem, 5srael on Jan$ary %+, *,,<. (Photo by Brian #endler4etty 5mages)
@ewish !anker greets *rab $errorist; !tanley .ischer (left), the .irst De0$ty Managing Director of the 5nternational Monetary
.$nd (5M.), 0re0ares to shake hands (ith Palestinian Liberation )rgani1ation terrorist 3asser 7rafat d$ring a 0ress conference
in the lobby of the 5M. b$ilding in Washington, D.C. on Jan$ary *%, *,,,. (Pa$l J. /ichards47.P4etty 5mages)
Eh$d )lmert (left), the Prime Minister of 5srael and a member of the Fadima Party, greets !tanley .ischer (right), the o"ernor
of the Bank of 5srael, on December *,, *,,=. (PhotoB Moshe Milner45srael o"ernment Press )ffice (P)))
(tanley <ischer *left., 5overnor of the =ank of Israel, shakes hands with )rime 0inister of Israel =enFamin ;etanyahu.
(From left to right) Former Bank of Israel Governor Jacob Frenkel, Prime Minister of Israel Benjamin Netanyahu, Finance Minister of Israel Yair
Lapid and outgoing Bank of Israel Governor Stanley Fischer appear at a press conference in the Knesset in Jerusalem, Israel on June 24,
2013. Stanley Fischer is a member of the Council on Foreign Relations, a private organization in New York City; Jacob Frenkel is a member of
the Trilateral Commission. @acob *. 'renkel, who was nominated to serve as the =overnor of the !ank of Israel in 17/3, withdrew his
nomination due to a shoplifting allegation. (Photo: GPO)
Stanley Fischer (left), Governor of the Bank of Israel, presents Prime Minister of Israel Benjamin Netanyahu with the Bank of Israels 2012
annual report.
ordon Bro(n (right), chairman of the 5nternational Monetary .inancial Committee, s0eaks d$ring a briefing (ith !tanley .ischer
(left), acting Managing Director of the 5M., at the World Bank45M. meeting in Washington D.C. on 70ril %=, *,,,.
(Leslie E. Fossoff47.P4etty 5mages)
Pa$l Dolcker (left), !tanley .ischer (center, red tie), and William J. McDono$gh (right) ha"e attended the Bilderberg Meetings in
the 0ast.
/odrigo de /ato .igaredo (left), !0ain>s Minister of Economy, greets !tanley .ischer, .irst De0$ty Managing Director of the
5nternational Monetary .$nd, at the start of their meeting in Washington D.C. on 70ril &,, *,,%.
(PhotoB Leslie E. Fossoff47.P4etty 5mages)
.rom left to rightB 7ngel $rria, !tanley .ischer (the o"ernor of the Bank of 5srael), Michel Camdess$s (former Managing
Director of the 5nternational Monetary .$nd), and Jean;Cla$de 6richet (President of the Central Bank of E$ro0e) are seen
la$ghing together d$ring a meeting on May **, *,,=. !tanley .ischer and Jean;Cla$de 6richet attended the Bilderberg
Meetings together in %---.
.irst De0$ty Managing Director of the 5nternational Monetary .$nd !tanley .ischer (left), .ederal /eser"e Chairman 7lan
reens0an (center), and 5nternational Monetary .$nd Managing Director Michel Camdess$s ha"e a 0ri"ate con"ersation at a
meeting on !e0tember *=, %---. 7lan reens0an and !tanley .ischer are members of the Co$ncil on .oreign /elations.
!tanley .ischer is c$rrently the o"ernor of the Bank of 5srael.
!tanley .ischer (right), o"ernor of the Bank of 5srael, talks (ith Mark Carney, o"ernor of the Bank of Canada, d$ring the
.ederal /eser"e Bank of Fansas City ann$al sym0osi$m near Jackson #ole, Wyoming, 8.!.7. on 6h$rsday, 7$g$st *=, *,%,.
!tanley .ischer and Mark Carney ha"e attended the Bilderberg Meetings in the 0ast. (PhotoB 7ndre( #arrer4Bloomberg)
5srael>s .inance Minister BenLamin 2etanyah$ (atches 5srael>s Prime Minister 7riel !haron greet !tanley .ischer, the o"ernor of the Bank of
5srael, at the Prime Minister>s )ffice in Jer$salem on May %, *,,<. .ischer attended the Bilderberg Meetings in %--=, %--:, and %---. 6he
Bank of 5srael is 5srael>s central bankC the Bank of 5srael finances the 5sraeli go"ernment, incl$ding the Mossad.
!tanley .ischer is recei"ed by 7riel !haron, the Prime Minister of 5srael, at the Prime Minister>s office in Jer$salem on Jan$ary %+, *,,<.
(Photo by Brian #endler4etty 5mages)

!tanley .ischer greets /$ssia>s President Dladimir P$tin.
5srael>s Prime Minister 7riel !haron (right) meets (ith Jacob .renkel (left), then the o"ernor of the Bank of 5srael, !tanley .ischer (second
from left), then the .irst De0$ty Managing Director of the 5nternational Monetary .$nd, and aby .ishman at the Fnesset in Jer$salem on May
%A, *,,%. Both Jacob .renkel and !tanley .ischer are members of the 6rilateral Commission, members of the ro$0 of 6hirty (;&,), and
directors of the 5nstit$te for 5nternational Economics. (PhotoB 7mos Ben ershom4P))
!tanley .ischer (center) meets (ith 8nited 2ations !ecretary eneral Fofi 7nnan (left).

LeftB 5srael>s Prime Minister 7riel !haron shakes hands (ith !tanley .ischer in 6el 7"i", 5srael on May %-, *,,<.
