M.G. Levey: The History of Dirty-Tricks (Part III)
The History of Dirty-Tricks (Part III): Who Gained From Old Europe's Self-Destruction?
By Mark G. Levey
The Bush Dynasty has reached the end of the line. The family name may go down in history along with the Romanovs as the embodiment of Imperial squander and ill-advised military bungling. George W. Bush is America's Nicholas the Last.
The aggregation of debt by the U.S. Treasury during the course of the Iraq war may reach $1 trillion. That trillion would make a fine sarcophagus for the Bush family -- if piled into bricks of singles it would make a pharaohic pyramid, 300 ft. high by thousand feet on each side. That's some serious squander.
But, it's also a bloody great fortune for the international bankers who are going to bundle this debt, and milk the U.S. taxpayer to pay it off. That's the cost when you lose a war. Just ask Russia and Germany after both were bankrupted by bad management more than once this past century.
As we see, below, these things don't happen entirely without planning and purpose. National ruin tends to follow the same predictable, repeating pattern.
Czar Nicholas II inherited the Great Power ambitions of his ill-fated ancestors, most of whom had been assassinated by their own secret police, as well as the Russian Empire's spectacular overstretch in the Balkans. He was a considerably less capable Commander-in-Chief than his father, Alexander III.
In the vacuum of leadership that attended Nicholas's reign (1897-1917), factional strife within his intelligence services ran wild. This lack of command and control over foreign operations of the Okhrana, already accustomed to a swaggering domestic role as semi-autonomous Court Police, led to the Okhrana's heavy hand in the assassination on July 24, 1914 of Archduke Ferdinand of Austria at Sarajevo. This assassination, of course, directly triggered World War One resulting in the fall of the Russian Imperial Dynasty. As will be discussed in the chapters below, this was hardly the first regicide carried out by the Okhrana – the Czar's Guard had exercised their police powers on a number of occasions since the 1700s, usually to terminate overly-ambitious members of the Romanov clan. There is considerable evidence that the Czar's intelligence service – either an ultra-nationalist faction within it or the element that served Berlin (the Okhrana's other master), over the previous two centuries – preemptively started World War One before Russia was fully prepared to fight.
By 1914, Russia's relations with Prussia, its historical trading partner and banker, had long been strained. Russian nationalists became assertive after Germany raised protective tariffs in 1878, leading to a crippling of Russian export earnings, particularly for agricultural goods and textiles that provided the bulk of the income that supported the Czar and the landed gentry. Rising tensions were also, in no small part, due to the provocations committed by the Okhrana, after its operations were expanded into a truly modern, international agency in 1881. In an environment of a mounting trade war with Germany, a series of inflammatory forgeries appeared, the "Ferdinand documents", which seemed to implicate the German Kaiser in a plot to take over the Bulgarian throne and the Balkan states. The source of these “Kuriosnye dokumenty” , as Alexander III called them, was unbeknownst to the Czar at the time, his own secret policemen in the Paris Embassy under Ambassador Mohrenheim.
Nicholas had his own “Neo-con” problem, 9/11 and Iraq War
As will be seen in greater detail below, the seeds of war between Russia, Germany, and Austria-Hungary were planted in the mid-1880s. By the time of the Bosnian crisis of 1908-09, they had bloomed into armed skirmishing between proxy armies. The first round of this contest for the Balkans was a humiliating slap-down of Russia's south Slavic allies, Bulgaria and Serbia, by Turkish forces backed by Austria-Hungary and Germany. This did not long deter the ambitions of the southern trans-Slavs. In March 1912 a secret treaty was signed between Bulgaria and Serbia, stipulating that in the event of a war with Turkey, the Czar would mediate any disagreement between the two over the contested territory of Turkish Macedonia. When French President Poincare learned of the pact five months later, he exclaimed to the Russian Foreign Minister, "To tell you the truth, it is a convention for war. Moreover, the treaty contains the germ not only of a war against Turkey, but of a war against Austria"(E. Taylor (1963): 193-4). Such a war, as he knew, would inevitably involve Russia, and its ally of convenience, France, against Germany.
