Jewish Idea in American Monetary Affairs
by Henry Ford
(Reprinted from the 18 June 1921 Issue of the house journal of the Ford Motor Co., the Dearborn Independent and slightly edited by Raymond Bray to eliminate the numerous uses of "which" for "that" in the original.)
Mr. Brisbane says that Jewish bankers exercise their large measure of control because they are abler than other bankers. It was very good of Mr. Brisbane to say so, and it adds to the sum of his weekly, almost daily, worship at the Jewish shrine, but it is scarcely true. Jewish bankers do not yet control the United States, and the principal reason they do not is that they are not abler than the other bankers. Doubtless they seek control; doubtless they have almost grasped it on several occasions; but not yet.
Nevertheless they form such a formidable force, and with their international connections constitute such a political problem, that the mere fact of their failing to top the column of control is not so reassuring as it sounds.
The great Jewish banking houses of the United States are foreign importations, as perhaps everyone knows. Most of them are sufficiently recent to be considered in their immigrant status, while the thought of them as aliens is stimulated by their retention of oversea connections. It is this international quality of the Jewish banking group that largely accounts for Jewish financial power: there is team-play, intimate understandings, and while there is a margin of competition among themselves (as at golf) there is also a wiping out of that margin when it comes to a contest between Jewish and "Gentile" capital.
Four conspicuous contemporary names in Jewish American finance are Belmont, Schiff, Warburg and Kahn. All of them, even the most recent, are of foreign origin.
August Belmont was the earliest and arrived in America in 1837 as the American representative of the Rothschilds in whose offices he had been raised. His birthplace was that great center of Jewish international finance, Frankfort-on-the-Main. He became the founder of the Belmont family in America, which has largely forgotten its Jewish origin. Politics was a part of his concern in this country, and during the critical time from 1800 to 1872 he was chairman of the National Democratic Committee. His management of the Rothschild interests was exceedingly profitable to that house, although the operations in which he engaged were quite simple compared with the operations of the present day.
Jacob Schiff is another Jewish financier who was given to the world by Frankfort-on-the-Main. He entered the United States in 1865, after having passed his apprenticeship in the office of his father, who was also an agent of the Rothschilds. The name Schiff runs a long way back without change, unlike the name of Rothschild. Originally named Bauer, this family of financiers took a new name from the red shield that adorned their house in the Jewish section of Frankfort and thus became "Rothschild." Commonly the last syllable is pronounced as if it were "child"; it is "schild," shield. An epoch-making family in itself, it has trained hundreds of agents and apprentices, of whom Jacob H. Schiff was one. He became one of the principal channels through which German-Jewish capital flowed into American undertakings, and his agency in these matters gave him a place in many important departments of American business, especially railroads, banks, insurance companies and telegraph companies. He married Theresa Loeb, and in due time came to be head of the firm of Kuhn, Loeb & Company.
Mr. Schiff, too, was interested in politics with a Jewish angle, and was perhaps the moving force in the campaign that forced Congress and the President to break off treaty relations with Russia, then a friendly nation, on a strictly Jewish question that had been skillfully given an American aspect. Mr. Schiff was of inestimable assistance to Japan in the war against Russia, but is understood to have been disappointed by Japan's shrewdness in preventing too high a return being made for that assistance.
Associated with Mr. Schiff in Kuhn, Loeb & Company is Otto Herman Kahn, who is probably more international than were either of the two gentlemen mentioned above and is more constantly engaged in dabbling in mysterious matters of an international nature. This characteristic may be accounted for, however, by his experience of many countries. He was born in Germany and is also a product of the Frankfort-on-the-Main school of finance, having had connection with the Frankfort Jewish house of Speyer.