(PhotoB 7mos Ben ershom4 5srael o"ernment Press )ffice (P)))
/ightB 5srael>s Prime Minister Eh$d Barak shakes hands (ith !tanley .ischer, the .irst De0$ty Managing Director of the 5nternational Monetary
.$nd, in 6el 7"i", 5srael on 2o"ember *:, %---. (PhotoB Moshe Milner45srael o"ernment Press )ffice (P)))
5srael>s Prime Minister 7riel !haron (atches the ne( o"ernor of the Bank of 5srael !tanley .ischer shake hands (ith 5srael>s .inance
Minister BenLamin 2etanyah$ in Jer$salem on May %, *,,<.
o"ernor of the Bank of 5srael !tanley .ischer (left) and 5srael>s Prime Minister Eh$d )lmert dis0lay a co0y of the *,,< Bank of 5srael ann$al
re0ort in Jer$salem on 70ril *, *,,=. !tanley .ischer is a member of the Co$ncil on .oreign /elations, and a member of the 6rilateral
Commission. !tanley .ischer attended the Bilderberg Meetings in %--=, %--:, and %---. (PhotoB 7mos Ben ershom4P))
5sraelNs Prime Minister Eh$d )lmert (/) recei"es a co0y of the ann$al re0ort from Bank of 5srael o"ernor !tanley .ischer in
Jer$salem on 70ril %, *,,:. (/e$ters)
5sraeli .inance Minister /oni Bar )n (/) and !tanley .ischer, o"ernor of the Bank of 5srael, arri"e in the Prime Ministry to attend the (eekly
cabinet meeting in Jer$salem, 5srael on )ctober %*, *,,:. 7s the meeting (as in 0rogress it (as anno$nced that the high;tech sector of the
6el 7"i" stock e'change had lost %= 0ercent of its "al$e and bl$e chi0s stocks $0 to : 0ercent as 5srael is affected in the slide of international
economies. (etty 5mages)
5n this hando$t 0hoto 0ro"ided by the 5sraeli o"ernment Press )ffice (P)), 5sraeli Prime Minister BenLamin 2etanyah$ (L) recei"es the
Bank of 5srael ann$al re0ort from o"ernor !tanley .ischer of the Bank of 5srael in Jer$salem, 5srael on 70ril %-, *,,-. .ischer re0orted that
5srael is (ithstanding the global economic crisis b$t that the recession is far from o"er. (etty 5mages)
!tanley .ischer (left), the o"ernor of the Bank of 5srael, (atches 5srael>s Prime Minister 7riel !haron (second from left), 5srael>s .inance
Minister Eh$d )lmert (second from right), and an $nidentified 5sraeli b$rea$crat hold a co0y of a check at a ceremony in the Prime Minister>s
office in Jer$salem, 5srael on Jan$ary A, *,,=. (PhotoB 7mos Ben ershom45srael o"ernment Press )ffice (P)))
World =ank )resident @obert Xoellick *I. and 5overnor of the =ank of Israel (tanley <ischer enter the morning session of the
<ederal @eserve"s 4ackson Hole >conomic (ymposium at 4ackson Iake Iodge in 5rand Teton ;ational )ark, Wyoming on
3ugust 66, 6AA,. @obert Xoellick and (tanley <ischer are members of the ouncil on <oreign @elations. *@euters.

!tanley .ischer dis0lays his 5sraeli identification card. !tanley .ischer maintains d$al citi1enshi0C !tanley Fischer is a naturalized
American citizen and a naturalized Israeli citizen. (Left photo: 5srael 5nsider4 7P Photo)
Left to rightB Bank of 5srael o"ernor !tanley .ischer, 5srael>s President !himon Peres, 5srael>s Prime Minister BenLamin 2etanyah$, and
5srael>s .inance Minister 3$"al !teinit1 attend a s(earing;in ceremony for !tanley .ischer>s second fi"e;year term in Jer$salem on !$nday,
May *, *,%,. .ischer said on !$nday 5srael co$ld become a leading economy globally if a Middle East 0eace deal is reached b$t that the key
challenges for no( (ere to accelerate gro(th and c$t 0o"erty. (/e$ters)
<rom left7 <inance 0inister of Israel #uval (teinitM, =ank of Israel 5overnor (tanley <ischer, )rime 0inister of Israel =enFamin
;etanyahu, and committee head Haim (hani attend a press conference in 4erusalem, Israel in (eptember 6A++.