The first Balkan war erupted in October of that year, which spread to include a Serbo-Bulgarian coalition with Greece and Montenegro. The victors soon fell to fighting among themselves over captured Turkish land, at which point the Austrians, as announced, interceded on the side of the Turks, threatening direct military action to block Serbia's annexation of the newly-independent Albania, established under Austrian protection. The success of Russia's allies in the Balkans then prompted Germany to send military advisors to reorganize the Turkish Army. The Czar, sensing a threat to Russian access to the Black Sea through the Dardanelles straits, convened an imperial crown council in St. Petersburg on February 21, 1914, which concluded that the "historic aims" of the Russian Empire could be had only by way of a general European War. The Czar's war council, however, found that it would be at least two to three years before adequate war preparations could be made, and prescribed a course of diplomatic moderation until Russia was ready to move on Austria-Hungary and Germany. (See, A.J.P.Taylor, (1954) 509).
In apparent disregard of the Czar's policy of caution, the Czar's Ambassador to Belgrade, N. H. de Hartwig, and his military attaches, Colonel Victor Artamanov and Captain Alexander Werchovski, moved forward with an aggressive strategy of provocation. These three officials funneled arms and money to the Serbian "Black Hand" terrorist organization, also known as Union or Death. The direct liaison for Russian aid to the Serbian terrorists was Colonel Dragutin Dimitrijevic, code-name "Apis", head of the military intelligence section of the Serbian Army.
In Edmond Taylor's account, Captain Werchovski is identified as the Russian intelligence operations officer who controlled Dimiitrijevic's Black Hand organization during the crucial weeks leading up to the assassination. His superior, Colonel Artmananov, claims to have been on a prolonged vacation in Switzerland starting in June, while it is thought that Ambassador Hartwig may not have known the details of the murder plot in advance. Furthermore, the assassination proceeded despite the foreknowledge of the Serbian government. Altogether, it is certain that the assassination was not the isolated doing of a single gunman, or even of a small circle of young Serbian fanatics. According to Taylor:
The Serbian government, that is Apis' enemy, Prime Minister Pasic, learned of the assassination plot through a secret informer planted inside the Black Hand, and actually took official steps to block its execution. . . The warning could not expose the role of the Black Hand or give any details that would enable the Austrians to arrest the killers before they could strike – otherwise Pasic and the Serbian Minister would have been signing their own death warrants. Accidentally or not, the Serbian Minister (in Vienna) sabotaged Belgrade's instructions, by the vague and bumbling way in which he delivered the warning . . . Austrian red tape and schlamperei did the rest . . ." (Taylor, E., Ibid., p. 200)
For his own part in the crime, Dimitrijevic was executed later in 1914 before a Serbian Army firing squad later. Artmananov survived both World Wars and retired in Yugoslavia. Werchovski, remarkably, went on to be War Minister in Kerensky's government, and eventually to a high command in the Red Army.
Military Realists vs. Rogue Intelligence Operators
The ruinous consequences for Russia, as for all the monarchies of Central and Eastern Europe, that attended the split of the Romanovs from the Hohenhollenz, was clearly foreseen by some in the Okhrana. Even within the loosely-run Imperial Russian Guard, there remained a core of rational loyalists, who provided the Czar with realistic advise. To the end, Nicholas proved fatally distracted, and unable to utilize what good intelligence he did receive.
The Czar's ministers and generals were themselves deeply divided about the prospects for Russia in a war with Germany, most being profoundly unrealistic in the promises they made about a short, triumphant dash by the Russian Army to the Brandenburg Gates. On the other side were the realists, a germanophile circle that had been around former Finance Minister Segei Witte, dismissed in 1903 under pressure from slavophile nationalists led by Vyacheslav Plehve, the Interior Minister. Plehve would be blown up in 1904 by Azev, the Okhrana's chief undercover assassin.
Prominent within this conservative, Berlin-oriented faction was Peter Durnovo, who had been Okhrana chief from 1884-94, and then Minister of the Interior during the revolutionary 1905-06 period, before finally being appointed to the State Council, Russia's upper house, where he headed the Right Wing until his death in 1915. He remained unconvinced by the pretenses of the Great Slavs, and morbidly skeptical about conflict with the Germans, whom he knew to be the master of the game of provoking ill-advised Kings into premature attacks, as Napolean III learned when unprepared French forces were routed by Bismarck at Sedan in 1870.
