Prelude to the New Deal

Whichever party gains the day, tyrants or demagogues are most sure to take the offices.
Assemblyman Clinton Roosevelt of New York, 1841.

The full story of the construction of corporate socialism in the United States, as envisaged by the financier-philosophers identified in the previous chapter, is beyond the scope of this book, but we can gain greater perspectives through a brief look at a few facets of the historical process: for example, Clinton Roosevelt's system a century before FDR, Bernard Baruch's War Industries Board, and Paul Warburg's Federal Reserve System.

In 1841 FDR's distant cousin, Assemblyman Clinton Roosevelt of New York, proposed a scheme resembling the New Deal for economic planning and control of society by the few. Under President Woodrow Wilson in 1918 Bernard Baruch, corporate socialist par excellence, followed the broad outline of the Roosevelt scheme, almost certainly unknowingly and probably attributable to some unconscious parallelism of action, when he established the War Industries Board, the organizational forerunner of the 1933 National Recovery Administration. Some of the 1918 WIB corporate elite appointed by Baruch—Hugh Johnson, for example—found administrative niches in Roosevelt's NRA. In 1922 then-Secretary of Commerce Herbert Hoover an up and coming Wall Streeter Franklin D. Roosevelt joined forces to promote trade associations, implementing Bernard Baruch's postwar economic planning proposals. Shortly thereafter, former socialist editor Benito Mussolini marched on Rome and established—with liberal help from the J.P. Morgan Company—the Italian corporate state whose organizational structure is distinctly reminiscent of Roosevelt's NRA. In the United States glorification of Mussolini and his Italian achievements was promoted by the ever-present financiers Thomas Lamont, Otto Kahn, and others. We will mention only briefly Wall Street involvement with both Bolshevik Russia and Hitler's Germany—both totalitarian states governed by a self-appointed elite—as full treatment of these aspects is covered in other volumes.1 In brief, construction of FDR's National Recovery Administration was but one facet of a wider historical process—construction of economic systems where the few could profit at the expense of the many, the citizen-taxpayer-in-the-street—and all of course promoted under the guise of the public good, whether it was Stalin's Russia, Mussolini's Italy, Hitler's Germany, or Roosevelt's New Deal.


New York Assemblyman Clinton Roosevelt was a 19th-century cousin of Franklin Delano Roosevelt and incidentally also related to President Theodore Roosevelt, John Quincy Adams, and President Martin Van Buren. Clinton Roosevelt's only literary effort is contained in a rare booklet dated 1841.2 In essence this is a Socratic discussion between author Roosevelt and a "Producer" presumably representing the rest of us (i.e., the many). Roosevelt proposes a totalitarian government along the lines of George Orwell's 1984 society, where all individuality is submerged to a collective run by an elitist aristocratic group (i.e., the few) who enact all legislation. Roosevelt demanded ultimate, but not immediate, abandonment of the Constitution

P. [Producer] But I ask again: Would you at once abandon the old doctrines of the Constitution?
A. [Author] Not by any means. Not any more than if one were in a leaky vessel he should spring overboard to save himself from drowning. It is a ship put hastily together when we left the British flag, and it was then thought an experiment of very doubtful issue.3

This early expression of Rooseveltian family skepticism toward the Constitution brings to mind the Supreme Court rejection in October 1934 (Schechter Poultry Corp. v. U.S.) of another Rooseveltian departure, an "unfettered" departure according to the court, from the rules of a constitutional society: the National Recovery Act, itself an uncanny replica of Clinton Roosevelt's 1841 program for a collective economy.

The earlier Rooseveltian system depended "First, on the art and science of cooperation. This is to bring the whole to bear for our mutual advantage."4 It is this cooperation, i.e., the ability to bring the whole to bear for the interest of the few, that is, as we have seen, the encompassing theme of the writings and preachings of Otto Kahn, Robert Brookings, Edward Filene, Myron Taylor, and the other financier-philosophers discussed in Chapter 5. In the Roosevelt schema each man rises through specified grades in the social system and is appointed to that class of work to which he is best suited, choice of occupation being strictly circumscribed. In the words of Clinton Roosevelt:

