[A-List] Manuel and Saddam, Benito and Adolf

[Bill Totten <shimogamo@xxxxxxxxxxxxx>]

We often hear today about the Anglo-American empire waging war on tyrants that
it had earlier put in power or otherwise sponsored. Manuel Noriega, Saddam
Hussein, and the Taliban of bin Laden are prominent examples. In his book, A
Century Of War: Anglo-American Oil Politics and the New World Order (revised
edition, Pluto Press, 2004), F William Engdahl says we also should include
Benito Mussolini and Adolf Hitler in the list of tyrants who rose under the
sporsorship of the Anglo-American empire and later fell (along with millions
of innocent bystanders) to its military.

The following is from the section entitled "Deterding, Montagu Norman, and
Schacht's Hitler Project from Chapter Six of that book. Engdahl's notes are
identified by <>. I have inserted supplementary information from earlier parts
of the book in curly brackets, {}, just before the last paragraph below.
- Bill Totten



The unstable international monetary order imposed after Versailles by London and
New York bankers on a defeated central Europe came to an abrupt, if predictable,
end in 1929. Montagu Norman, then the world's most influential central banker as
governor of the Bank of England, precipitated the crash of the Wall Street stock
market in October 1929. Norman had asked the governor of the New York Federal
Reserve Bank, George Harrison, to raise US interest rate levels. Harrison
complied, and the most dramatic financial and economic collapse in US history
ensued in the following months.

By early 1931, Montagu Norman and a small circle in the British establishment
had plans to shift the political dynamic in central Europe in a most astonishing
manner. At the time, Austria's largest banking institution was the Creditanstalt
of Vienna. Closely tied to the Austrian branch of the house of Rothschild, the
Creditanstalt had grown during the 1920s through an unhealthy process of merging
smaller troubled banks. The largest such merger was forced onto Creditanstalt
during the month of the October 1929 stock market crash, when it was asked by
the authorities to take over the Vienna Bodenkreditanstalt, a real estate lender
which itself had swallowed several other unhealthy banks in the previous years.

At the beginning of 1931, Creditanstalt appeared to the world to be one of the
mightiest of world banks. In reality, it was one of the sickest. The draconian
Versailles conditions imposed by Britain, France and the United States had
dismantled the Austro-Hungarian Empire, isolating Austria's economy from the
valuable economic ties and raw materials of Hungary and the lands of eastern
Europe. Austria's industrial economy had never recovered from the devastation of
the First World War. Industry had run-down plants, outmoded equipment and huge
unredeemable war loans. The political circumstances in Austria in the 1920s had
led major parts of insolvent Austrian industry to pass into the hands of the
ever-larger Creditanstalt.

Thus, by early 1931, Austria in general, and the Vienna Creditanstalt in
particular, were the weak links of an international credit chain which had been
built under the unhealthy foundation set by the New York banking firm of J P
Morgan, in concert with the Bank of England and the London banks. Creditanstalt
was unable to generate sufficient capital for its activities from the depressed
Austrian economy and had become largely dependent on very short-term borrowings
from London and New York to finance its activities. The Bank of England itself
was actually a significant lender to Creditanstalt.

In March 1931, the French government and French Foreign Minister Briand declared
themselves in determined opposition to announced negotiations between Berlin and
Vienna for the forming of an Austro-German trade and customs union, a belated
attempt to counter a growing world economic depression that had begun in America
some months earlier. France reportedly ordered its banks to cut short-term
credit lines to Creditanstalt, in a bid to bring pressure to bear on the
Austrian government. What ensued that May, as rumors of a run on the deposits of
Creditanstalt broke in the Vienna press, was a credit crisis which shook all of
Europe. The Austrian National Bank, and ultimately the Austrian state, were
forced to come to the rescue of the Creditanstalt, in what became the largest
bank failure in history. Subsequent examination revealed that the crisis need
never have reached such dramatic dimensions. It was intended  to do so by
certain powerful London and New York financiers who were preparing a dramatic
shift in European geopolitics. <12>  By the end of the 1920s, influential
circles in Britain and the United States had decided to back a radical course
for Germany.