Durnovo provides posterity with an amazingly realistic assessment of the ruinous debacle that was to come. During the Czar's February 1914 war council, he offered a powerful dissent to the drum beats of the War Party. Durnovo argued that the rationale being offered for war with Germany simply did not make sense -- strategically, financially, or politically -- for the old regime. Durnovo prepared a Memorandum to Nicholas II at the time of the War council, ((February 1914) reprinted in T. Riha, ed., Readings in Russian Civilization, Vol. II, Chicago: University of Chicago Press (second ed., revised, 1969), pp. 465-478)) in which he stated:
'The vital interests of Russia and Germany do not conflict . . . even from the viewpoint of new conquests, what can we gain from a victory over Germany? Possen or East Prussia? But why do we need these regions, densely populated as they are by Poles, when we find it difficult enough to manage our own Russian Poles? Why encourage centripetal tendencies . . . the Russians can not stifle?
As for the purported advantages of access to French loans over the terms offered by the Berlin banks, Durnovo observed, "German capital is more advantageous to us than any other. First and foremost, this capital is cheaper than any other." He cited "Germany's readiness to invest in enterprises which, because of their relatively small returns, are shunned by other foreign investors". From a balance of payments perspective, the accounts of the heavily-indebted Russian crown and the value of the ruble would have benefited had Russia not dumped its Berlin lenders. "As a result of that relative cheapness", of German capital, Durnovo argued, "its influx into Russia is attended by a smaller outflow of investor's profits from Russia, as compared with French and English investments." When one also considers the higher rate of German reinvestment, he concluded, the net result was "a larger amount of rubles remain in Russia."
The enmity created between the crown rulers of Germany and Russia, he stated, would bankrupt and destroy both. Durnovo predicted:
"war will demand such enormous expenditures that they will many times exceed the more than doubtful advantages to us of the abolition of the German (economic) domination. . . a struggle between Germany and Russia, regardless of its issue, is profoundly undesirable to both sides, as undoubtedly involving a weakening of the conservative principle in the world of which the above-named two great powers are the only reliable bulwarks . . . a general European war is mortally dangerous, both for Russia and Germany, no matter who wins.
His memo finally contains the prescient warning about the historical political consequences of war between Russia and Germany. Writing as a veteran intelligence analyst, Durnovo offered the following assessment:
"It is our firm conviction, based upon a long and careful study of all contemporary subversive tendencies, that there must inevitably break out in the defeated country a social revolution which, by the very nature of things, will spread to the country of the victor."
Revolutions from Above
Social revolution certainly was the result in both countries, and the major cause was subversion from above. This outcome was obviously not unforeseen in some quarters, which raises the questions of motive and loyalty behind the Paris Okhrana's actions. If the Paris agentura was not entirely serving the interests of the Czar – intentionally, functionally, or circumstantially -- then the question arises: who, aside from Mohrenheim (a minor scoundrel), did benefit from Okhrana terrorism, forgery and financial skullduggery?
A. Wall Street
William Nelson Cromwell
1. The Lawyers, 1879-1924
The source of some of the most outrageous domestic intrigue and international revolutionary conspiracy of the era was 42 Wall Street, the mahogany-lined law offices of Sullivan & Cromwell. Until his death in 1948 at the ripe old age of 94, founding partner William Nelson Cromwell was part court solicitor and part buccaneer-for-hire to the greatest Robber Barons of the day. In 1879, Cromwell, "the Fox", incorporated the Edison General Electric Company as a virtual monopoly over the American electric power industry, and did the same thing for Andrew Carnegie's United States Steel Corporation in 1901. Cromwell also orchestrated the enormous land grabs, strike-breaking, and corporate consolidations that led to Edward H. Harriman's takeover of the Union Pacific Railroad in 1898. In creating these trusts, Cromwell worked hand in glove with the premier Wall Street moneymen of the day, including J.P. Morgan, the Rockefellers, Kuhn Loeb & Co., Otto Kahn and Felix Warburg. Spending much of his time in Paris, Cromwell had close ties to the J. Henry Schroder banking house of London. Rightly dubbed, "Wall Street's lawyer to the world", he was instrumental in rounding up many of the largest syndicates of foreign investment in the United States.