*)hoto credit7 >mil (alman. http7UUwww.israelhayom.comUsiteUnewsletter[article.php2idY++/-
!tanley .ischer (right), o"ernor of the Bank of 5srael, s0eaks to Domini?$e !tra$ss;Fahn (left), Managing Director of the
5nternational Monetary .$nd, and his (ife 7nne !inclair (center) as they attend the ann$al international conference on sec$rity
and 0olicy in #er1liya, 5srael, located north of 6el 7"i", on Jan$ary &%, *,%,. (etty 5mages)
Chancellor of ermany 7ngela Merkel (right) shakes hand (ith !tanley .ischer (*
nd
left), o"ernor of the Bank of 5srael, at the
start of her meeting (ith 5sraeli b$sinessmen in Jer$salem, 5srael on .ebr$ary %, *,%%. Merkel tra"elled to 5srael (ith members
of her cabinet in order to cond$ct Loint go"ernment cabinet meetings (ith their 5sraeli co$nter0arts. (etty 5mages)
7mbassador ao 3an0ing (right), the Comm$nist Chinese 7mbassador to the !tate of 5srael, meets (ith !tanley .ischer,
o"ernor of the Bank of 5srael, in Jer$salem, 5srael on .ebr$ary :, *,%*. !tanley .ischer is a d$al citi1en of the 8nited !tates of
7merica and the !tate of 5sraelC !tanley .ischer is a member of the Co$ncil on .oreign /elations, a 0ri"ate 0olitical organi1ation
in 2e( 3ork City. (PhotoB Embassy of the Peo0leNs /e0$blic of China in the !tate of 5srael)
With the 6eton Mo$ntains behind them, .ederal /eser"e Chairman Ben Bernanke (left) and Bank of 5srael o"ernor !tanley .ischer (right)
(alk together o$tside of the Jackson #ole Economic !ym0osi$m at rand 6eton 2ational Park near Jackson #ole, Wyoming, 8.!.7. on .riday
7$g$st &%, *,%*. (PhotoB 6ed !. Warren47P)
!0eakers at the memorial ser"ice for Pa$l 7. !am$elson, held at the Fresge 7$ditori$m at the Massach$setts 5nstit$te of 6echnology (M56) on
!at$rday, 70ril %,, *,%,B (.rom left) James Poterba, Mits$i Professor of Economics at M56C /icardo Caballero, .ord 5nternational Professor of
Economics at M56 and chairman of the De0artment of EconomicsC #elm$t WeymarC !tanley .ischer, o"ernor of the Bank of 5sraelC M56
President !$san #ockfieldC /obert !olo(, M56 5nstit$te Professor, Emerit$s, and Professor of Economics, Emerit$sC Pa$l Fr$gman, 0rofessor
of economics and international affairs at Princeton 8ni"ersityC La(rence !$mmers, director of the White #o$se>s 2ational Economic Co$ncilC
and William !am$elson, 0rofessor of b$siness 0olicy and la( at Boston 8ni"ersity. Stanley 'ischer, Susan Fockfield, Daul (rugman, and
:awrence Summers are .or were4 members of the Council on 'oreign )elations.
(PhotoB L. Barry #etherington4Massach$setts 5nstit$te of 6echnology)
(ource7 http7UUwww.bankisrael.gov.ilUabengUnag[now.htm
$he =overnor of the !ank # Drof. Stanley 'ischer

Prof. !tanley .ischer has been o"ernor of the Bank of 5srael since May *,,<.
Prior to Loining the Bank of 5srael, Prof. .ischer (as Dice Chairman of Citigro$0
from .ebr$ary *,,* thro$gh 70ril *,,<, (here he (as also #ead of the P$blic
!ector ro$0 from .ebr$ary *,,A to 70ril *,,<, Chairman of the Co$ntry /isk
Committee, and President of Citigro$0 5nternational.
Prof.. .ischer (as the .irst De0$ty Managing Director of the 5nternational
Monetary .$nd, from !e0tember %--A $ntil the end of 7$g$st *,,%.
Before he Loined the 5M., Prof. .ischer (as the Fillian Professor and #ead of the
De0artment of Economics at M56 (Massach$setts 5nstit$te of 6echnology). .rom
Jan$ary %-:: to 7$g$st %--, he (as Dice President, De"elo0ment Economics
and Chief Economist at the World Bank.


Prof. .ischer (as born in Xambia in %-A&.
#e took the B.!c (Econ) and M.!c. (Econ) at the London !chool of Economics from %-=*;==, and obtained his
Ph.D. in economics at M56 in %-=-. #e (as 7ssistant Professor of Economics at the 8ni"ersity of Chicago $ntil
%-+&, (hen he ret$rned to the M56 De0artment of Economics as an 7ssociate Professor. #e became Professor of
Economics in %-++. #e has held "isiting 0ositions at the #ebre( 8ni"ersity, Jer$salem, and at the #oo"er 5nstit$tion
at !tanford.
Prof. .ischer is the a$thor of ,acroeconomics ((ith /$di Dornb$sch and /ichard !tart1, -th edition, *,,A). #e is
also the a$thor of +ectures in ,acroeconomics (M56 Press, %-:-, (ith )li"ier Blanchard), Economics (second
edition, Mcra( #ill, %-::, (ith /$diger Dornb$sch and /ichard !chmalensee), /,9 Essays 9rom a "ime of #risis
(M56 Press, *,,A) and /nde=ing0 /nflation0 and Economic %olicy (M56 Press, %-:=) and the editor of other books,
among them !ec$ring Peace in the Middle East (M56 Press, %--A). .rom %-:= to %--A he (as editor of the 2BE/
,acroeconomics &nnual? he has also ser"ed as 7ssociate Editor of other economics Lo$rnals. #e has 0$blished
e'tensi"ely in the 0rofessional Lo$rnals.
Prof. .ischer is a .ello( of the Econometric !ociety and the 7merican 7cademy of 7rts and !ciences, a member of
the Co$ncil on .oreign /elations, the ;&,, and the 6rilateral Commission, a $ggenheim .ello(, and a /esearch
7ssociate of the 2ational B$rea$ of Economic /esearch. #e has ser"ed on the Boards of the 5nstit$te for
5nternational Economics, WomenNs World Banking and the 5nternational Crisis ro$0, as (ell as the 5nternational
7d"isory Board of the 2e( Economic !chool, Mosco(.
=iography of (tanley <ischer
Born: 1ctober +E, +,G-
6amily Status: 0arried, three children
Gegrees:
=.(c. *>con. Iondon 'niversity, +,CE *Iondon (chool of >conomics.
0.(c. *>con. Iondon 'niversity, +,CC *Iondon (chool of >conomics.