Of just how many countries Mr. Kahn has been a citizen is a question not easy to determine here because of the doubt that was recently cast upon his American citizenship by a protest against his being to cast a vote last year and by his failure - the announced cause being physical indisposition - to cast his vote. If Mr. Kahn is a citizen of the United States (a status that will be readily proclaimed upon proof that he is), that probably increases the number of his citizenships to three. He was a German citizen by birth, and served in the German Army. And in 1914, in August, at the time of the outbreak of the European War, when efforts were being made, which afterwards succeeded, to put Paul M. Warburg, a member of the firm of Kuhn, Loeb & Company, on the Federal Reserve Board, Mr. Warburg testified that at that time Mr. Kahn was not a citizen of the United States.
Senator Bristow - "How many of these partners are American citizens, or are they all American citizens.
Mr. Warburg - :They are all American citizens except Mr. Kahn." - (P. 7, Senate Hearings, August 1, 1914.)
Senator Bristow - "Now, the members of your firm, are they all American citizens except Mr. Kahn?"
Mr. Warburg - "Except Mr. Kahn, yes."
Senator Bristow - Was Mr. Kahn ever an American Citizen?"
Mr. Warburg - "No."
Senator Bristow - "He never was?"
Mr. Warburg - "No; he is a British subject."
The Chairman - "He lives in England, does he not?"
Mr. Warburg - "No. At one time he thought he would move to Europe, and that was when the question arose of his standing for Parliament; then he changed his mind and moved back to the United States."
Senator Bristow - "He was at one time a candidate, or a prospective candidate for Parliament, was he not?"
Mr. Warburg - "No; he was not; but there was talk about it; it had been suggested, and he had it in his mind. Something had been written about it in the papers." - ((P. 76, Senate Hearings, August 3, 1914.)
So if Mr. Kahn is a citizen of the United States now, which as a matter of fact has been disputed, then he has been a citizen of three countries, Germany and Great Britain being the other two.
Mr. Kahn, by the way, is one of those Jews whose adoption of another form of faith brings no denunciation whatever from the Jews themselves. A most peculiar circumstance! But doubtless not inexplicable. Mr. Kahn is not called a "renegade Jew" nor any of the other nasty names heaped upon Jewish converts to Christianity, because he does not deserve them. The would not fit him. He is not renegade. And he never was regarded for a moment by Jacob H. Schiff as anything but a Jew, else that "Prince of Israel" would not have chosen him to remain in America and run the business of Kuhn, Loeb & Company, at a time when it seemed undesirable to put the junior Schiff in full charge of it.
Doubtless it was Mr. Kahn's desire, just at the time Jacob Schiff made his wishes known, to go to England and stand for Parliament.
But from New York he fulfills, probably as well as he could from London, those mysterious missions that frequently take him to the Continent, at which times he makes what are regarded as certain authoritative decisions, though just whose decisions it is not always possible to say. In Paris particularly, and at points east thereof, Mr. Kahn has been established in the position of spokesman of the American Financial Hierarchy, which, of course, he is not. But he undoubtedly is the spokesmen of some group, possibly the group that so ably put through the Jewish program at the Peace Conference, the group that impressed Eastern Europe with the feeling that the United States of America was a very powerful Semitic empire. Mr. Kahn's trips abroad are usually unheralded, but their results richly repay observation.
A fourth member of the Jewish financial group in America (which is the form of statement that Mr. Chaim Weizmann would sanction, rather than to say "Jewish-American financiers") is Mr. Paul Warburg, to whose testimony we have just alluded.
Mr. Warburg is the most recent of all. He was born in Germany in 1868; he became an American citizen in 1911. He came to the United States for the express purpose of reforming our financial system, and it is hardly possible to understand fully the system in operation today without reference to Paul Warburg. He is a man of very fine mind, a money-maker, but something more - a shrewd student of the systems by which money is made. There are two types engaged in the mere work of money-making, which is better described as "money-getting," without reference to production; one type grubs away under whatever system obtains, regarding it as fixed as the solar system; another type is sufficiently detached to see the system as an artifice that may be mended, remodeled or supplanted altogether. Paul Warburg, scion of a long line of German Jewish bankers, is of the latter type. He is not content wit the fact that the cash-register fills itself with money; he wants also to know how the cash-register works, and whether it can be worked. He is thus a student of money and of the number of ways in which it can be manipulated.