So ruthlessly were the tactics of these syndicates in eliminating competitors and rigging prices in American markets, that even a conservative, Big-Business dominated Congress under Republican Senate majority leader Mark "Dollar" Hana was forced to pass the Sherman Anti-trust Act of 1890. What reform there was came despite the huge bribes that had been paid Hana by Cromwell and his cronies to Members on both sides of the isle over the years.
As notorious as his business tactics were inside the United States, it was in the realm of international finance and in engineering political revolutions abroad that Cromwell really set the world-class standard. In 1896, Cromwell was retained by Philippe Bunau-Varilla, chief engineer of the failed French Panama Canal construction company, the Compagnie Nouvelle Pour le Canal Interoceanic. Its predecessor, the Compagnie Universal, had squandered a quarter billion dollars, much of it the subscriptions of thousands of French small investors, in a futile attempt to build a sea-level canal without locks across the Isthmus of Panama. French supervisors and native laborers died by the droves of mosquito-borne diseases, and shares in the Companie seemed worthless. Nonetheless, Bunau-Varilla charged Cromwell with the task -- which The Fox initially judged "futile"-- of convincing the U.S. Government to pay $40 million for a pile of rusting construction equipment and the soon-to-expire development rights from the Colombian government.
In one of the most audacious feats of covert corporate-political warfare in history, Cromwell paid Hana a record bribe of $60,000 (which surpassed even the $50,000 given to the Republican Party leader to smooth the way for the U.S. Steel deal), then proceeded to put together a secret syndicate of middleman bankers – among others, Isaac Selig, Otto Kahn and Paul Warburg -- to surreptitiously buy up a controlling interest in the outstanding shares of "worthless" Compagnie stock at pennies on the dollar.
Beginning in 1902, $3.5 million was quietly paid out by a second syndicate organized by Cromwell that included J.P. Morgan and some of the largest bankers in New York along with a coterie of noted public officials, to repurchase these shares, bought up at the lowest price possible. When the Colombian government learned of the scheme, and balked at the terms in 1903, the deal seemed imperiled as the Colombians threatened to march on Colon in November to throw the Americans out and a crush a Panamanian revolt. At the same time, the scheme met with increasing resistance in Washington and in the press, led by Senator John Tyler Morgan (who had a stake in competing canal plan through Nicaragua) and Joseph Pulitizer, whose New York World newspaper had sought to expose the Panama conspiracy.
Cromwell then let loose his team of secret agents, lawyers, and bankers to spark a "nationalist" revolution in Panama. In the meantime, President McKinley, whose support had been lukewarm, no better, was gunned down by an anarchist in Buffalo, New York. After Teddy Roosevelt assumed office, things soon got back on track. As American war ships, dispatched as a "Big Stick" by Roosevelt, patrolled the waters off the Panamanian capitol of Colon in November 1903, Cromwell's agents bribed the Colombian Army, sending the officers and enlisted men on their way, pockets jangling with silver all the way back to Bogota.
Despite the ensuing scandal, most of the press hailed the revolution of the "Panama Patriots" as a triumph for American-style democracy, which indeed it was. The U.S. Congress voted to pay out the $40 million , and authorized another million in public underwriting for the bonds of the Panamanian railroad company owned by Cromwell. The distribution of the U.S. Government payments to stockholders and the Panamanians was, strangely, put in Cromwell's hands, rather than administered by the U.S. Treasury. The conspiracy's principal investors saw as high as a 1,250 percent return. For his $1.333 million investment, Cromwell personally took at least $18 million, a colossal fortune for that day, while his law firm billed the United States a further $832,449 in legal fees [LINK];
According to the account published in The New York World, Teddy Roosevelt, his brother in-law, Douglas Robinson, along with Henry W. Taft, brother of Republican Party candidate, William Howard Taft, shared in the windfall profits. For his part as pioneering investigative journalist, Joseph Pulitizer was forced to live on a boat as a fugitive and was finally indicted in 1908 by Teddy Roosevelt's attorney general on a charge of federal libel, a statute which the Supreme Court later found did not exist. It was nonetheless an expensive lesson about the wages of investigative journalism on Wall Street that most of the rest of the press learned on the spot. The scandal was soon forgotten after Teddy Roosevelt grabbed all the credit in his famous, "I took Panama" campaign speech during his unsuccessful 1912 attempt to return to the White House.