)h.D. 0assachusetts Institute of Technology, +,C,
Doctor Honoris ausa, Tbilisi (tate 'niversity, 5eorgia, +,,C
Doctor Honoris ausa, =en 5urion 'niversity, Israel +,,/
Doctor Honoris ausa, Tel 3viv 'niversity, 6AA+
Doctor Honoris ausa, Iondon (chool of >conomics, 6AA6
Honorary )rofessor, <aculty of >conomics of (t. )etersbug (tate 'niversity, 6AA-
Doctor Honoris ausa, 'niversity of (ofia, =ulgaria, 6AAG
Honorary )rofessor, The 3cademy of ;ational >conomy under the 5overnment of the @ussian <ederation, 6AAG
Doctor Honoris ausa, The Hebrew 'niversity, 6AAC
+ositions:
5overnor, =ank of Israel, 0ay 6AAE&)resent
:ice hairman, itigroup, <ebruary 6AA6&3pril 6AAE
hairman of ountry @isk ommittee, itigroup, 6AA6&6AAE
)resident, itigroup International, 6AA6&6AAG
Head, )ublic (ector lient 5roup, itigroup, <ebruary 6AAG&6AAE
<irst Deputy 0anaging Director, International 0onetary <und, +,,G&6AA+
Head, Department of >conomics, 0.I.T., +,,-&+,,G
>liMabeth and 4ames 9illian lass of +,6C )rofessor, 0.I.T., +,,6&+,,E
)rofessor, Department of >conomics, 0.I.T., +,BB&+,,,
:ice )resident, Development >conomics and hief >conomist World =ank, 4anuary +,//&3ugust +,,A
3ssociate )rofessor, Department of >conomics, 0.I.T. +,B-&BB
3ssistant )rofessor, Department of >conomics, 'niversity of hicago, +,BA&B-
)ostdoctoral <ellow, Department of >conomics, 'niversity of hicago, +,C,&BA
Instructor, Department of >conomics, 0.I.T., +,C,
3dFunct (enior <ellow, ouncil on <oreign @elations, +,,G
Director, World >conomy Iaboratory, 0.I.T., +,,+&+,,-
0a? =ogen :isiting )rofessor of >conomics, Hebrew 'niversity, 4erusalem, +,/G
:isiting (cholar, Hoover Institution, +,/+&/6
<ellow, Institute for 3dvanced (tudies, Hebrew 'niversity, 4erusalem, +,BC&BB
:isiting (enior Iecturer, Department of >conomics, Hebrew 'niversity, 4erusalem, +,B6
#cti!ities and Societies:
Honorary <ellow, Iondon (chool of >conomics @esearch 3ssociate, ;ational =ureau of >conomic @esearch
<ellow of the >conometric (ociety
<ellow, 3merican 3cademy of 3rts and (ciences
0ember, ouncil on <oreign @elations
0ember, 5roup of -A
5uggenheim <ellow
0ember, <inancial (tability <orum hairman$s 3dvisory ouncil, 6AA6&
0ember, =oard of Directors, Institute for International >conomics, 6AA6&
0ember, International 3dvisory =oard, ;ew >conomic (chool, 0oscow, 6AA6&
0ember, =oard of Directors, Women$s World =anking, 6AA-&
0ember, =oard of Trustees, International risis 5roup, 6AAG&
:ice8)resident, 3merican >conomic 3ssociation, +,,E 0ember, >?ecutive ommittee of the 3merican >conomic 3ssociation,
+,/,&,+
hairman, <ellowship ommittee, 5asparini Institute for >conomic @esearch, 0ilan, Italy, +,,A&+,,G.
Honorary 3dviser, Institute for 0onetary and >conomic (tudies, =ank of 4apan, +,/B&+,,G
0ember, =oard of Trustees, Hebrew 'niversity, 4erusalem, +,/C&+,,G.
0ember, :isiting ommittee of 0IT >conomics Department, 6AA-&
0ember, 3dvisory ouncil of the Woodrow Wilson (chool, )rinceton 'niversity, +,,A&+,,G.
0ember, :isiting ommittee, 9ennedy (chool of 5overnment, Harvard 'niversity, +,,+&+,,B
0ember, =oard of Trustees, <alk Institute for >conomic @esearch in Israel, +,/B&+,,/
0ember, 3cademic 3dvisory ouncil, <ederal @eserve =ank of ;ew #ork, +,,6&+,,G! 6AA6&
0ember, 3cademic 3dvisory ouncil, ongressional =udget 1ffice, +,,-&+,,G.
0ember, =rookings )anel on >conomic 3ctivity, +,/+&/6, +,,+&,6.
0ember, )anel for >conomic )olicy, +,,6&,-.
0ember, ;ational (cience <oundation >conomics )anel, +,B/&/A.
onsultant7 '.(. Treasury, '.(. (tate Department, World =ank, International 0onetary <und, =ank of Israel.
Books7
&i9ing Standards and the ealth of Nations , *IesMek =alcerowicM and (tanley <ischer, eds.. ambridge, 037 0IT )ress, 6AAC.
%acroeconomics, ninth edition, 0c5raw Hill, 6AAG, with @. Dornbusch and @. (tartM.
I%F Essays From A Time of Crisis" The International Financial System+ Sta(ili:ation+ and ;e9elopment, 0.I.T. )ress, 6AAG.
&ect*res on %acroeconomics, 0.I.T. )ress, +,/,, with 1. =lanchard.
Economics, second edition, 0c5raw8Hill, ;ew #ork, +,/B, with @. Dornbusch and @. (chmalensee.
Indexing+ Inflation+ and Economic )olicy, *ollected papers., 0.I.T. )ress, +,/C.
