The Role of Gold
In order to understand the central role of gold in the central banks of the 19th century, let us look at the mechanism that gold played in boosting the power of a group of Jewish financiers, mainly in Britain and France.
When a central bank has gold worth $1000, then it has the capacity to lend up to 10 times that value. In short, it can lend up to $10,000. It charges an interest rate of 5%, which for the year comes to $500. This profit yields a return of 50% in a single year. Furthermore, the borrower of this $1000 has to give the bank collateral to the value of the loan, and many a times, even more than the value of the loan. If the client defaults, the bank takes possession of the collateral, and sells it, at times, at a profit. Thus, the bank suffers no loss.
By 1820, the Rothschild family had gained control over the Bank of England. In France, the family gained control over the Bank of France by 1830. Soon, both Britain and France went on to becoming Europe’s main colonial powers, with France playing the role of junior partner to Britain. Britain by the end of the 19th century was the leading political, economic and military power in the world. British gold, under the jealous, guarding eye of the Bank of England (the BOE), was the basis for the role of the pound sterling as the source spring of world credit, since 1815.
After the defeat of Napoleon at Waterloo, in 1815, for which the British took the credit, and the lion’s share of gold reserves, which flowed into London. After a law of June, 1816, gold was declared the sole measure of value in the British Empire. For the next 75 years, British foreign policy was to secure- for the BOE) the newly mined reserves of world gold, whether it came from California, Australia, or South Africa. At the same time, Britain actively pursued a policy of “strategic denial” of those same identifiable gold reserves to competitor nations whenever possible. Thus, the more gold that the BOE could secure, the more money it could lend, and the increase in wealth and power that flowed from this policy.
The 1815 Congress of Vienna, which carved up post-Napoleonic Europe, under British guidance, served to keep Continental Europe divided and too weak to rival British global expansion. After 1815, British naval superiority was unchallenged on the world’s seas. British manufactured goods had led the world for decades. British ships carried British goods
British banks extended credit for world trade, and funneled loan capital to build railways in America, Russia and Argentina, among other types of loans, the more the domestic economic basis of Britain deteriorated. Goods produced by other nations were forced to agree to the terms of trade set in London by the Lloyd’s shipping, insurance and banking syndicates. Britain’s navy, the world’s largest of its time, policed the world’s major sea-lanes, and provided cost-free “insurance” for British merchant ships, while competitor fleets were forced to pay a hefty premium to insure their ships and cargo against, piracy, catastrophe, and acts of war, through the London Lloyd’s insurance syndicate. This had the effect of pushing the costs of rival nations up.
Credit and bills of exchange out of British banks were necessary for most of the world’s shipping trade finance. The BOE, along with banks such as the Barings, Hambros and Rothschilds manipulated the world’s largest gold supply in calculated actions which would cause a flood of British goods to be dumped mercilessly onto any rival market at will. Britain’s unquestioned domination of international finance was the second pillar of the British Empire following 1815. The first pillar was its domination of global maritime routes.
The third pillar, gaining in importance with the start of the Industrial Revolution, was British geopolitical domination of the world’s major raw materials- cotton, metals, coffee, coal, and by the end of the century, oil.
“Free Trade” Unleashed
In 1846, Britain repealed the Corn Laws-which provided import protection for British agriculture. With this repeal, import restrictions on agriculture were removed, and it resulted in a wave of agricultural goods flooding Britain. This devastated British farming, leading to large scale bankruptcy, and a reduced labor cost. This was a decisive advantage to the Rothschilds. If they dominated world trade, “free trade” could only ensure that their dominance would grow at the expense of other less-developed trading nations. Removal of the Corn Laws opened the floodgates throughout the British Empire to a “cheap labor policy” the only ones to benefit were the international trading houses and the banks that financed them.
Under the banner of free trade, British finance reaped massive profits on the India-Turkey-China opium trade, while forcing China to open her economy to the British. Around 1850, China was the world’s leading economy, with 50% of the world’s GNP, while India was the world’s second-largest economy with a 27% share of the world’s GNP. Britain destroyed both these economies for its own benefit.