J P Morgan bankers had already proved to themselves the usefulness of radical
top-down political solutions to ensure repayment of bank loans, when they gave
foreign credit to the fascist regime of Italian strongman Benito Mussolini. In
November 1925, Italian Finance Minister Volpi di Misurata announced that the
Mussolini government had reached an agreement on repaying the Versailles war
debts of Italy to Britain and the United States. One week later, J P Morgan &
Company, financial agents of the Mussolini government in the United  States,
announced a crucial $100 million loan to Italy to 'stabilize the lira'.

In reality, Morgan had decided to stabilize Mussolini's fascist regime. On the
urging of J P Morgan & Company and Montagu Norman, governor of the Bank of
England, Volpi di Misurata established in 1926 a single Italian central bank,
the Bank of Italy, to control national monetary policy and further ensure
repayment of foreign debts. Mussolini had shown himself to be the ideal
strongman to discipline Italian labor unions, drive down wages and enforce
sufficient austerity to guarantee foreign bank lending, or so thought Morgan's
people in New York.

The man who controlled US monetary policy at the time, former Morgan banker
Benjamin Strong, an intimate personal friend and collaborator of Britain's
Montagu Norman, met with Volpi and the Bank of Italy governor, Bonaldo Stringher,
to confirm the final details of the Italian 'stabilization' program. From Poland
to Romania during the 1920s, the same combination of powerful persons - J P
Morgan & Company, Montagu Norman and the New York Federal Reserve - organized
effective economic control over most countries of Continental Europe, under the
pretext of the establishment of 'creditworthy' national policies - an informal
precursor of the role of the International Monetary Fund in the 1980s. The New
York banks were the source of the significant short-term capital for this
lending, and the Bank of England, together with the British Foreign Office
establishment, provided the political experience to impose the policy. <13>

The most concentrated efforts of this Anglo-Saxon circle were focused on Germany
during the 1920s. Following the successful imposition of Hjalmar Schacht as
president of the Reichsbank in 1923, and Schacht's implementation of the
draconian Dawes Plan of war reparations repayment, drafted by Morgan & Company,
the German economy during the 1920s became dependent on short-term loans from
London and New York banks and their collaborators in Paris. For the banks, these
German short-term credits were the most lucrative in the entire world financial
markets of the day. For many of Germany's banks, including the fourth-largest,
Darmstadter und Nationalbank Kommandit-Gesellschaft (Danat), dependence on
short-term New York and London capital borrowings had become substantial, and at
punitively high interest rates. The Weimar hyperinflation had largely destroyed
the capital and reserves of major German banks during the early part of the
decade. Thus the expansion of German bank lending during the late 1920s was by
banks with a precariously small capital base in the event of loan default or
other crises. Germany stood unique among major European industrial countries by
the time of the 1929-30 New York stock market collapse. She owed international
bank creditors an estimated sixteen billion Reichsmarks in such short-term debts.

This unsound banking structure required only a small push to topple it in its
entirety. The push came from the New York Federal Reserve and the Bank of
England, which, in a series of moves in 1929, raised their interest rates
following more than two years of unprecedented stock market speculation as they
pursued ever lower interest rates. The predictable crash in the New York stock
market and the London market led to a massive withdrawal of US and British
banking funds from Germany and Austria. By May 13 1931, the fuse was ready for
the torch.

On that day, the large Vienna Creditanstalt collapsed. The French had decided to
'punish' Austria for entering into customs union talks with Germany by imposing
currency sanctions. Creditanstalt was a Rothschild bank with heavy ties to
French banking. As French funds were recalled from Austria, this toppled the
fragile Creditanstalt the largest Austrian bank, which had large interests in
some seventy per cent of Austria's industry. To attempt to stop the run on the
Creditanstalt, Austrian banks called in all funds they had in German banks.
Creditanstalt was the weak link which started the domino collapse of banking
throughout central Europe.

The ensuing banking crisis, economic depression and the related tragic
developments in Austria and Germany were dictated virtually to the letter by
Montagu Norman of the Bank of England, the governor of the New York Federal
Reserve, George Harrison, and the house of Morgan and friends in Wall Street. A
decision had been made to cut all credits to Germany, though even a minimal
roll-over of nominally small sums would probably have stopped the crisis from
erupting out of control at this early stage.