Perhaps it will be best to let him tell his own story as far as he goes. When he told it to the Committee on Banking and Currency of the United States Senate in executive session, there was some dispute as to whether the proceedings should be recorded by stenographer. It was finally agreed that notes should be made but should not be divulged. The testimony was printed, "in confidence" on August 5, 1914, and nominally "made public" on August 12.
The Warburgs are one of the international families whose importance was not realized until the war, and would not have been realized then if their internationalism had not been so apparent. It was an interesting spectacle to see brothers occupying important places of counsel on either side of the great struggle.
Paul Warburg learned the rudiments of banking in his father's bank at Hamburg, Germany, studying the over-sea trade that is the foundation of that city's business. The banking house of Warburg in Hamburg dates from 1796.
"After that I went to England, where I stayed for two years, first in the banking and discount firm of Samuel Montague & Company, and after that I took the opportunity of staying two months in the office of a stockbroker in order to learn that part of the business.
"After that I went to France, where I stayed in a French bank, so that --"
The Chairman - "What French bank was that?"
Mr. Warburg - "It is the Russian bank for foreign trade, which has an agency in Paris."
"And after that I went back to Hamburg and worked there again for a year, I think.
"Then I went round to India, China and Japan.
"And then I came to this country for the firs time in 1893. I stayed here only a short time, then, and went back to Hamburg, and then became a partner of the firm in Hamburg."
The Chairman - "How long were you in Hamburg then in the banking business?"
Mr. Warburg - "Until 1902 . . . . And then I moved over here to this country to become a partner of Kuhn, Loeb & Company.
"I explained in the curriculum that I gave you, Mr. Chairman, that by marriage I am related to members of the firm, the late Mr. Loeb having been my father-in-law, which brought about a desire on the part of the family to bring me over here . . . . I ought to say that I got married in this country in 1895 and that I have been in this country every year since, for several months. . . . That is the history of my banking education."
It will be recalled that Jacob H. Schiff also married a daughter of Mr. Loeb, so that Mr. Warburg married the sister of Mrs. Jacob H. Schiff. Felix Warburg, Paul's brother, who is also in the firm, married Mr. Schiff's daughter.
Mr. Warburg immediately cast a critical eye upon the state of financial affairs in the United States and it is significant of the grasp he already had on such matters that he found the country rather behind the times.
He conceived the ambition - the very daring ambition - of taking hold of the United States' monetary system and making it what he though it ought to be.
This alone would make him a remarkable man. It illustrates very well that detached point of view that the Jew is more fitted to take than any other man perhaps. He sees countries and systems with the same freedom from intimate bias with which another man would view assorted fish upon a market stall. Most of the world is engaged in doing its work and indulging its national, racial, domestic and social affections and inclinations; a small minority stands in the background and watches the entire mass at its unconscious maneuvers, and studies it as an observer studies a hive of bees. The man at work has no time except for his job. One man, standing back and studying 1,000 men at work, is able to see how he might utilize their labor or possess himself of a first toll on their production. Doubtless there must be men to stand at a sufficient distance from things to get a correct idea of their interrelationship, and doubtless such an attitude may be made of great service to the race, but doubtless it has also contributed to the selfish manipulation of natural and social processes.
Mr. Warburg testified: "When I came here I was at once impressed by the lack of system, by the old-fashioned nature of the system that prevailed here; and I got immediately into one of those periods of high interest rates, where call money went up to 25 and 100 percent; and I wrote an article on the subject then and there for my own benefit.
"I was not here three weeks before I was trying to explain to myself the roots of the evil. I showed the article to a few friends but I kept in my desk, because I did not want to be one of those who try to inform and educate the country after they have been here for a month or so; and I kept that article until the end of 1906, shortly before the panic, when those conditions arose again, and when one newspaper wanted for an issue at the end of the year an article dealing with the conditions in our country.