Britain’s “Informal Empire”
Britain had used the special circumstances of being an island apart from Continental Europe. She was saved the costs of having to raise a large standing army to defend her interests, leaving her free to concentrate on mastery of the seas. Britain’s looting of the wealth of the vast riches of the world allowed her to maintain a “balance-of-power” on Continental Europe, creating or financing coalitions against whichever nations seemed on the verge of dominating the Eurasian land mass, stretching from Russia to Spain. British “balance-of-power” diplomacy was defined using London as the center point; that’s how London could play off rival economic powers to her own advantage.
Increasingly, during the last decades of the 19th century, British capital flowed into select countries in order to finance, build, then run their national rail and transport infrastructure. British finance dictated the terms of trade. These client states of Britain found that they had surrendered control over their economic sovereignty far more effectively than if British troops had occupied their capital cities to enforce tax collection in support of the British Empire. British policy, with a minimum investment, was not only to control, but to ensure that other rival powers did not gain coveted raw materials or other treasures of economic power.
British secret intelligence agencies at this time also evolved in an unusual manner. Unlike the empires of other nations, Britain-after 1815- modeled its empire on an extremely sophisticated marriage between top bankers, financiers, cabinet ministers, heads of key companies and the heads of the intelligence services. British Intelligence operated as a secret network which wove together the immense powers of British finance, shipping industry and government. Because all of this was secret, it wielded immense power over unsuspecting foreign economies. This covert marriage of private commercial power with government was the secret of British global domination.
The Great Depression of 1873
As a direct consequence of British free trade policies, a deep economic depression had begun in Britain following a financial panic. The London bank panic of 1857 resulted from a foreign run on the Bank of England’s gold reserves. The run collapsed bank credit in London. The BOE then raised interest rates to levels higher than rates in competing trading nations, hoping this would stop the drain on its gold reserves, and gold would eventually flow back into British banks from New York, Berlin, Paris or Moscow. This interest rate policy was a powerful weapon in central banking which gave the BOE a decisive advantage over rivals.
The dominant faction in British economic policy was finance and international trade, and not industry or agriculture. These latter two were devastated by the high interest rate policy. In order to insure the supremacy of British international finance, these bankers were willing to sacrifice domestic industry and investment. Reflecting the rising unemployment and industrial bankruptcies of that depression, British prices collapsed 50% from 1873 to 1896; and unemployment became widespread.
The lack of capital investment into British industry was already evident at the International Exhibition of 1867. Products from other countries clearly overshadowed the stagnant technological levels of British industry, the world leader only two decades before. It was a turning point in British history which signaled that the onset of “free trade” some three decades earlier, with the repeal of the Corn Laws, had doomed British industrial technology to decadence in order that finance assume supremacy in the affairs of the Empire. The period of Britain’s easy leadership among the world’s industrial relations was clearly over by the 1890s. British free trade policies were doomed for failure as its foundations were based on cannibalizing the economies of increasing parts of the globe in order to survive. After 1873, British efforts to spread the virus of free trade policies became less successful as other nations, such as Germany initiated a series of national economic protectionist measures which allowed them to unleash the most dramatic rates of industrial growth seen in the past 2 centuries.
This all set the stage for a new debate amongst the British elite over how to maintain empire and power in a rapidly changing world.
Germany & the Geopolitics of World War 1
Growing divergence after 1873 between the depressed economy of the British Empire and the emerging industrial economies of Continental Europe, especially Germany, created the background to the outbreak in 1914 of World War 1. By the 1890s, British industry had been surpassed in both rate and quality of technological development by an astonishing emergence of industrial and agricultural developments within Germany.