Instead, capital began to flow out of Germany in ever greater amounts. On the
demand of Montagu Norman and George Harrison a new Reichsbank President, Hans
Luther, dutifully abstained from doing anything to stop the collapse of the
large German banks. The immediate consequence of the Creditanstalt collapse in
Vienna was the related failure of the Danat-Bank of Germany. The Danat-Bank,
heavily dependent on foreign credits, lost almost 100 million Reichsmarks of
deposits that May. The next month, Danat lost 848 million Reichsmarks, or forty
per cent of all the deposits it held while Dresdner Bank lost ten per cent and
even Deutsche Bank lost eight per cent of its deposits. By late June, Bankers
Trust, a Morgan bank, cut the credit line to Deutsche Bank.

Harrison demanded that Reichsbank head Hans Luther impose rigorous credit
austerity and tightening in the German capital markets claiming that this was
the only way to stop the flight of foreign capital. What it ensured was the
overall collapse of the German banking system and industry into the worst
depression imaginable.

Montagu Norman backed Harrison, and the governor of the Bank of France joined
them in blaming Germany for the crisis. Desperate last-minute efforts by the
Bruning government to persuade Luther to seek an emergency stabilization credit
from other central banks to contain the national banking crisis were, as a
result, refused by Luther. When he finally capitulated and asked Montagu Norman
for help, Norman slammed the door in his face. Germany as a consequence no
longer effectively had any lender of last resort.

By July 1931, some two months after the collapse of the Vienna Creditanstalt had
initiated the flight of capital out of Germany, the Basle Nationalzeitung
reported that the Danat-Bank was 'in difficulties', which was sufficient in the
electric climate to trigger a full panic run on that bank. The bank's chairman,
Goldschmidt, later charged that the Reichsbank had selectively precipitated his
bank's failure with discriminatory credit rationing. The ensuing banking crisis
and collapse of industry created in Germany in the winter of 1931-32 what was
said to be 'the hardest winter in one hundred years'. It was the breeding ground
for radical political alternatives.

In March 1930, some months before the credit cutoff against Germany was imposed
by the Anglo-American bankers, Reichsbank president Hjalmar Schacht surprised
the government by handing in his resignation. The actual issue he resigned over
was the offer of an emergency stabilization credit of 500 million Reichsmarks,
which the Berlin government had been offered by the Swedish industrialist and
financier, Ivar Kreuger, the famous Swedish 'match king'. Kreuger and his
American bankers, Lee Higginson & Company, were major lenders to Germany and
other countries that had been cut off by the London and New York banks. But
Kreuger's loan offer of early 1930 had explosive and unacceptable political
consequences for the long-term strategy of Montagu Norman's friends. German
Finance Minister Rudolf Hilferding urged Schacht, who, under the terms of the
Dawes reparations plan, had to approve all foreign loans, to accept the Kreuger
loan. Schacht refused and on March 6 handed Reichspresident von Hindenburg his
resignation. Schacht had other duties to tend to.

Kreuger himself was found dead some months later, in early 1932 in his Paris
hotel room. Official autopsy registered the death as suicide, but detailed
inquiry by Swedish researchers decades later made a conclusive case that Kreuger
had been murdered. The persons who stood to gain most from Kreuger's death were
in London and New York, though the actual details will likely remain buried
along with Kreuger. With Kreuger's death ended also Germany's hope for relief.
She was totally cut off from international credit. <14>

For his part, Schacht was anything but idle after his resignation from the
Reichsbank. He devoted his full energies to organizing financial support for the
man he and his close friend, Bank of England governor Norman, agreed was the man
for Germany's crisis.

Since 1926 Schacht had secretly been a backer of the radical National Socialist
German workers' Party (NSDAP) or Nazi party of Adolf Hitler. After resigning his
Reichsbank post, Schacht acted as a key liaison between powerful, but skeptical,
German industrial leaders, the so-called 'Schlotbarone' of the Ruhr, and foreign
financial leaders, especially Britain's Lord Norman.

British policy at this juncture was to create the 'Hitler Project', knowing
fully what its ultimate geopolitical and military direction would be. As Colonel
David Stirling, the founder of Britain's elite Special Air Services, related in
a private discussion almost half a century later, 'The greatest mistake we
British did was to think we could play the German Empire against the Russian
Empire, and have them bleed one another to death'.