>ditor of Sec*ring )eace in the %iddle East" )ro<ect on Economic Transition, *with I. Hausman, 3. 9arasik, and T. (chelling.,
0.I.T. )ress, +,,G.
>ditor of The Economics of %iddle East )eace, *with Dani @odrik and >lias Tuma., 0.I.T. )ress, +,,-.
>ditor of %onetary Theory and Tho*ght" Essays in Honor of ;on )atinkin, *with Haim =arkai and ;issan Iiviatan., 0acmillan,
Iondon, +,,-.
>ditor of Ad<*stment &ending 4e9isited, *with :ittorio orbo and (teven Webb., World =ank, +,,6.
>ditor of Economic 4eform in S*(0Saharan Africa, *with 3. hhibber., World =ank, +,,+.
>ditor of &essons of Economic Sta(ili:ation and Its Aftermath, *with 0. =runo, >. Helpman, ;. Iiviatan and I. 0eridor., 0.I.T.
)ress, +,,A.
>ditor of Inflation Sta(ili:ation *with ). 3spe, 0. =runo and @. Dornbusch., 0.I.T. )ress, +,//.
>ditor of %acroeconomics and Finance" Essays in Honor of Franco %odigliani, *with @. Dornbusch and 4. =ossons., 0.I.T.
)ress, +,/B.
>ditor of 4ational Expectations and Economic )olicy, 'niversity of hicago )ress, +,/A.
(ource7 http7UUwww.bankisrael.gov.ilUabengUnagid[now[full[eng.htm
(tanley <ischer, nominee for the :ice hairman of the <ederal @eserve *hip (omodevillaU5etty Images.
&or 4o! - at &ed2 Hhite 'ouse &a9ors Central Banker in the Bernanke *old
=y =I;#30I; 3))>I=3'0
)ublished7 December ++, 6A+-
!tanley .ischer, second from left, ta$ght 0olicy makers like Ben !. Bernanke, second from right, and )li"ier Blanchard
(Chi0 !omode"illa4etty 5mages)
W3(HI;5T1; W (tanley <ischer, the former governor of the =ank of Israel and a mentor to the <ederal @eserve"s chairman,
=en (. =ernanke, is the leading candidate to become vice chairman of the <ed, according to former and current administration
officials.
If nominated, and then confirmed by the (enate, 0r. <ischer, BA, would succeed 4anet I. #ellen, whom )resident 1bama
nominated to succeed 0r. =ernanke as the <ed"s leader when his term ends in 4anuary.
0r. <ischer is at once a surprising choice and a popular pick among economists and investors. He is a highly regarded economist
with significant policy8making e?perience, yet many had considered his selection improbable because of his recent service in a
foreign government. ;ews about 0r. <ischer"s possible nomination was reported on Israeli television.
That e?perience could become a concern if he is nominated, as could his e?perience at itigroup, where he was vice chairman
between 6AA6 and 6AAE. The company"s e?pansion during that period eventually ended in a federal bailout.
3s the <ed"s vice chairman, 0r. <ischer would most likely e?ert a moderating influence on 0s. #ellen, echoing, in a way, her
intellectual partnership with 0r. =ernanke. 0s. #ellen is a forceful advocate for the <ed"s efforts to stimulate the economy and
reduce unemployment. 0r. <ischer has been generally supportive of those efforts, but has raised questions about the particulars.
He offered measured support at a conference last month for the <ed"s bond8buying campaign, describing it as dangerous% but
necessary.% 3t the same time, he has e?pressed greater skepticism about the companion effort to hold down borrowing costs by
declaring that short8term interest rates will remain low, describing such forward guidance as potentially confusing.
#ou can"t e?pect the <ed to spell out what it"s going to do. Why2 =ecause it doesn"t know,% he said at a conference in
(eptember, according to The Wall (treet 4ournal. It"s a mistake to try and get too precise.%
0r. <ischer"s e?perience on Wall (treet, while potentially a political liability, could prove valuable for the <ed, which lacks
officials with e?perience in the financial markets that it must manage and regulate.
0r. <ischer has unrivaled international e?pertise and is a seasoned crisis8manager W complementing #ellen, who has much
less e?perience in these areas,% 9rishna 5uha, head of central bank strategy at the financial services firm International (trategy
and Investment, wrote in a client note.
0r. <ischer stepped down in 4une after eight years as the leader of Israel"s central bank. He drew wide praise for helping to
shelter the Israeli economy from the global financial crisis, in part by moving quickly to cut interest rates.
The Israeli economy grew during each of 0r. <ischer"s eight years as the bank"s governor, even as most developed economies
collapsed into deep recessions. When Israel"s strength attracted a surge of foreign investment, 0r. <ischer was again quick to
respond, building up foreign reserves to limit the rise of the shekel and protect Israeli e?porters.
He also shepherded passage of a law that limited his own power by creating a si?8person committee to manage monetary policy.
0r. <ischer may be better known for the students he taught as a professor of economics at 0.I.T. beginning in the late +,BAs. In
addition to 0r. =ernanke, the list includes 0ario Draghi, the president of the >uropean entral =ank! ;. 5regory 0ankiw,
chairman of the ouncil of >conomic 3dvisers under )resident 5eorge W. =ush! and 1livier =lanchard, chief economist at the
International 0onetary <und.
(tudents say 0r. <ischer was a formative influence who inculcated the pragmatic view that government had some power to
improve economic outcomes W a middle ground between the academic orthodo?ies of the era.
He was a pioneering figure in the effort to formaliMe this middle ground, helping to forge the approach now known as ;ew
9eynesianism.
He then set an e?ample for his students by entering public service in the late +,/As, working first at the World =ank and then at
the I.0.<. before Foining itigroup.