P. Whose duty will it be to make appointments to each class?
A. The Grand Marshal's.
P. Who will be accountable that the men appointed are the best qualified?
A. A Court of physiologists, Moral Philosophers, and Farmers and Mechanics, to be chosen by the Grand Marshal and accountable to him.
P. Would you constrain a citizen to submit to their decisions in the selection of a calling?
A. No. If any one of good character insisted, he might try until he found the occupation most congenial to his tastes and feelings.5

Production in the system had to be equated with consumption, and the handling of "excesses and deficiencies" reflected the ideas pursued in the Swope Plan,6 the literary base of Roosevelt's NRA. The system is certainly akin to that used in Bernard Baruch's War Industries Board during World War I. This is how Clinton Roosevelt describes the duties of the Marshal of Creation, whose job it is to balance production and consumption:

P. What is the duty of the Marshal of the Creating or Producing order?
A. It is to estimate the amount of produce and manufactures necessary to produce a sufficiency in each department below him. When in operation, he shall report excesses and deficiencies to the Grand Marshal.
P. How shall he discover such excesses and deficiencies?
A. The various merchants will report to him the demand and supplies in every line of business, as will be seen hereafter.
P. Under this order are agriculture, manufactures and commerce, as I perceive. What then is the duty of the Marshal of Agriculture?
A. He should have under him four regions, or if not, foreign commerce must make good the deficiency.
P. What four regions?
A. The temperate, the warm, the hot region and the water region.
P. Why divide them thus?
A. Because the products of these different regions require different systems of cultivation, and are properly subject to different minds.7

Then there is a Marshal of Manufacturers overseeing the whole system—similar to Baruch's position as economic dictator in 1918 and Hugh Johnson's position as Administrator of the National Recovery Administration in 1933. The Marshal's functions are described by Clinton Roosevelt as follows:

P. What are the duties of the Marshal of Manufacturers?
A. He shall divide men into five general classes, according to the printed diagram.
1st. The manufacturers of all the means of defence against the weather.
2d. All kinds of viands.
3d. Metals and minerals.
4th. Chemicals.
5th. Machinery.
All these have on the printed diagrams, banners, with a glory on one side and an appropriate motto on the reverse, showing the advantage each class is to all others: and by the way, we would remark, this should be universally adopted, to give a just direction to man's love of glory.
By a reference to the chart, and what has been before observed, the duties of the officers under this department will all be obvious.

The industrial categories of 1841 are not of course precisely the categories of 1930, but a generalized similarity can be traced. The 1st division is clothing and fabrics, limited in 1841 to cotton, wool, and linen, but extended today to synthetic materials, including plastics and fibers. The 2nd division is that devoted to foodstuffs. The 3rd division is devoted to raw materials, and the 4th division includes medicines. The 5th is machinery. Today the 5th division comprises the many subdivisions of electronics, mechanical and civil engineering, but the five categories could be utilized to divide a modern economy. Clinton Roosevelt's society can be summed in his phrase, "The system should rule, and the system should look chiefly to the general good."


While the Federal Reserve System and its private legal monopoly of the money supply has been a fount of wealth for its operators, the ultimate goal of making society work for the few as outlined by Frederick Howe and Clinton Roosevelt can be brought about only by planned control of the whole economy, and this requires compulsory adherence of the many smaller entrepreneurs to the dictates of the few deciding the plans to be followed.

The genesis of Roosevelt's NRA, a system that included compulsory adherence by small enterpreneurs to a plan devised by big business, can be traced from Bernard Baruch's U.S. War Industries Board, established and elaborated as an emergency wartime measure. In 1915, before the U.S. entered World War I, Howard E. Coffin, then chairman of General Electric, headed the U.S. Committee on Industrial Preparedness. In company with Bernard Baruch and Daniel Willard of the Baltimore and Ohio Railroad, Coffin was also a member of the Advisory Commission to the Council of National Defense. In 1915 Bernard Baruch was invited by President Woodrow Wilson to design a plan for a defense mobilization committee. This Baruch plan subsequently became the War Industries Board, which absorbed and replaced the old General Munitions Board. Margaret L. Coit, Baruch's biographer, describes the War Industries Board as a concept similar to cooperative trade associations, a device long desired by Wall Street to control the unwanted rigors of competition in the market place:

Committees of industry, big business and small business, both represented in Washington, and both with Washington representation back home—this could be the backbone of the whole structure.8