The British support for the Hitler option reached to the very highest levels. It
included Britain's prime minister, Neville Chamberlain, the man infamous for the
1938 Munich appeasement which set Hitler's armies marching to Sudetenland in the
east. Philip Kerr (later Lord Lothian), of the Cecil Rhodes Round Table group
which we met earlier, was a close adviser to Neville Chamberlain. Lothian backed
the Hitler project as part of the infamous Cliveden set in British circles, as
did Lord Beaverbrook, the most influential British press magnate of the day, who
controlled the mass-circulation Daily Express and Evening Standard. But perhaps
the most influential backer of Hitler's movement at this time in Britain was the
Prince of Wales, who became Edward VIII in early 1936, until his abdication at
the end of the same year.

Certain influential American establishment figures were hardly ignorant of what
the Hitler movement was about. Leading Wall Street and US State Department
circles had been informed from an early stage. Even before the ill-fated 1923
Munich 'beer hall putsch', a US State Department official stationed in Munich as
part of the Versailles occupation of Germany, Robert Murphy, later a central
figure in the postwar Bilderberg group, personally met the young Hitler through
General Erich Ludendorff. Murphy, who had served under Allen Dulles in Berne
during the First World War, gathering intelligence on the German Reich, was in
Munich with another influential US government official, Truman Smith, assigned
to US Army intelligence occupying Germany.

In his memoirs, Smith later recalled his arrival in Munich in late 1922:

I talked at length about National Socialism with the Munich Consul, Mr Robert
Murphy (later a very distinguished American Ambassador), General Erich
Ludendorff, Crown Prince Rupert of Bavaria and Alfred Rosenberg. The latter
later became the political philosopher of the Nazi party. On this visit I also
saw much of Ernst F S ('Putzi') Hanfstaengl, of the well-known Munich art family.
'Putzi' was a Harvard graduate and later became Hitler's foreign press chief ...
My interview with Hitler lasted some hours. The  diary I kept in Munich
indicates I was deeply impressed by his personality and thought it likely
that he would play an important part in German politics.


In his November 1922 report to his superiors in Washington, Smith filed the
following recommendation regarding his evaluation of the tiny Hitler group.
Speaking of Hitler, Smith said:

His basic aim is the overthrow of Marxism ... and the winning of labor to the
nationalist ideals of state and property ... The clash of party interests has ...
demonstrated the impossibility of Germany's rescue from her present difficulties
through democracy. His movement aims at the establishment of a national
dictatorship through non-parliamentary means. Once achieved, he demands that
the reparations demands be reduced to a possible figure, but that done, the sum
agreed on to be paid to the last Pfennig, as a matter of national honor. To
accomplish this the dictator must introduce universal reparations service and
enforce it with the whole force of the state. His power during the period of
fulfillment cannot be hampered by any legislature or popular assembly ...


To ensure that his colleagues in Washington's Division of Military intelligence
got the point, Smith added his personal evaluation of Hitler:  'In private
conversation he disclosed himself as a forceful and logical speaker, which, when
tempered with a fanatical earnestness, makes a very deep impression on a neutral
listener'. <15>


In late autumn of 1931, a man arrived at London's Liverpool Street railway
station from Germany. His name was Alfred Rosenberg. Rosenberg met with the
editor in chief of the influential London Times, Geoffrey Dawson. The Times gave
Hitler's movement invaluable positive international publicity in the coming
months. But the most important meeting Rosenberg had during this first England
visit in 1931 was with Montagu Norman, governor of the Bank of England, and
arguably the most influential figure of the day in world finance. Norman had
three hatreds, according to his trusted personal secretary - the French, the
Catholics and the Jews. Norman and Rosenberg found no difficulty in their talks
together. The introduction to Norman had come through Hjalmar Schacht. From
their first meeting in 1924, Schacht and Norman developed a friendship which
lasted until Norman's death in 1945.

Rosenberg concluded his fateful London visit with a meeting with a leading
person of the London Schroeder Bank, which was affiliated with J H Schroeder
Bank in New York and with the Cologne-based private bank, J H Stein of Baron
Kurt von Schroeder. The man whom Rosenberg met from Schroeder Bank in London was
F C Tiarks, who was also a member of the Bank of England directorate and a close
friend of Montagu Norman.

