How Wall Street bankers got the U.S. into WWI
“The war should be a tremendous opportunity for America.”
—J.P. Morgan, personal letter to President Woodrow Wilson, September 4, 1914
Just days after the assassination of Archduke Ferdinand, nearly a month before the start of WWI, and long before all the combatants had taken sides, President Woodrow Wilson invited J.P. Morgan to a luncheon at the White House.
This is an excerpt from Naomi Prins new book All the President's Bankers.
Though Wilson explained this did not signify the start of a series of talks with “men high in the world of finance,” rumors of a closer alliance between the president and Wall Street financiers persisted.
Not wanting to leave war financing to chance, Wilson and Morgan kicked their power alliance into gear. At the request of high-ranking State Department officials, Morgan immediately immersed himself in war financing issues. On August 10, 1914, Secretary of State William Jennings Bryan wrote Wilson that Morgan had asked whether there would be any objection if his bank made loans to the French government and the Rothschilds’ Bank (also intended for the French government). Bryan was concerned that approving such an extension of capital might detract from the neutrality position that Wilson had adopted and, worse, invite other requests for loans from nations less allied with the United States than France, such as Germany or Austria. The Morgan Bank was only interested in assisting the Allies.
Bryan was due to speak with Morgan senior partner Henry Davison later that day. Though Morgan had made it clear that any money his firm lent would be spent in the United States, Bryan worried that “if foreign loans absorb our loanable money it might affect our getting government loans if we need.” Thus, private banks’ lending decisions could affect not just the course of international governments’ participation in the war but also that of the US government’s financial health during the war.
Twenty years later the Senate would conduct an investigation into the causes of WWI, and why the United States entered it. It was called the Nye Committee.
Senator Gerald Nye (R-North Dakota), was one of the last progressive Republicans. He was also an isolationist with a deep hatred of the war profiteers. His investigation focused primarily on the munitions industry and their influence on the federal government, but he also touched on Wall Street banks.
After nearly two years of investigation his committee found that between 1915 and January 1917, the United States lent Germany 27 million dollars. At the same time the United States lent the United Kingdom, France, and their allies $2.3 Billion, nearly 100 times as much.
When the Russian government began to topple after the February Revolution, the Wall Street banks put pressure on the Wilson Government to come to the aid of their allies...and their outstanding loans.
Within months the United States was at war.
The profits that Wall Street banks made from these war loans were enormous, and they began before the war started.
Historian Alan Brugar has pointed out that for every soldier who died in battle, the international bankers made a profit of $10,000 dollars!
The French firm of Rothschild Freres had cabled Morgan and Company in New York before the war ever started, asking for $100 million. From that point going forward, J.P. Morgan became the main point of contact for allied war effort borrowing.
Shortly afterward, Morgan began a propaganda campaign.
“In March 1915, the J.P. Morgan interests….…got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and the sufficient number of them to control generally the policy of the daily press…….They found it was only necessary to purchase the control of 25 of the greatest papers.”
The reason for buying control of US media was to mould public opinion against Germany and in favour of American entry into the war. Had Germany won, the bankers would not have been able to recover their loans.
The story of those WWI loans don't stop with the end of that useless and terrible war. They were a leading cause of the global economic crisis in the 1930's, and thus WWII.
Michael Hudson's book Super Imperialism details how the struggle to pay these war debts led directly to the begger-thy-neighbor policies that crushed global trade.
In 1932 Britain defaulted on its WWI debts to Wall Street banks, followed shortly afterward by France and almost everyone other allied nation.