By March 1918 President Wilson acting without Congressional authority, had endowed Baruch with more power than any other individual had been granted in the history of the United States. The War Industries Board, with Baruch as its chairman, became responsible for building all factories and for the supply of all raw material, all products, and all transportation, and all its final decisions rested with chairman Bernard Baruch. In brief, Baruch became economic dictator of the United States, or "Marshal of Manufacturers" in Clinton Roosevelt's scheme. Yet, as Margaret Coit points out, "... the creation of this office was never specifically authorized by an Act of Congress."9

So by the summer of 1918 Baruch, with extraordinary and unconstitutional powers, had, in his own words, "finally developed a scheme of positive 'control' over the major portion of the industrial fabric... Success bred courage for more success, and trade after trade was taken under control with an increasing willingness on the part of the interests affected."10

At the time of the Armistice the W.I.B. comprised Baruch (chairman), Alexander Legge of International Harvester (vice chairman), with E.B. Parker and R.S. Brookings (whose ideas we have already examined) in charge of price fixing. Assistants to the chairman were: Herbert Bayard Swope, brother of Gerard Swope of General Electric; Clarence Dillon of the Wall Street firm Dillon, Read & Co.; Harrison Williams; and Harold T. Clark.11

Baruch's final report on W.I.B. activity was much more than a history of its operations; it was also a specific plan and recommendation for economic planning in peacetime. Baruch was not content merely to summarize the lessons to be learned for planning in war or for industrial preparedness in time of uneasy peace. On the contrary, Baruch's conclusions were directed, in his own words, to the "industrial practices of peace" and to make recommendations "relating to the business practices of normal times." The bulk of the conclusions relate to change-over of a planned wartime economic system to a planned peacetime economic system, and even the suggestions for wartime practice are related to peacetime functions. Baruch suggested that the most important "direct war lessons to be derived" from the operation of the War Industries Board were:

1. The establishment of a peacetime skeleton organization with 50 commodity divisions, meeting to keep abrest of the development of industry and develop information. The thrust of this proposal was that the information needed for peacetime planning should be collected and that the direction of the organization should stem from large-scale or major industry.
2. That the government "should devise some system for protecting and stimulating internal production of certain raw materials used in war," and
3. That war-related industries should be encouraged by the government to maintain skeleton organizations for wartime use.

Apart from these quite elementary suggestions, Baruch is exclusively concerned in the report with peacetime "planning." First we are presented with the canard that, in some unstated way, "the processes of trade" have changed and are now forced to give way before "certain new principles of supervision." This non sequitur is followed by the statement:

We have been gradually compelled to drift away from the old doctrine of Anglo-American law, that the sphere of Government should be limited to preventing breach of contract, fraud, physical injury and injury to property, and that the Government should exercise protection only over non competent persons.

It is necessary, writes Baruch, for government "to reach out its arm" to protect "competent individuals against the discriminating practices of mass industrial power." While Baruch points to Federal control of the railroads and the merchant fleet, he does not state why the representatives of big business would be the best fitted to exercise this control. In other words, why the fox is proposed as the most competent being to run the chicken coop is left unstated. Baruch then slashes at the Sherman and Clayton anti-trust laws on the grounds that these statutes are merely efforts to force industry into the mold of "simpler principles sufficient for the conditions of a bygone day," and lauds the achievement of the War Industries Board because it had constructed hundreds of trade associations controlling prices and methods of distribution and production:

Many businessmen have experienced during the war, for the first time in their careers, the tremendous advantages, both to themselves and to the general public, of combination, of cooperation and common action with their natural competitors.

If these cooperative attributes are not continued, argues Baruch, then businessmen will be tempted "and many of them will be unable to resist" to conduct "their business for private gain with little reference to general public welfare." On the other hand, trade associations can be of the greatest public benefit to achieve the desired end of cooperation. Baruch concludes:

The question, then is what kind of Government organization can be devised to safeguard the public interest while these associations are preserved to carry on the good work of which they are capable.

Baruch, like any good socialist, proposes government organizations to develop these principles of cooperation and coordination.

If the reader will shed for a moment the idea of a mutual antagonism between communism and capitalism, he will readily see in the writing of Bernard Baruch the basic objectives of Karl Marx writing in The Communist Manifesto. What is different between the two systems are the names of the elitist few running the operation known as state planning; the vanguard of the proletariat in Karl Marx is replaced by the vanguard of big business in Bernard Baruch.

