Wall Street and F.D.R.

Franklin Roosevelt as an agent of Wall Street financiers
-- by: Antony C. Sutton, 1975, source: Reformation.org
MHP hypertext version for non-profit educational use only

12.  FDR and the Corporate Socialists

Willing accomplice of the rich and powerful

Conclusion

"At the first meeting of the Cabinet after the President took office in 1933, the financier and adviser to Roosevelt, Bernard Baruch, and Baruch's friend General Hugh Johnson, who was to become the head of the National Recovery Administration, came in with a copy of a book by Gentile, the Italian Fascist theoretician, for each member of the Cabinet, and we all read it with great care."

Mrs. Frances Perkins, Secretary of Labor under FDR

It is worth recalling at this point the epigraph to Chapter 1, that Franklin D. Roosevelt privately believed that the U.S. government was owned by a financial elite. There is, of course, nothing notably original about this observation: it was commonplace in the 19th century. In modern times, it has been averred by such dissimilar writers as Robert Welch and William Domhoff that America is controlled by a financial elite based in New York. The Soviets, who are not always altogether inaccurate, have used this theme in their propaganda for decades, and it was a Marxist theme before Lenin came along. [1]

It was under Roosevelt that quaint Keynesian notions -- the modern versions of John Laws' con game with paper money -- were introduced to Washington, and so the seeds of our present economic chaos were laid in the early 1930s under Roosevelt. Contemporary double digit inflation, a bankrupt Social Security system, bumbling state bureaucracy, rising unemployment -- all this and more can be traced to Franklin Delano Roosevelt and his legislative whirlwind.

But while we now pay the price for these unsound and irresponsible policies, so pervasive is prevailing misinformation that even the identity of the originators of Roosevelt's New Deal and their reasons have been forgotten. While our economists cover their blackboards with meaningless static equations, a dynamic looting operation of the economy has been in progress by the authentic formulators of the liberal New Deal. While the bleeding heart social engineers have screamed at capitalism as the cause of the world's misery, they have been blissfully unaware that their own social formulas in part emanated from -- and have certainly been quietly subsidized by -- these same so-called capitalists. The tunnel vision of our academic world is hard to beat and equalled only by their avarice for a piece of the action.

What we do find is that government intervention into the economy is the root of our present problems; that a Wall Street coterie has substantive, if subtle, muscle within this government structure to obtain legislation beneficial to itself; and that a prime example of this self-seeking legislation to establish legal monopoly under big business control was FDR's New Deal and, in particular, the National Recovery Administration.

The name Franklin Delano Roosevelt should suggest, but rarely does, a link with Wall Street. Both Delano and Roosevelt are prominent names in the history of American financial institutions.

Who was Franklin Delano Roosevelt?

Roosevelt's pre-political career can be described only as that of financier. Both his family and career before 1928 and his election as Governor of New York were in the business world, more specifically the financial world. Between 1921 and 1928 Roosevelt was a director of 11 corporations headquartered in the Wall Street golden circle and president of a major trade association. The American Construction Council.

Furthermore, Roosevelt was not only president of United European Investors, Ltd., formed to take pecuniary advantage of the misery of German hyperinflation, but was one of the organizers of American Investigation Corporation, a high-powered financial syndicate. Roosevelts formed the financial firm Roosevelt and Son in the late 18th century, and Delanos operated in the financial arena from at least the mid 19th century. Roosevelts and Delanos may not have reaped the great wealth of Morgans and Rockefellers, but they were known and respected names in the halls of international finance. Even in the 1920s we find Uncle Frederic Delano on the Federal Reserve Board, and George Emlen Roosevelt as a director of Guaranty Trust, the bete noire of the Street if there ever was one.

It is also reliably recorded that Theodore Roosevelt's Progressive Party, the first step to the modern welfare-warfare state, was financed by the J.P. Morgan interests; consequently, it should not surprise us to find Wall Street backing Roosevelt in 1928, 1930, and 1932.

In brief, we have shown that Roosevelt was a Wall Streeter, descended from prominent Wall Street families and backed financially by Wall Street. The policies implemented by the Roosevelt regime were precisely those required by the world of international finance. It should not be news to us that international bankers influence policy. What appears to have been neglected in the history of the Roosevelt era is that, not only did FDR reflect their objectives, but was more inclined to do so than the so-called reactionary Herbert Hoover. In fact, Hoover lost in 1932 because, in his own words, he was unwilling to accept the Swope Plan, alias NRA, which he termed, not incorrectly, "a fascist measure."