0r. =ernanke cited 0r. <ischer as one of his most important mentors last month, saying that he demonstrated that he lived
what he taught.%
0r. <ischer was born in what is today Xambia. He came to the 'nited (tates as a graduate student and became an 3merican
citiMen in +,BC. When he became governor of the =ank of Israel he also accepted Israeli citiMenship.
0r. <ischer has the self8deprecating manner of many central bankers, but he is funnier than many of his peers. In an interview
with The Washington )ost, he described his first encounter with one of the seminal works of economics, The 5eneral Theory
of >mployment, Interest and 0oney,% by 4ohn 0aynard 9eynes.
I was immensely impressed,% he said, not because I understood it but by the quality of the >nglish.%
In selecting 0r. <ischer, the White House would continue a recent pattern of reinforcing the <ed"s e?isting direction.
The White House did not comment on 0r. <ischer"s possible nomination.
)resident 1bama had the unusual opportunity to replace as many as five of the seven members of the <ed"s board of governors
ne?t year. Instead, he plans to replace only those who insisted on departing, retaining 0s. #ellen and 4erome H. )owell, a
@epublican financier.
Iael =rainard, formerly the Treasury under secretary for international affairs, is a front8runner to fill one of the remaining
vacancies, according to people familiar with the matter.
)eter Baker contri(*ted reporting from &ittle 4ock+ Ark8
7 "ersion of this article a00ears in 0rint on December %*, *,%&, on 0age B% of the 2e( 3ork edition (ith the headlineB .or 2o. * at .ed, White
#o$se .a"ors Central Banker in the Bernanke Mold.
(ource7 http7UUwww.nytimes.comU6A+-U+6U+6UbusinessUeconomyUstanley8fischer8seen8as8leading8candidate8for8fed8vice8
chairman.html
(tanley <ischer *left. is seated before testifying to the (enate =anking, Housing, and 'rban 3ffairs ommittee on his
nomination to be vice chairman of the =oard of 5overnors of the <ederal @eserve (ystem on apitol Hill in Washington, D..
on 0arch +-, 6A+G. <ederal @eserve =oard nominees 4erome )owell *center. and Iael =rainard *right. appear alongside (tanley
<ischer. (tanley <ischer, 4erome )owell, and Iael =rainard are members of the ouncil on <oreign @elations, a private
organiMation in ;ew #ork ity. *03;D>I ;53;U3<)U5etty Images.
(tanley <ischer *left., former 5overnor of the =ank of Israel and nominee to be :ice hairman of the <ederal @eserve, 4erome
)owell *center., current and nominee to be a board member of the <ederal @eserve, and Iael =rainard *right., nominee to be a
board member of the <ederal @eserve, swear8in before a (enate =anking ommittee nomination hearing in Washington, D..,
'.(.3. on Thursday, 0arch +-, 6A+G. (tanley <ischer, 4erome )owell, and Iael =rainard are members of the ouncil on
<oreign @elations, a private organiMation in ;ew #ork ity. *)hoto7 3ndrew HarrerU=loomberg via 5etty Images.
>?cerpts from arroll Luigley"s book Tragedy and Hope, pages EG8EC

(ince it is quite impossible to understand the history of the twentieth century without some understanding of the role played by
money in domestic affairs and in foreign affairs, as well as the role played by bankers in economic life and in political life, we
must take at least a glance at each of these four subFects.
In each country the supply of money took the form of an inverted pyramid or cone balanced on its point. In the point was a
supply of gold and its equivalent certificates! on the intermediate levels was a much larger supply of notes! and at the top, with
an open and e?pandable upper surface, was an even greater supply of deposits. >ach level used the levels below it as its reserves,
and, since these lower levels had smaller quantities of money, they were sounder.% 3 holder of claims on the middle or upper
level could increase his confidence in his claims on wealth by reducing them to a lower level, although, of course, if everyone,
or any considerable number of persons, tried to do this at the same time the volume of reserves would be totally inadequate.
;otes were issued by banks of emission% or banks of issue,% and were secured by reserves of gold or certificates held in their
own coffers or in some central reserve. The fraction of such a note issue held in reserve depended upon custom, banking
regulations *including the terms of a bank"s charter., or statute law. There %ere formerly many banks of issue but this
function is no% generally restricted to a fe% or e!en to a single =central bank? in each country. Such banks e!en central
banks %ere pri!ate institutions o%ned by shareholders %ho profited by their operations. In the +,+G8+,-, period, in the
'nited (tates, <ederal @eserve ;otes were covered by gold certificates to GA percent of their value, but this was reduced to 6E
percent in +,GE. The =ank of >ngland, by an 3ct of +,6/, had its notes uncovered up to P6EA million, and covered by gold for
+AA percent value over that amount. The =ank of <rance, in the same year, set its note cover at -E percent. These provisions
could always be set aside or changed in an emergency, such as war.
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 relationships7 *+. 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 *6.
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. =oth form part of the money
supply. Iodged 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 'nited (tates deposits were traditionally limited to ten times reserves of notes and gold. In
=ritain 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 e?tent e?plains the inflationary aspect of a depression, the
combination helping to form the so8called 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 system! 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 0ercury, could hardly be seen in the daMMle emitted by the central bank which they, in fact, often dominated. #et a close
observer could hardly fail to notice the close private associations between these private, international bankers and the central
bank itself. In <rance, for e?ample, in +,-C when the =ank of <rance was reformed, its =oard of @egents *directors. was still
dominated by the names of the families who had originally set it up in +/AA! to these had been added a few more recent names,
such as @othschild *added in +/+,.! in some cases the name might not be readily recogniMed because it was that of a son8in8law
rather than that of a son. 1therwise, in +,+G, the names, frequently those of )rotestants of (wiss origin *who arrived in the
eighteenth century. or of 4ews of 5erman origin *who arrived in the nineteenth century., had been much the same for more than
a century. In >ngland a somewhat similar situation e?isted, so that even in the middle of the twentieth century the 0embers of
the ourt of the =ank of >ngland were chiefly associates of the various old merchant banking% firms such as =aring =rothers,
0organ 5renfell, IaMard =rothers, and others.