Who would gain from Baruch's proposal? The consumer? Not at all, because consumer interests are always protected by free competition in the market place, where goods and services are produced at the least cost, in the most efficient manner, and the consumer is given maximum choice among competing producers. The gainers from Baruch's proposals would be the few who control major industrial sectors—particularly iron and steel, raw materials, electrical goods, that is, those industries already well established and fearful of competition from more enterprising newcomers. In other words, the gainers from his proposal would be Bernard Baruch and the Wall Street coterie that effectively controls big business through its interlocking directorships. The gut issue then is: who benefits from these proposals for trade associations and government coordination of industry? The principal, indeed the only major benefactors—apart from the swarms of academic advisers, bureaucrats, and planners—would be the financial elite in Wall Street.

So here we have, in Baruch's own words and ideas, an implementation of Frederic Howe's injunction to "make society work for you," the monopolist. This is also in the form of a proposal comparable to Clinton Roosevelt's system. There is no evidence that Baruch had heard of Clinton Roosevelt. There was no need for him to have done so; the advantages of restraint of trade and opportunity have always been obvious to the already established enterprise. It will therefore come as no surprise to find Bernard Baruch at the very core of the Roosevelt NRA, which itself parallels many of Baruch's post-war proposals, and who had a $200,000 investment in the election of FDR. It explains why Baruch's World War I personnel turn up in the New Deal. General Hugh Johnson, for example, spent the 1920s studying industrial organization at Baruch's expense and emerged in 1933 as boss of the National Recovery Administration. It also explains why Franklin Delano Roosevelt, a Wall Streeter himself for much of the 1920s, was cofounder with Herbert Hoover—another Wall Streeter in the 1920s—of the first of the trade associations proposed by Baruch, the American Steel Construction Association, discussed in the next chapter.

Parallel to Bernard Baruch's ideas, which came to fruition in the NRA, there is a much more successful contemporary example of corporate socialism in practice: the Federal Reserve System.


Although many had a hand, or thought they had, in fashioning the Federal Reserve legislation, essentially the system was the brain child of one man: Paul Warburg, brother of Max Warburg, whom we met in Chapter 3. Paul Moritz Warburg (1868-1932) descended from the German banking family of Oppenheim. After early training in the offices of Samuel Montagu & Co. in London and the Banque Russe Pour le Commerce Etranger in Paris, Warburg entered the family banking house of M.M. Warburg & Co. in Hamburg. In 1902 Warburg became a partner in the New York banking house of Kuhn, Loeb & Co. while continuing as a partner in Warburg's of Hamburg. Five years later, in the wake of the financial panic of 1907, Warburg wrote two pamphlets on the U.S. banking system: Defects and Needs of our Banking System and A Plan for a Modified Central Bank.12

In the years after 1907, Warburg lost no opportunity to speak and write publicly about the need for banking and currency reform in the United States, and in 1910 he formally proposed a United Reserve Bank of the United States. This plan developed into the Federal Reserve System, and Warburg was appointed by President Woodrow Wilson a member of the first Federal Reserve Board. Major criticism of Warburg erupted during World War I because of brother Max's role in Germany, and he was not reappointed to the Board in 1918. However, from 1921 to 1926, after criticism had abated, Warburg became a member of the Advisory Council of the Federal Reserve Board and served as its president from 1924 to 1926.

After passage of the 1913 Federal Reserve Act, Warburg and his banking associates promptly set about using the legal banking monopoly for their own ends and purposes, as suggested by Frederic Howe. In 1919 Warburg organized the American Acceptance Council and served as chairman of its executive committee in 1919-20 and as its president in 1921-22. Then in 1921 Warburg organized and became chairman of the private International Acceptance Bank, Inc. while still serving on the Advisory Council of the Federal Reserve Board. In 1925 Warburg added two more private acceptance banks: the American and Continental Corp. and the International Acceptance Trust Co. These banks were affiliated with the Warburg-controlled Bank of the Manhattan Company. As an aside it may be noted that Paul Warburg was also a director of the American IG Chemical Corp., the American subsidiary of IG Farben in Germany. I.G. Farben was prominent in bringing Hitler to power in 1933 and manufactured the Zyklon-B gas used in Nazi concentration camps. Warburg was a founding member of the Carl Schurz Memorial Foundation, a propaganda organization established in 1930, a director of the prestigious Council on Foreign Relations, Inc., and a trustee of the Brookings Institution.