As Baron von Schroeder and Hjalmar Schacht went to leading German industrial and
financial figures to secure support for the NSDAP after 1931, the first question
of nervous and skeptical industrialists was, 'How does international finance,
and especially Montagu Norman, regard the prospect of a German government under
Hitler?'  Was Norman prepared to come in with financial credit for Germany in
such an event?  The reality is that at this critical juncture, when Hitler's
NSDAP had little more than six million votes in the 1930 elections, the
international backing of Montagu Norman, Tiarks and friends in London was
decisive.

On January 4 1932, at the Cologne villa of Baron Kurt von Schroeder, Adolf
Hitler, von Papen and the Cologne banker, von Schroeder, secretly arranged
financing of Hitler's NSDAP, at that time de facto bankrupt with huge debts,
until the planned seizure of power by Hitler. Another meeting between Hitler and
Franz von Papen took place on January 4, 1933, at von Schroeder's Cologne villa,
at which the plan was finalized to topple the weak government of Schleicher and
build a right-wing coalition. On January 30 1933, Adolf Hitler became chancellor
of the Reich.

The final London visit of Alfred Rosenberg was in May 1933, this time as one of
the inner figures in the new Hitler government. He went directly to the country
home in Buckhurst Park in Ascot of Sir Henri Deterding, the head of Royal Dutch
Shell and arguably the world's most influential businessman. According to
English press accounts, the two had a warm and eventful discussion. Rosenberg
had first met Deterding during his 1931 London trip. Royal Dutch Shell had
intimate contact with, and provided support for the German NSDAP. Though the
details were kept secret, reliable British reports of the day were that
Deterding had provided substantial financial support to the Hitler project
in its critical early phases.

{Engdahl says on pages 58 and 62 of the book that Royal Dutch Shell was covertly
owned by the British Government, and says on page 59 that Deterding served as a
trusted agent of British secret intelligence.}

While Norman and the Bank of England had adamantly refused to advance a pfennig
of credit to Germany at the critical period in 1931 (thus precipitating the
banking and unemployment crisis which made desperate alternatives such as Hitler
even thinkable to leading circles in Germany), as soon as Hitler had
consolidated power, in early 1933, the same Montagu Norman moved with indecent
haste to reward the Hitler government with vital Bank of England credit. Norman
made a special visit to Berlin in May 1934 to arrange further secret financial
stabilization for the new regime. Hitler had responded by making Norman's dear
friend Schacht his minister of economics as well as president of the Reichsbank.
The latter post Schacht held until 1939. <16>

Notes:

12. Dieter Stiefel. Finanzdiplomatie und Weltwirtschaftskrise: Die Krise der
Creditanstalt fur Handel und Gewerbe, 1931. Frankfurt a.M.: Fritz Knapp Verlag,
1989.

13. Richard H Meyer. Bankers' Diplomacy: Monetary Stabilization in the 1920's.
New York: Columbia University Press, 1970.

14. Lars-Jonas Angstrom. 'Ivar Kreuger blev mordad!' Svenska Marknaden.
August 1987. Stockholm.

15. Truman Smith. Berlin Alert: The Memoirs and Reports of Truman Smith.
Stanford California: Hoover Institution Press, 1984.

16. Among the more useful references for this little-discussed topic are J and S
Pool. 'Hitlers Wegbereiter zur Macht: Die geheimen deutschen und internationalen
Geldquellen, die Hitlers Aufsteig zur Macht ermoglichten'.  Munchen: Scherz
Verlag, 1979; Heinz, Pentrzlin. 'Hjalmar Schacht'. Berlin: Verlag Ullstein GmbH,
1980; Also useful is Harold James. The German Slump: Politics and Economics
1924-1936. Oxford: Clarendon Press, 1986.


Also see "Bush - Nazi Dealings Continued Until 1951 - Federal Documents" by John
Buchanan and Stacey Michael, The New Hampshire Gazette, Volume 248 Number 3
(November 07 2003) at
http://www.nhgazette.com/cgi-bin/NHGstore.cgi?user_action=detail&catalogno=NN_Bush_Nazi_2



Bill Totten     http://billtotten.blogspot.com/