In 1871, Germany became united politically. Germany moved away from the British model of free trade, and built up a national economic strategy, with remarkable results. The heart of the German industrial revolution was the explosion of technological progress. Germany created a national modern rail transport infrastructure and import tariff protection for emerging domestic industries. Steel was at the center of Germany’s growth, with the rapidly emerging electric power and chemical industries close behind.
Large industry grew after the 1880s, in partnership with large banks, such as Deutsche Bank, under what became known as the “German model” of interlocking ownership between the major banks and key industrial companies.
In 1890, London’s Barings Bank collapsed. In Berlin a bank panic ensued, as the dominoes of an international financial pyramid began to collapse. In the wake of this crash, the German authorities passed laws restricting all sorts of financial speculation. The German government established a different form of finance and banking in Germany from that of Britain or America-what is called Anglo-Saxon banking.
By the late 1890s, the British power elite – headed by the Rothschild family-had begun to express their first signs of alarm over two specific aspects of Germany’s industrial development. After 1873, Britain’s policy fostered industrial retardation of technological progress, while that of Germany was the opposite. By 1900, the trends of divergence between the two countries were evident to all. But a growing friction between Germany and Britain in the years before 1914 was centered on two special aspects of Germany’s economic development.
First was the dramatic emergence of Germany as a preeminent modern shipping nation, ultimately threatening the decades-long British domination of the seas. So long as Germany did not control her own modern merchant shipping fleet, and have a navy to defend it, she could never determine her own economic affairs. Between 1875 and 1914, Germany rapidly built up her merchant fleet, and a powerful navy to defend it. British policy makers came to the conclusion that “a German battle fleet directly posed a challenge to Britain. By 1910, the Rothschilds realized that drastic remedies would be required to deal with the awesome German economic emergence. For the first time ever, oil begins to emerge as a significant factor in the geopolitical calculus of war.
A Global Fight for Oil Begins
In 1882, oil had little commercial interest other than as a fuel to light the new oil lamps. In 1867, John D. Rockefeller created the Standard Oil Company to exploit this market for lamp oil and various medical “cures” in the United States.
Admiral Fisher of the British navy understood the military-strategic implications of oil for the future control of the world’s seas. He insisted that oil power would allow Britain to maintain decisive strategic advantage in future control of the sea. Oil-powered ships would be able to increase their efficiencies over coal-powered ships by multiple factors.
When a German engineer, Gottlieb Daimler, developed the world’s first oil motor to drive a road vehicle. This was in 1885, and cars were regarded as a play-thing for the rich. A handful of people realized the economic potentials of the oil industry. By 1905, British Intelligence realized the strategic importance of the new fuel. Britain’s problem was that it didn’t have any oil of its own.
In 1901, a geologist, William Knox D’Arcy secured a royal concession from the Persian ruler to explore for oil in Iran. British Intelligence “ace of spies” Sidney Reilly persuaded D’Arcy to sell to the British the concession, thus securing exclusive rights over what were then believed to be vast untapped oil deposits in Iran. A new company, Anglo-Persian Oil was formed to hold this concession. The major shareholders were the Rothschilds and the British government. Reilly had secured Britain’s first major oil source.
The Berlin-Baghdad Railroad
In 1889, a group of German industrialists and bankers, led by Deutsche Bank, secured a concession from the Ottoman government to build a railway line through Anatolia from Constantinople. Ten years later, in 1899, this accord was expanded for the line to reach Baghdad. Germany decided to build a strong economic alliance with Turkey as a way to develop vast new markets to the East for the export of German industrial goods. The Berlin-Baghdad railway project was to be the centerpiece of a brilliant and quite workable economic strategy. Potential supplies of oil were lurking in the background, and Britain stood opposed. The seeds of animosity tragically being acted out in the Middle East from then to now, directly trace back to this period.
The ancient rich valley of the Tigris and Euphrates rivers was coming into sight of a modern transportation infrastructure. For the first time, the railway gave the Ottoman Empire a vital modern economic linkage with its entire Asiatic interior. The rail link, ending at Kuwait and the Persian Gulf, would provide the cheapest and fastest link between Europe and the entire Indian subcontinent, a world rail link of the first order.