But it was through a virtual monopoly of U.S. acceptance banking, achieved by the International Acceptance Bank Inc. and its affiliated units, that Warburg was able to get society to go to work for the Warburgs and their banking friends. Revisionist historian Murray Rothbard has examined the origins of the 1920s inflation that led to the collapse of 1929 and makes this pertinent observation:

While purchase of U.S. securities has received more publicity, bills bought were at least as important and indeed more important than discounts. Bills bought led the inflationary parade of Reserve credit in 1921 and 1922, were considerably more important than securities in the 1924 inflationary spurt, and equally important in the 1927 spurt. Furthermore, bills bought alone continued the inflationary stimulus in the fatal last half of 1928.13

What were these "bills bought" pinpointed by Rothbard as the key culprit of the 1929 depression? Bills bought were acceptances, and almost all were bankers acceptances.

Who created the acceptance market in the United States, largely unknown before 1920? Paul Warburg.
Who gained the lions' share of this acceptance business at artificially low subsidized rates? The International Acceptance Bank, Inc.

Who was the International Acceptance Bank, Inc? Its chairman was Paul Warburg, with Felix Warburg and James Paul Warburg as co-directors. However, a closer look at the make-up of the banks (see below page 95) suggests that it was a vehicle representing the financial élite of Wall Street.

Did the Warburgs and their Wall Street friends know where their financial policy would lead? In other words, did their financial policies of the 1920s have elements of deliberation? There exists a memorandum by Paul Warburg that clearly notes that banks had the capability to prevent inflation:

If the Government and the banks of the United States were helpless automatons, inflation, no doubt, would have to ensue. But it is insulting our banks to have the impression go out that they should not be capable of cooperating in some common plan of protection such, for instance, as keeping all cash reserves higher than required by the law, if indeed such a step should become advisable for the greater safety of the country.14

Consequently, Rothbard quite rightly concludes:

Surely, Warburg's leading role in the Federal Reserve System was not unconnected with his reaping the lion's share of benefits from its acceptance policy.15

In brief, the policy of creating acceptances at subsidized artificial rates was not only inflationary, but was the most important factor, apparently a deliberate banking policy, leading to the inflation of the 1920s and the ultimate collapse in 1929, thus making FDR's New Deal or national economic planning appear necessary. Further, this was, as Rothbard states, "...the grant of special privilege to a small group at the expense of the general public." In other words, Wall Street made American society go to work for a financial oligopoly.

Warburg's revolutionary plan to get American society to go to work for Wall Street was astonishingly simple. Even today, in 1975, academic theoreticians cover their blackboards with meaningless equations, and the general public struggles in bewildered confusion with inflation and the coming credit collapse, while the quite simple explanation of the problem goes un discussed and almost entirely un comprehended. The Federal Reserve System is a legal private monopoly of the money supply operated for the benefit of a few under the guise of protecting and promoting the public interest.
Revolutionary? Yes indeed! But as one of Warburg's admiring biographers commented:

Paul M. Warburg is probably the mildest-mannered man that ever personally conducted a revolution. It was a bloodless revolution: he did not attempt to rouse the populace to arms. He stepped forth armed simply with an idea. And he conquered. That is the amazing thing. A shy, sensitive man, he imposed his idea on a nation of a hundred million people.16

How did this revolution of Warburg's differ from socialist revolution? Only in the fact that under socialism, once the revolution is achieved and the power of the state gathered into the right ideological hands, the accrued personal rewards are not usually as substantial— although the fiefdoms carved out by national socialist Hitler and the modern Soviets may challenge this observation—nor are the results so veiled. The monetary dictatorship of the Soviets is obvious. The monetary dictatorship of the Federal Reserve System is muted and evaded.

We should then take a closer look at the International Acceptance Bank, the vehicle used for this revolutionary exploitive maneuver because it provides valid signals that Wall Street would also have a real interest in national economic planning and an FDR type of New Deal.