>?cerpts from arroll Luigley"s book Tragedy and Hope, pages EC8C6
ommercial =anks 1perate 1utside entral =anks and )rivate =anking <irms
In a secondary position, outside the central core, are the commercial banks, called in >ngland the Foint8stock banks,% and on the
ontinent frequently known as deposit banks.% These include such famous names as 0idland =ank, Iloyd"s =ank, =arclays =ank in
>ngland, the ;ational ity =ank in the 'nited (tates, the redit Iyonnais in <rance, and the Darmst\dter =ank in 5ermany.
(avings =anks, Insurance <unds and Trust ompanies 1perate on the 1utside @ing
1utside this secondary ring is a third, more peripheral, assemblage of institutions that have little financial power but do have the very
significant function of mobiliMing funds from the public. This includes a wide variety of savings banks, insurance firms, and trust
companies. ;aturally, 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 <rance and >ngland the private bankers e?ercised 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 5ermany, Italy, the 'nited (tates, or @ussia, private savings were sufficient to allow much of industry to finance itself without
recourse either to bankers or government. In the 'nited (tates 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 ;ew #ork <ederal @eserve =ank. was
established late *+,+-. and became powerful much later *after financial capitalism was passing from the scene.. In 5ermany industry
was financed and controlled by the discount banks, while the central bank was of little power or significance before +,+G. In @ussia
the role of the government was dominant in much of economic life, while in Italy the situation was backward and complicated.
The (upply of 0oney
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 subFect to no centraliMed, 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. 0oreover, 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. This last point can be seen in the fact that the supply of
gold could be decreased but could hardly be increased. If an ounce of gold was added to the point of the pyramid in a system where
law and custom allowed +A percent reserves on each level, it could permit an increase of deposits equivalent to O6ACB on the
uppermost level. If such an ounce of gold were withdrawn from a fully e?panded pyramid of money, this would compel a reduction of
deposits by at least this amount, probably by a refusal to renew loans.
The 0oney )ower )ersuaded 5overnments to >stablish a Deflationary 0onetary 'nit
Throughout modern history the influence of the gold standard has been deflationary, because the natural output of gold each year,
e?cept in e?traordinary times, has not kept pace with the increase in output of goods. 1nly 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 economiMe the use of gold,
have saved our civiliMation from steady price deflation over the last couple of centuries. 3s it was, we had two long periods of such
deflation from +/+/ to +/EA and from +/B6 to about +/,B. The three surrounding periods of inflation *+B,A8+/+B, +/EA8+/B6, +/,B8
+,6+. were caused by *+. the wars of the <rench @evolution and ;apoleon when most countries were not on gold! *6. the new gold
strikes of alifornia and 3laska in +/G,8+/EA, followed by a series of wars, which included the rimean War of +/EG8+/EC, the
3ustrian8<rench War of +/E,, the 3merican ivil War of +/C+8+/CE, the 3ustro8)russian and <ranco8)russian wars of +/CC and
+/BA, and even the @usso8Turkish War of +/BB! and *-. the 9londike and Transvaal gold strikes of the late +/,A"s, supplemented by
the new cyanide method of refining gold *about +/,B. and the series of wars from the (panish83merican War of +/,/8+/,,, the =oer
War of +/,,8+,A6, and the @usso84apanese War of +,AG8+,AE, to the almost uninterrupted series of wars in the decade +,++8+,6+. In
each case, the three great periods of war ended with an e?treme deflationary crisis *+/+,, +/B-, +,6+. as the influential 0oney )ower
persuaded governments to reestablish a deflationary monetary unit with a high gold content.
0oney )ower Is 0ore oncerned With 0oney Than 5oods
The obsession of the 0oney )ower with deflation was partly a result of their concern with money rather than with goods, but was also
founded on other factors, one of which was parado?ical. The parado? arose from the fact that the basic economic conditions of the
nineteenth century were deflationary, with a money system based on gold and an industrial system pouring out increasing supplies of
goods, but in spite of falling prices *with its increasing value of money. the interest rate tended to fall rather than to rise. This occurred
because the relative limiting of the supply of money in business was not reflected in the world of finance where e?cess profits of
finance made e?cess funds available for lending. 0oreover, the old traditions of merchant banking continued to prevail in financial
capitalism even to its end in +,-+. It continued to emphasiMe bonds rather than equity securities *stocks., to favor government issues
rather than private offerings, and to look to foreign rather than to domestic investments. 'ntil +/6E, government bonds made up almost
the whole of securities on the Iondon (tock >?change. In +/G-, such bonds, usually foreign, were /A percent of the securities
registered, and in +/BE they were still C/ percent. The funds available for such loans were so great that there were, in the nineteenth
century, sometimes riots by subscribers seeking opportunities to buy security flotations! and offerings from many remote places and
obscure activities commanded a ready sale. The e?cess of savings led to a fall in the price necessary to hire money, so that the interest
rate on =ritish government bonds fell from G.G6 percent in +/6A to -.++ in +/EA to 6.BC in +,AA. This tended to drive savings into
foreign fields where, on the whole, they continued to seek government issues and fi?ed interest securities. 3ll this served to strengthen
the merchant bankers" obsession both with government influence and with deflation *which would increase value of money and
interest rates..