From the British side, this was exactly the point. A senior British analyst warned ; “ If Berlin-Baghdad “ were achieved, a huge block of territory producing every kind of economic wealth, and unassailable by sea-power would be united under German authority – – – German and Ottoman armies would be within striking distance of our Egyptian interests, and from the Persian Gulf, our Indian Empire would be threatened. The port of Alexandra and the control of the Dardanelles would soon give Germany enormous naval power in the Mediterranean, – – – A glance at the map will show how the chain of states stretched from Berlin to Baghdad. The German Empire, the Austro-Hungarian Empire, Bulgaria, Turkey. One little strip of territory alone blocked the way and prevented the two ends of the chain being linked together. That little strip was Serbia. Serbia was really the first line of defense of our eastern possessions. If she were crushed or enticed into the “Berlin-Baghdad” system, then our vast but slightly defended empire would soon have felt the shock of Germany’s eastward thrust”.
Over the next 15 years, Britain sought, with every device known, to delay and obstruct progress of the railway.
Then Britain played a trump card. In 1901, Britain signed a treaty with the al Sabah tribe that governed Kuwait- a province of Iraq, an Ottoman Empire territory. Turkey was militarily and economically too weak other than to feebly protest the de facto occupation of Kuwait. Kuwait in British hands blocked successful completion of the Berlin-Baghdad railway from eventual access to the Persian Gulf.
By 1902, it was known that the region of the Ottoman Empire known as Mesopotamia – today Iraq and Kuwait – contained oil deposits, how much was still a matter of speculation. This discovery shaped the gigantic battle for global economic and military control which continues to the present day. By 1912, German industry and government had realized that oil was the fuel of its economic future, for land and sea transport. At that time, the Rockefeller Standard Oil trust controlled 91% of Germany’s oil market. The Deutsche Bank plan was for Mesopotamian oil to be transported via the Berlin-Baghdad railway, free from possible naval blockade, thereby making Germany independent in its oil requirements.
Britain had no oil of its own, and was desperate to get its hands on oil reserves. If Britain could not secure oil for its future, then she could deny its economic rivals their access to secure oil reserves in the world. In short, if Britain’s stagnating industry could not compete with Germany’s emerging Daimler motors, then she would control the raw material on which the Daimler motors must run. Deutsche Bank director Karl Helfferich stated: “Britain’s policy was always constructed against the politically and economically strongest Continental power. The only condition which would lead to improvement of Anglo-German relations would be if we bridled our economic development, and this is not possible.”
Britain Forms an Alliance against Germany
For decades, the British balance-of-power alliance strategy in Europe had been built around support the Ottoman Empire, as part of what British strategists called the Great Game – blocking the emergence of a strong and industrialised Russia. Support for Turkey, which controlled the vital Dardanelles access to warm waters for Russia, had been a vital part of British geopolitics until that time. But as German links with the Ottoman Empire grew stronger by the early 1900s, so too did British overtures to Russia, and against Turkey and Germany.
By 1907, Britain had created a web of secret alliances -including Russia and France -encircling Germany, and had laid the foundations for the coming military showdown with Germany. The next 7 years were ones of preparation for the final elimination of the German threat.
Thus, it was not surprising to find enormous unrest and wars throughout the Balkans in the decade before 1914. The conflict and wars helped weaken the German-Ottoman alliance, especially the completion of the Berlin-Baghdad rail link. Following British consolidation of its Triple Alliance strategy of encircling Germany and her allies, a series of continuous crisis and regional wars were unleashed in the Balkans. In the First Balkan War of 1912, Serbia, Bulgaria and Greece , secretly backed by Britain, declared war on the weak Ottoman Empire, resulting in stripping Turkey of most of her European possessions. This was followed in 1913 by a second Balkan War over the spoils of the first, in which Romania joined to crush Bulgaria. The stage was being set for Britain’s great European war.