Official harassment and silencing of media critics was augmented by the tactic of outright purchase of public opinion. Mr. Bunau-Varilla, who originally retained Cromwell to sell the French canal, went on to buy Le Matin, the largest newspaper in France, which in 1914 became a vociferous advocate of war with Germany. This attitude of belligerency was inflamed by a generous subscription paid by the Paris Office of the Okhrana of tens of thousands of dollars each month dispensed to Bunau-Varilla, as well as the editors of other influential periodicals, including, the Echo de Paris, the Gallois, and the Figaro. By the 1930s, Bunau-Varilla had changed his mind about the Germans, and became one of France's most influential Fascist Fifth Columnists and a vocal supporter of Hitler .
2. The Lawyers, 1924-1952
With the great Panama conspiracy, Sullivan & Cromwell earned its reputation as the firm of choice for generations of ambitious lawyers and clients seeking fortune and power around the world. The World Wars provided the political and financial opportunity which S&C rode to global influence. Two partners, brothers, led the firm from War One until they left to marshal the Cold War. While America fought two wars with Germany, John Foster and Allen Dulles proved the best friends, and the best lawyers, that German industry and banks ever had.
John Foster, in particular, seemed born and bred to his role as the American Prime Minister. First in the 1908 class at Princeton, the grandson of John Foster, President Harrison's Secretary of State, and the nephew of Robert Lansing, who was Woodrow Wilson's Secretary from 1915-1920, John Foster Dulles molded himself quite consciously on the patrician model of a European statesman. The Dulles's were well prepared for their historic roles by birth, education, and position. Since the Revolutionary War, most leading American spies and diplomats had been lawyers, and John Foster was among the very best. Allen, a likable rogue, was careless – he often revealed secrets in an offhanded way, drank quite a lot, and was a notorious and compulsive womanizer – leading to breeches in security which would have many times ended the career of anyone less well connected.
Serving on a number of German corporate and bank boards, the Dulles brothers worked tirelessly from 1924 onwards to shelter German assets from seizure by U.S. and Allied governments and to keep the flow of money and commerce moving in both directions, even after Nazi Germany declared war on the United States of America. The Dulles brothers served as role model and mentor for several generations of international corporate lawyers. True to the profession's mercenary ethic, the brothers were a model of zealous service to those clients who could afford their services. With a total professionalism and moral detachment, the Dulles's were ideal lawyers, as described in the famous statement of Lord Henry Brougham:
"An advocate, in the discharge of his duty, knows but one person in all the world, and that person is his client . . . in performing this duty he must not regard the alarm, the torments, the destruction which he may bring upon others. Separating the duty of a patriot from an advocate, he must go on reckless of consequences, though it should be his unhappy fate to involve his country in confusion."See David Luban, "The Fundamental Dilemma of Lawyering: The Ethics of the Hired Gun", in Richard L. Abel (ed.), LAWYERS: A Critical Reader. New York: The New Press (1997) at page 4.
James Srodes, in his sympathetic biography of Allen Dulles, writes that Cromwell "gloried in the identification of the firm with his chosen protégé, Foster Dulles, the acknowledge expert on such matters." German war reparations and loans to the allies, structured by the Dulles brothers so that the U.S. Treasury guaranteed private lending to Germany, provided an enormous windfall to Wall Street. Srodes explains:
In the aftermath of the war, the flow of capital from Europe to the United States began to go the other way as the victors paid renewed attention to the bleeding continent and the newly developed group of nations. Cromwell once again was on top of every deal . . . Much of the financing of the 1920s and 1930s in Europe had ties – either direct or by implication to the reparations or voluntary debts that resulted from the war. See, James Srodes, ALLEN DULLES: Master of Spies, Washington, DC: Regnery Publishing (1999), 143.
Fresh from his 1926 release from the Foreign Service, Allen Dulles quickly proceeded to line up loans and obtain Treasury Department approval for private lending in the tens of millions of dollars to foreign governments, huge sums for that time. He proved masterful at cutting through official Washington regulations and restrictions on capital transfers to Germany. Allen was instrumental in the $30 million lent the Prussian government over the objection of the reparations commissioner, and the further $20 million that went to the Weimar republic in 1927 Id. 144.