The bank was founded in 1921 in New York and affiliated with Warburg's Bank of the Manhattan Company. However, the board of directors suggests that the most important elements in Wall Street also had a significant interest and control in and profited from the International Acceptance Bank. Further, we find a striking link-up between its affiliated financial institutions and a general scheme to establish corporate socialism in the United States.

As we have noted, Paul M. Warburg was chairman of the board: his brother Felix, also a partner in Kuhn Loeb & Co., and his son James P. Warburg were co directors. The vice chairman of the board was John Stewart Baker, also president and director of the Bank of Manhattan Trust Co. and International Manhattan Co., as well as chairman of the executive committee and director of the Manhattan Trust Co. Baker was also director of the American Trust Co. and the New York Title and Mortgage Co.

F. Abbot Goodhue was president and director of International Acceptance Bank, on the board of the other Warburg banks, and a director of the First National Bank of Boston. Other directors of the International Acceptance Bank were Newcomb Carlton, director of the Rockefeller-controlled Chase National Bank, the Morgan-controlled Metropolitan Life Insurance Co., and other such major companies as the American Express Co., the American Sugar Refining Co., and the American Telegraph and Cable Co. Newcomb Carlton was also a director of American Telegraph and Cable and a director of American International Corporation, a company intimately involved with the Bolshevik Revolution.17 Another director of International Acceptance Bank who was also a director of American International Corp. was Charles A. Stone, located at 120 Broadway and a director of the Federal Reserve Bank from 1919 to 1932. Bronson Winthrop was also a director of both American International Corp. and International Acceptance Corp. Thus, three directors of International Acceptance Bank had interlocking directorships with American International Corp., the key vehicle in U.S. involvement in the Bolshevik revolution.

Another director of International Acceptance Bank was David Franklin Houston, who was also a director of the Carnegie Corp., the Morgan-controlled Guaranty Trust Co., U.S. Steel, and A.T.& T., as well as president of the Mutual Life Insurance Co. Other directors of I.A.B. included Philip Stockton, president of the First National Bank of Boston, and a director of A.T. & T., General Electric, International Power Securities, and many other companies; William Skinner, director of Irving Trust Co., Equitable Life Assurance, and the Union Square Savings Bank; Charles Bronson Seger, director of Aviation Corp., Guaranty Trust Co., and W.A. Harriman; Otto V. Schrenk, director of Agfa Ansco Corp., Krupp Nirosta, and Mercedes Benz Co.; and Henry Tatnall, director of the Girard Trust Co. Paul Warburg was also a director of Agfa Ansco, Inc., a firm 60 per cent owned by I.G. Farben and a "front" for I.G. in the United States.

In sum, the directors of International Acceptance Bank reflected the most powerful sectors of Wall Street: the Morgans, the Rockefellers, and Harriman, as well as the Boston bankers.

Further, there was a lifelong and intimate Warburg association with the Roosevelts from childhood to the New Deal. This Warburg–Roosevelt association is illustrated by an extract from James P. Warburg's memoirs: "It so happened that I had known the President elect's eldest son, James Roosevelt, for some years, because he had been living in one of the cottages on my Uncle Felix's estate in White Plains."18

Later the same James P. Warburg became adviser to President Franklin D. Roosevelt on domestic and international monetary affairs. The Warburg's deep interest in the NRA program is reflected in a 1933 Warburg memorandum to FDR:

Memorandum for the President: Domestic Currency Problem. The Administration has, in my judgment, never faced a more serious situation than it does today. The entire recovery program, which is the heart of its policy, is jeopardized by uncertainty and doubt in the monetary field. The National Recovery Act cannot possibly function to any useful end if there is fear of currency depreciation of an unknown amount and fear as to monetary experimentation. There has already been a tremendous flight of capital, and this flight will continue at an increasing pace so long as uncertainty prevails.19

Then, following the Warburg proclivity for monopoly, James Warburg recommended to FDR that all monetary ideas, actions, and decisions be centralized in the Treasury Department and the Federal Reserve Board.

Obviously, this proposal would ensure that all monetary decisions were made by the élitist group associated with the International Acceptance Bank and the Federal Reserve System. The Secretary of the Treasury in July 1933, when James Warburg wrote his memorandum to FDR, was William H. Woodin, who had been director of FRB of New York from 1925 to 1931. We can also cite FDR's own associations with the Federal Reserve System. His "favorite uncle" Frederic Delano was appointed vice chairman of the Federal Reserve Board by President Woodrow Wilson in 1914, and from 1931 to 1936 Delano served as chairman of the board of the Federal Reserve Bank of Richmond, Virginia. FDR appointed Delano chairman of the National Resources Planning Board in 1934.