We cannot say that Wall Streeter Roosevelt was always a highly ethical promoter in his financial flotations. Buyers of his promotions lost money, and substantial money, as the following brief table based on the data presented suggests:

How Investors Fared With FDR at the Helm

Company Associated with FDR	Issue Price of Stock	Subsequent Price History]
United European Investors, Ltd.	10,000 marks (about $13)	Company wound up, stock-holders offered $7.50
International Germanic Trust Company, Inc.	$170	Went to $257 in 1928, liquidated in 1930 at $19 a share

Loss of stockholders' funds, however, can be an accident or mismanagement. Many honest financiers have stumbled. However, association with persons of known ill repute such as Roberts and Gould in United European Investors, Ltd. was not accidental.

FDR's association with the American Construction Council brings to mind Adam Smith's obita dicta that the law ". . . cannot hinder people of the same trade from sometimes assembling together, but it ought to do nothing to facilitate such assemblies, much less to render them necessary." [2] Why not? Because the American Construction Council was in the interests of the construction industry, not in those of the consumer of construction services.

The New York bonding business was made to order for FDR. As vice president of the Fidelity and Deposit Company of Maryland, FDR knew precisely how to operate in the world of politicized business, where price and product quality in the market place are replaced by "Whom do you know?" and "What are your politics?"

The United European Investors caper was an attempt to take advantage of the misery of German 1921-23 hyperinflation. The firm operated under a Canadian charter, no doubt because Canadian registration requirements were more lenient at that time. The most conspicuous observation concerns FDR's associates at U.E.I., including John von Berenberg-Gossler, a HAPAG co-director of German Chancellor Cuno, who was responsible for the inflation! Then there was William Schall, FDR's New York associate, who had only a few years earlier been involved with German espionage in the United States -- at 120 Broadway. The Roberts-Gould element in United European Investors was under criminal investigation; FDR knew they were under investigation, but continued his business associations.

Then we found that the background of the New Deal was speckled with prominent financiers. The economic recovery part of the New Deal was a creation of Wall Street -- specifically Bernard Baruch and Gerard Swope of General Electric -- in the form of the Swope Plan. So in Chapter 5 we expanded upon the idea of the politicization of business and formulated the thesis of corporate socialism: that the political way of running an economy is more attractive to big business because it avoids the rigors and the imposed efficiency of a market system. Further, through business control or influence in regulatory agencies and the police power of the state, the political system is an effective way to gain a monopoly, and a legal monopoly always leads to wealth. Consequently, Wall Street is intensely interested in the political arena and supports those political candidates able to maximize the amount of political decision-making under whatever label and minimize the degree to which economic decisions in society are made in the market place. In brief. Wall Street has a vested interest in politics because through politics it can make society go to work for Wall Street. It can also thus avoid the penalties and risks of the market place.

We examined an early version of this idea: Clinton Roosevelt's planned society, published in 1841. We then briefly discussed Bernard Baruch's 1917 economic dictatorship and his declared intent to follow the course of a planned economy in peacetime and traced Baruch and his economic assistant Hugh Johnson to the very core of the National Recovery Administration.

Some attention was then given to the Federal Reserve System as the most prominent example of private legal monopoly and to the role of the Warburgs through the International Acceptance Bank and the manner in which the bank was able to get society to go to work for Wall Street.

In a final look at the years before FDR's New Deal we reviewed the operation of the American Construction Council, a trade association, the concept of which originated with Herbert Hoover, but with FDR as its president. The council had, as its stated objectives, limitation of production and regulation of industry, a euphemism for industry control for maximization of its own profits.

Then we examined the financial contributions of the 1928, 1930, and 1932 elections on the ground that such contributions are a very accurate measure of political inclinations. In 1928, an extraordinary percentage of the larger contributions, those over $25,000, came from Wall Street's golden circle. Such large sums are important because their contributors are more than likely to be identifiable after the election when they ask favors in return for their earlier subsidies. We found that no less than 78.83 per cent of the over $1000 contributions to the Al Smith for President campaign came from a one-mile circle centered on 120 Broadway. Similarly 51.4 per cent, a lesser but still significant figure, of Hoover's contributions came from within this same area.

Then we demonstrated that, after his election, Herbert Hoover was given an ultimatum by Wall Street: either accept the Swope Plan (the NRA) or the money and influence of Wall Street would go to FDR who was willing to sponsor that scheme. To his eternal credit, Herbert Hoover refused to introduce such planning on the ground that it was equivalent to Mussolini's fascist state.

FDR was not so fussy. In FDR's 1930 campaign for Governor of New York, we identified a major Wall Street influence. There was an extraordinary flow of funds via the County Trust Company, and John J. Raskob of Du Pont and General Motors emerged as Chairman of the Democratic Campaign Committee and a power behind the scenes in the election of FDR. Seventy-eight per cent of the pre-convention "early-bird" contributions for FDR's 1932 Presidential bid came from Wall Street.