"Then I took out that article and touched it up and brought it up to date; and that was the first article of mine that was published. It was called, 'Defects and Needs of Our Banking System.'. . .
"That was, however, the first time that I know of that the question of the discount system and the concentration of reserves was really brought out; and I got a great many encouraging letters asking me to go on and explain my ideas."
Mr. Warburg was perfectly willing to talk to the committee about himself, but not about Kuhn, Loeb & Company, his firm.
"I cannot discuss the affairs of my firm nor my partners," he said, "nor be asked to criticize acts of my partners, either to approve them or in any other way," but eventually he did tell a number of things that students of American financial affairs have considered interesting. Of which more later.
On page 77 of the testimony, more personal matters appear:
Senator Bristow - " When did you become a citizen of the United States, Mr. Warburg?"
Mr. Warburg - "1911. Did I not answer that?"
Senator Bristow - "Perhaps so. Did you intend to become a citizen when you came to the United States in 1902?"
Mr. Warburg - "I had no definite intentions then, because some of the reasons that brought me over here were family reasons; . . . . That had a good deal to do with my first coming here; and I was not sure at all that I would stay here when I came."
Senator Bristow - "When did you decide to become a citizen of the United States?"
Mr. Warburg - "In 1908, when I took out my papers."
Senator Bristow - "When you took out your first papers? You took out your second papers then, in 1911?"
Mr. Warburg - "Yes."
Senator Bristow - "You made your declaration in 1908; that is you decided to become an American citizen?"
Mr. Warburg - "Yes."
Senator Bristow - "Why did you wait as long as you did after you came to this country, before deciding to become a citizen of this country?"
Mr. Warburg - "I think that a man that does not come here as an immigrant; a man who has had, if you may call it such, a prominent position in his own country, will not give up his nationality so easily as a man who comes over here knowing that he does not care for his own country at all. I had been a very loyal citizen of my own country; and I think that a man who hesitates in giving up his own nationality and taking a new one, is apt to be more loyal to his new country when he does change his nationality than a man who gives up his old country more lightly."
Senator Bristow - "Yes,"
Mr. Warburg - "I may add this: That a thing that had a great deal of influence on my making up my mind to remain in this country and work here, and become a part and parcel of this country, was that monetary reform work, for I felt I had a distinct duty to perform here; and I thought I could do that; and in fact I have been working on it since 1906 or 1907.
"Then I felt that it was the right thing for me to become an American citizen and work here and throw in my lot definitely with this country."
Senator Bristow - "When you became an American citizen; and the motive that induced you to become an American citizen was, then, as I understand it, largely with a view of laboring to bring about a reform of the American monetary system?"
Mr. Warburg - "Well, you put it nearly exclusively on that. I think a man wants to feel that he is going to do some useful work in his country; that he has a mission to perform; and that is what happened to me . . . . Moreover, I had been long enough in this country then to have thoroughly taken root and feel that I was a part and parcel of it."
Senator Bristow - "Yes. When did you first become active in promoting the monetary reforms in the United States?"
Mr. Warburg - "1906."
Senator Bristow - "What was your method of promoting your ideas with regard to monetary reforms?"
Mr. Warburg - "Mainly writing."
Senator Bristow - "Were you connected with the Monetary Commission?"
Mr. Warburg - "No, not directly . . . . "
Senator Bristow - "Were you consulted in regard to the report of the Monetary Commission in any way?"
Mr. Warburg - "Yes, Senator Aldrich consulted with me about details, and I gave him my advice freely."
Senator Bristow - "And in regard to the bill that was prepared by Senator Aldrich in connection with the commission, were you consulted in regard to that?"
Mr. Warburg - "Yes.
Senator Bristow - "What part did you have in the preparation of that bill, directly or indirectly?"
Mr. Warburg - "Well, only that I gave the best advice that I could give."