In 1933-34 the United States faced the greatest financial crisis in its history. And what did FDR do? He called in as the financial doctors the very operators responsible for the crisis—as sensible a policy as allowing the lunatics to run the asylum.

So we find associations between Franklin D. Roosevelt, the Warburg family, and the Warburg-inspired central banking system ranging from childhood to Warburg's appointment as a key monetary adviser to FDR. We shall see later that it was Warburg who determined the final shape of the National Industrial Recovery Administration. On the other hand, the Warburg family and their Wall Street friends controlled the private monopoly money supply known as the Federal Reserve System and through the International Acceptance Bank exploited that monopoly for their own purposes.

The Founding Fathers demonstrated a profound wisdom and insight into the dangers of a monopoly of paper money issue that is reflected in Article I, Section 9 of the U.S. Constitution: "No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts...."

A constitutional challenge to the issue of Federal Reserve notes by a private banking monopoly, the Federal Reserve System, is overdue. Hopefully, the value of the dollar will not have to be reduced to zero, as the mark was in post-World War I Germany, before such a challenge is initiated and sustained by the Supreme Court of the United States.


1. For Wall Street and the early Bolsheviks see Sutton, Bolshevik Revolution, op. cit. Wall Street involvement with the rise of Hitler and German Nazism is the topic of a forthcoming book.

2. Clinton Roosevelt, The Science of Government Founded on Natural Law (New York: Dean & Trevett, 1841). There are two known copies of this book: one in the Library of Congress, Washington D.C. and another in the Harvard University Library. The existence of the book is not recorded in the latest edition of the Library of Congress catalog, but was recorded in the earlier 1959 edition (page 75). A facsimile edition was published by Emanuel J. Josephson, as part of his Roosevelt's Communist Manifesto (New York: Chedney Press, 1955).

3. Ibid.

4. Ibid.

5. Ibid.

6. See Appendix A.

7. Clinton Roosevelt, The Science of Government Founded on Natural Law, op. cit.

8. Margaret L. Coit, Mr. Baruch (Boston: Houghton, Mifflin, 1957), p. 147.

9. Ibid., p. 172.

10. Bernard M. Baruch, American Industry in the War: A Report of the War Industries Board (March 1921), with an introduction by Hugh S. Johnson (New York: Prentice-Hall, 1941) (including "a reprint of the report of the War Industries Board of World War I, Mr. Baruch's own program for total mobilization of the nation as presented to the War Policies Commission in 1931, and current material on priorities and price fixing").

11. For a complete list of W.I.B. personnel see Grosvenor B. Clarkson, Industrial America in the World War (New York: Houghton, Mifflin, 1923), Appendix III. In the light of Chapter 11, below, it is intriguing to note numerous W.I.B. committee members with offices at 120 Broadway including Murry W. Guggenheim, Stephen Birch (Kennecott Copper), Edward W. Brush (American Smelting and Refining), F. Y. Robertson (United States Metals Refining Co.), Harry F. Sinclair (Sinclair Refining Co.), Charles W. Baker, (American Zinc), and Sidney J. Jennings (United States Smelting, Refining and Mining Co.)

12. See also Paul Warburg, The Federal Reserve System, Its Origin & Growth; Reflections & Recollections (New York: Macmillan, 1930)

13. Murray N. Rothbard, America's Great Depression (Los Angeles: Nash Publishing Corp. 1972), p. 117.

14. United States Senate, Hearings, Munitions Industry, Part 25, op. cit., p. 8103.

15. Murray Rothbard, America's Great Depression, op. cit., p. 119.

16. Harold Kellock, "Warburg, the Revolutionist," in The Century Magazine, May 1915, p. 79.

17. See Sutton, Bolshevik Revolution, op. cit., Chapter 8.

18. James P. Warburg, The Long Road Home: The Autobiography of a Maverick (Garden City: Doubleday, 1964), p. 106.

19. Franklin D. Roosevelt and Foreign Affairs, Vol. I, p. 325. Memorandum of James P. Warburg to Roosevelt, July 24, 1933