The Swope Plan was a scheme to force American industry into compulsory trade associations and provide exemption from the anti-trust laws. It was baited with a massive welfare carrot to quiet the misgivings of labor and other groups. The administrator of the National Recovery Administration, which developed from the Swope Plan, was Baruch's assistant. General Hugh Johnson. The three musketeers, Johnson's circle of assistants, comprised Gerard Swope of General Electric, Walter Teagle, of Standard Oil of New Jersey, and Louis Kirstein of Filene's of Boston. Adherence to the NRA codes was compulsory for all firms with more than 50 employees. The Swope NRA Plan was greeted favorably by such socialists as Norman Thomas, whose main objection was only that they, the orthodox socialists, were not to run the plan.

Fortunately, NRA failed. Big business attempted to oppress the little man. The codes were riddled with abuses and inconsistencies. It was put out of its misery by the Supreme Court in the Schechter Poultry decision of 1935, although its failure was evident long before the Supreme Court decision. Because of failure of NRA, the so-called 1934 Butler Affair becomes of peculiar interest. According to General Smedley Butler's testimony to Congress, supported by independent witnesses, there was a plan to install a dictator in the White House. President Roosevelt was to be kicked upstairs and a new General Secretary -- General Butler was offered the post -- was to take over the economy on behalf of Wall Street. Far-fetched as this accusation may seem, we can isolate three major statements of fact:

1. There was independent confirmation of General Butler's statements and in some measure unwilling confirmation by one of the plotters.
2. There existed a motive for Wall Street to initiate such a desperate gamble: the NRA-Swope proposal was foundering.
3. The alleged identity of the men behind the scenes is the same as those identified in the Bolshevik Revolution and in the political promotion of FDR.

Unfortunately, and to its lasting shame. Congress suppressed the core of the Butler testimony. Further, The New York Times first reported the story fairly, but then buried and distorted its coverage, even to the extent of incomplete indexing. We are left with the definite possibility that failure of the Baruch-Swope-Johnson NRA plan was to be followed by a more covert, coercive take-over of American industry. This occurrence deserves the fullest attention that unbiased scholars can bring to it. Obviously, the full story has yet to emerge.

Once again, as in the earlier volume, we found a remarkable concentration of persons, firms and events at a single address -- 120 Broadway, New York City. This was FDR's office address as president of Fidelity and Deposit Company. It was Bernard Baruch's address and the address of Gerard Swope. The three main promoters of the National Recovery Administration -- FDR, Baruch, and Swope -- were located at the same address through the 1920s. Most disturbing of all, it was found that the original meeting for the Butler Affair was held in 1926 at the Bankers Club, also located at 120 Broadway.

No explanation is yet offered for this remarkable concentration of talent and ideas at a single address. Quite obviously, it is an observation that must be accounted for sooner or later. We also found a concentration of directors of American International Corporation, the vehicle for Wall Street involvement in the Bolshevik revolution, and heavy contributors to the Roosevelt campaign.

Can we look at this story in any wider perspective? The ideas behind the Roosevelt New Deal were not really those of Wall Street; they actually go back to Roman times. From 49 to 44 B.C., Julius Caesar had his new deal public works projects; in 91 A.D., Domitian had his equivalent of the American Construction Council to stop overproduction. The ultimate fall of Rome reflected all the elements we recognize today: extravagant government spending, rapid inflation, and a crushing taxation, all coupled with totalitarian state regulation. [3]

Under Woodrow Wilson achieved a central banking monopoly, the Federal Reserve System. The significance of the International Acceptance Bank, controlled by the financial establishment in Wall Street, was that the Federal Reserve banks used the police power of the state to create for themselves a perpetual money-making machine: the ability to create money with a stroke of a pen or the push of a computer key. The Warburgs, key figures in the International Acceptance Bank -- an overseas money-making machine -- were advisers to the Roosevelt administration and its monetary policies. Gold was declared a "barbaric relic," opening the way to worthless paper money in the United States. In 1975, as we go to press, the fiat inconvertible dollar is obviously on the way to ultimate depreciation.

Did Wall Street recognize the result of removing gold as backing for currency? Of course it did! Witness Paul Warburg to a Congressional Committee:

"Abandonment of the gold standard means wildly fluctuating foreign exchanges and, therefore, the destruction of the free inflow of foreign capital and business. Weak countries will repudiate -- or, to use the more polite expression, "fund their debts" -- but there will be no general demonetization of gold. Gold at the end of the war will not be worth less but more." [4]

The inevitable conclusion forced upon us by the evidence is that there may indeed exist a financial elite, as pointed out by Franklin D. Roosevelt, and that the objective of this elite is monopoly acquisition of wealth. We have termed this elite advocates of corporate socialism. It thrives on the political process, and it would fade away if it were exposed to the activity of a free market. The great paradox is that the influential world Socialist movement, which views itself as an enemy of this elite, is in fact the generator of precisely that politicization of economic activity that keeps the monopoly in power and that its great hero, Franklin D. Roosevelt, was its self-admitted instrument.