Most readers will recall that the name of "Aldrich" was, a few years ago, the synonym for the money power in government. Senator Aldrich was an able man and a tireless worker. His character for thoroughness and industry did more than anything else to disabuse the popular mind of the notion that such men were mere "tools of the money interest," or engaged in their work out of lust for gain, or out of sheer pleasure in legislating against the interests of the people. Senator Aldrich led on tariff and financial matters because he understood them; and he understood them by tireless study of them; and, therefore, he was the master of other men who had not paid the price of knowledge. But he understood these matters from the standpoint of the business interests only. He was sincerely desirous of the prosperity of the country, but that prosperity was written in banking balances. Fifteen years ago it might not have been possible to judge him thus calmly, because then he represented in the public mind, more than any individual does today, the concentrated power of the financial group. Their prosperity was his first care, possibly because he believed that their prosperity was also the country's.
It was such a man, then, that came to Mr. Warburg for advice. The labors of Senator Aldrich comprise many volumes of difficult material and Senator Aldrich's appeal to Mr. Warburg was a very high compliment to the quality of the latter's mind and financial experience - this, of course, assuming that Mr. Warburg's counsel was not forced upon the Aldrich committee by the New York money interests.
In his testimony, Mr. Warburg did not tell all. The omission, however, was supplied by an article in Leslie's Weekly in 1916, the author being B. C. Forbes.
It is a story of which Current Opinion said: "It reads like the opening in a shilling shocker."
It appears that the conferences between Mr. Warburg and Senator Aldrich took place on an isolated island off the coast of Georgia - Jekyl Island. Included in the party, besides Senator Aldrich and Mr. Warburg, were two New York bankers and the then Assistant Treasurer of the United States. The mysteriousness of it all was well brought out by Mr. Forbes:
"Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundreds of miles south, embarking on a mysterious launch, sneaking out to an island deserted by all but a few servants, living there a full week under such rigid secrecy that the name of not one of them was once mentioned lest servitors learn their identity and disclose to the world this strangest, most secret episode in the history of American finance.
"The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car that the railroad had received orders to draw up at an unfrequented platform. Drawn blinds balked any peering eyes that might be around. Off the party set. New York's ubiquitous reporters had been foiled. So far so good. After bowling along the railroad hour after hour into southern country, the order was given to prepare to disembark.
"Stepping from the car when the station had been well cleared of travelers, the members of the expedition embarked in a small boat. Silence reigned, for the boatmen must not find out how distinguished were their passengers.
"In due time they drew up at another deserted pier. They were at Jekyl Island, off Georgia. The island was entirely unpeopled save for half a dozen servants.
"'The servants must under no circumstances learn who we are,' cautioned Senator Aldrich.
"'What can we do to fool them?' asked another member of the group. The problem was discussed.
"'I have it,' cried one. 'Let's all call each other by our first names. Don't ever let us mention our last names.'
"It was so agreed.
"The dignified veteran Senator Aldrich, king of Rhode Island and a power second to none in the United States Senate, became just 'Nelson'; . . . . and the quiet, scholarly member of the powerful international banking firm of Kuhn, Loeb & Company, became 'Paul.'
"Nelson had meanwhile confided to Harry, Frank, Paul and Piatt that he was to keep them locked up on Jekyl Island, cut off from the rest of the world, until they had evolved and compiled a scientific currency system for the United States, a system that would embody all that was best in Europe, yet so modeled that it could serve a country measuring thousands where European countries measured only hundreds of miles."
Mr. Forbes does not omit to write this further description of Mr. Warburg's condition at the time: "unable then to speak idiomatic English with perfect freedom and without an accent, an alien not naturalized."
Mr. Forbes also wrote - "Here is a German-American, but the sort of one that makes the hyphen look like a badge of honor."
That was in 1916. Hyphens went out of fashion, though not entirely out of use, soon after.
Thus far the story of Paul Warburg.