On July 28, 1914, Archduke Franz Ferdinand, heir to the Austrian throne, was assassinated in Sarajevo by a Serb, setting off a tragic chain of events which detonated World War 1.
World War 1 & 2
World War 1 broke out in July 1914 and ended in 1918. On the eve of the war, Britain was broke. Over the course of the next 3 years, the two key Rothschild countries in Europe, Britain and France had borrowed $4.2 billion from American finance, mainly through the Rothschild agent in New York, J.P.Morgan. Britain pleaded with the Rothschilds to bring America into the war on its side against Germany. In return, Britain would give Palestine to the Rothschilds. In February 1917, America entered into the war.
The American entry into the war was based on two factors: – the first was to safeguard their loan repayments, and the second was to make sure that a very-much weakened Britain did not stand in America’s way to global power. In fact, the war was a contest between Germany and America as to who would succeed Britain as the next global power. Within a month of America entering the war, the capital of international finance had subtly shifted over to New York, from London. By wars end, the majority of official central bank reserves had moved to New York. This gold from European countries flooded into New York in order to pay for war supplies.
Starting from 1920, American capital bought up many European companies, on the cheap. American exports boomed, but were priced out of markets tied into London’s economic bloc – the so-called “preferential access “areas. A bitter war between London and New York was fought in the background. The battlefield ranged over gold, oil and markets. A secret US military plan was designed to destroy the British Navy (code named Operation Blue, while the plan to destroy Britain’s ally in the Far East, Japan, and was code named Operation Orange). This did not come to pass because by 1927, the Rothschilds gave in to New York. London admitted New York into the Iraqi oil concession in return for New York backing away from taking over the South African gold industry.
The 1929 stock market crash was a London operation designed to drain America of its gold reserves. In this, London gained initial success, but it was short lived. In 1933, the Rockefeller family put Franklin Delano Roosevelt into the White House. And FDR immediately began to target the Rothschild financial base in New York. Washington seized all private gold holdings in the US. This was done to replenish the gold in Washington and New York that was drained out of America by London- this was the key factor behind the 1929 stock market crash. The SEC was created to curb Rothschild power on Wall Street, by establishing the Glass-Steagall Act, wherein banking and investments banks were separated. This neutralized the awesome power of JP Morgan in American finance. The Rockefeller banks were retail, and not wholesale banks. These banks were not affected, such as Chase Manhattan and Citibank.
A weakened Britain could not stand this onslaught from New York, and slowly but surely, its choicest holding were grabbed and taken over by Nelson Rockefeller in Latin America, between 1933 and 1945. At the same time, Hitler was brought to power in Germany and was financially backed by New York and London. The aim of New York was to first destroy a weakened Britain, along with the other European colonial powers. Secondly, was to destroy Eurasia as a whole, so that at wars end, America will become a global superpower. And that is how it played out. The British backing of Hitler was to use him to destroy Russia. Hitler managed to do both of these tasks set out by his backers.
I call the First World War as the First Battle for Eurasia. Remember, that by 1919, many empires in Europe collapsed – such as the Austro-Hungarian, the Russian Czarist, and the Ottoman Empires. China was in civil war. The Middle East was being carved up by the Rothschild countries of Britain and France. Eurasia was in a weakened state. At the end of war ending, in 1918, America became the leading financial power in the world. And the Second World War II became known as the Second Battle for Eurasia. When the war ended in 1945, America had become even more powerful, financially, economically, and militarily. This was due to the whole of Eurasia lying in ashes, from Britain in the West to Japan in the East. America was intact. In the present day, in 2017, the world is potentially entering the Third Battle for Eurasia, wherein a weakened America is trying to hold onto its global power. It can only achieve this by, once again, destroying Eurasia. Thus, we see that China, the EU, and Iran are Wall Streets’ main targets in this round.
We shall discuss in more details about World Wars 1 and 2, when we are doing the report on the “Geopolitics of Oil”, in the near future.