=anker )olicies Iead to Inflation and Deflation
3nother parado? 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. (ince they make money out of loans, they are eager to increase the amounts of
bank credit on loan. =ut 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.. =ut such bankers" deflation was destructive to business and industry in the short run as well as the long run.
hanging the Luality of 0oney
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 'nited (tates, for e?ample, an upper
limit has been set on deposits by requiring <ederal @eserve member banks to keep a certain percentage of their deposits as reserves
with the local <ederal @eserve =ank. The percentage *usually from B to 6C percent. varies with the locality and the decisions of the
=oard of 5overnors of the <ederal @eserve (ystem.
entral =anks :ary 0oney in irculation
entral 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. <or e?ample, if the <ederal @eserve =ank 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 <ederal @eserve =ank. (ince banks are permitted to issue loans
for several times the value of their reserves with the <ederal @eserve =ank, such a transaction permits them to issue loans for a much
larger sum.
entral =anks @aise and Iower Interest @ates
entral 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 re8discount rate or changing reserve requirements. =y changing the re8discount 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. =y raising the re8discount 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..
Iowering the re8discount rate permits an opposite result.
entral =anks <orce Iocal =anks to Decrease redit
hanging 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 'nited (tates. where there is a statutory limit on reserves. Increasing reserve requirements curtails the ability
of lesser banks to grant credit, while decreasing it e?pands 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 deflationWa
reflection of the old banking idea that inflation was bad and deflation was good.
The )owers of 5overnment 1ver 0oney
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 ta?ation, 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. (ince most central banks have been *technically. private institutions, this
control is frequently based on custom rather than on law. In any case, the control over the supply of money which governments have
through central banks is e?ercised by the regular banking procedures we have discussed. The powers of the government over the
quantity of money in the community e?ercised through ta?ation and public spending are largely independent of banking control.
Ta?ation tends to reduce the amount of money in a community and is usually a deflationary force! government spending tends to
increase the amount of money in a community and is usually an inflationary force. The total effects of a government"s policy will
depend on which item is greater. 3n unbalanced budget will be inflationary! a budget with a surplus will be deflationary. 3
government can also change the amount of money in a community by other, more drastic, methods. =y changing the gold content of
the monetary unit they can change the amount of money in the community by a much greater amount. If, for e?ample, the gold content
of the dollar is cut in half, the amount of gold certificates will be able to be doubled, and the amount of notes and deposits reared on
this basis will be increased many fold, depending on the customs of the community in respect to reserve requirements. 0oreover, if a
government goes off the gold standard completelyWthat is, refuses to e?change certificates and notes for specieWthe amount of notes
and deposits can be increased indefinitely because these are no longer limited by limited amounts of gold reserves.
The 0oney )owerWontrolled by International Investment =ankersWDominates =usiness and 5overnment
In the various actions which increase or decrease the supply of money, governments, bankers, and industrialists have not always seen
eye to eye. 1n the whole, in the period up to +,-+, bankers, especially the 0oney )ower controlled by the international investment
bankers, were able to dominate both business and government. They could dominate business, especially in activities and in areas
where industry could not finance its own needs for capital, because investment bankers had the ability to supply or refuse to supply
such capital. Thus, @othschild interests came to dominate many of the railroads of >urope, while 0organ dominated at least 6C,AAA
miles of 3merican railroads. (uch bankers went further than this. In return for flotations of securities of industry, they took seats on
the boards of directors of industrial firms, as they had already done on commercial banks, savings banks, insurance firms, and finance
companies. <rom these lesser institutions they funneled capital to enterprises which yielded control and away from those who resisted.
These firms were controlled through interlocking directorships, holding companies, and lesser banks. They engineered amalgamations
and generally reduced competition, until by the early twentieth century many activities were so monopoliMed that they could raise their
noncompetitive prices above costs to obtain sufficient profits to become self8financing and were thus able to eliminate the control of
bankers. =ut before that stage was reached a relatively small number of bankers were in positions of immense influence in >uropean
and 3merican economic life. 3s early as +,A,, Walter @athenau, who was in a position to know *since he had inherited from his father
control of the 5erman 5eneral >lectric ompany and held scores of directorships himself., said, =Three hundred men all of %hom
kno% one another direct the economic destiny of *urope and choose their successors from among themsel!es.?
The )ower of Investment =ankers 1ver 5overnments
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 short8term treasury bills as well as long8term government bonds. 4ust 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 ta? receipts. 3s e?perts 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 +,C+ a @epublican investment banker became (ecretary of the Treasury in a Democratic 3dministration in Washington
without significant comment from any direction.
The 0oney )ower @eigns (upreme and 'nquestioned
;aturally, the influence of bankers over governments during the age of financial capitalism *roughly +/EA8+,-+. was not something
about which anyone talked freely, but it has been admitted frequently enough by those on the inside, especially in >ngland. In +/E6
5ladstone, chancellor of the >?chequer, declared, The hinge of the whole situation was this7 the government itself was not to be a
substantive power in matters of <inance, but was to leave the 0oney )ower supreme and unquestioned.J 1n (eptember 6C, +,6+, The
Financial Times wrote, JHalf a doMen men at the top of the =ig <ive =anks could upset the whole fabric of government finance by
refraining from renewing Treasury =ills.J In +,6G (ir Drummond <raser, vice8president of the Institute of =ankers, stated, =The
>o!ernor of the Bank of *ngland must be the autocrat %ho dictates the terms upon %hich alone the >o!ernment can obtain
borro%ed money.?