But, Allen's direct foreign lending to the Reich was small potatoes compared to the haul realized by the New York banks as a result of financing the German war reparations, set in June 1920 at $32 billion, payable $1.56 billion per year, terms on which Germany repeatedly defaulted. Simultaneously, long-term foreign lending to Germany exploded, rising from $234 million in 1924 to $2.2 billion by September 1930, with short-term loans amounting to another $2.7 billion. See, Eugene Staley, WAR AND THE PRIVATE INVESTOR (1935), Chapter 2, "Investments Entangled in Politics: Two Cases", reprinted on-line at [LINK]. One thing that Germany did not lack for during the years that the Nazi movement grew to power was access to foreign investment.
The west, contrary to myth, did not starve Germany of funds needed to rebuild its civilian and military plant during the 1920s, and the burden of reparations payments, though onerous, was not the immediate cause of German economic collapse. The source of the financial catastrophe from which Hitler sprang was the excessive endebtedness of German industry to private lenders, most of which were American.
Private capital inflow to Germany far exceeded the outflow of reparation payments. Between 1924 and 1932, reparations actually paid by the Weimar Republic amounted to only 5 billion marks ($1.25 billion) See, Alfred C. Mierzejewski, "Payments and Profits: The German National Railroad Company and Reparations, 1924-1932", German Studies Review 18, 1 (February 1995): 65-86. The problem was that earnings from foreign investments were exported, and reparations had to be paid out of current income or privately financed abroad through further borrowing at high rates of interest. This spiral of foreign debt, of course, resulted in unsustainable imbalances in current accounts, balance of payments, and meager national savings in Germany, leading to a chronic currency crisis. Inevitably, and inexorably, this led to a swift and steep economic collapse when foreign capital flows dried up after 1929 when the onset of the Great Depression hit the western money markets.
This catastrophe occurred despite some good-faith efforts western diplomats and lenders to ease the terms of reparations. As it became clear the Germans were not able to maintain payments out of retained taxable revenues, the terms of the reparations burden were considerably relaxed. Under the 1930 Young Plan, German reparations were restructured into a long-term annuity of 59 annual payments of $548 million. By this point, however, the burden of repayment on private lending was so immense that the German economy imploded, nonetheless.
The Young Plan was actually a neat circle. These installments were supposed to be paid by Germany to Britain and France. But, the reparations funds were in fact financed as loans guaranteed by the U.S. Government, the interest on which was paid back to American lenders by the Allies. The whole scheme came crashing down in June 1934, after Hitler's Finance Minister, Dr. Schacht announced a mortarium on all German debts, private and public, having earlier disavowed the terms of the World War One Armistice and payment of reparations. The Nazi's default on foreign loans may seem to have been the least desirable of all outcomes from the point of view of western bankers. But, that was not the case – a sustained collapse of the German economy, under a government that posed no real military threat, would have been far worse. The situation was not beyond redemption provided that the U.S. and its Allies were able to force Germany to come to terms, but that would require renewed military occupation, and sufficient provocation to arouse the western public into a new war.
The default on German debts had the effect of deferring payments on these notes, rather than requiring a massive write-off by the western banks. Obviously, only a war fought to total German surrender would guarantee repayment at satisfactory terms. The prospect of another World War thus presented a relatively favorable outcome for Wall Street. The U.S. Government was certainly a more reliable guarantor of eventual repayment than the Weimar Republic had ever been.
3. The Clients
In addition to its work structuring public debt, Sullivan and Cromwell came to represent practically every major multi-national corporation of its day. The S&C client roster lines up well with the list of covert U.S. operations that were planned or carried out during the Eisenhower Administration, while the Dulles brothers had control over U.S. foreign policy. S&C clients included United Fruit, whose vast holdings controlled Latin America (Guatemala, CIA coup, 1954). Standard Oil of New Jersey was a long-time Cromwell client (Iran, CIA coup, 1953). Another major client, International Nickel, owned the world's largest nickel mine about sixty miles northwest of the Bay of Pigs, Cuba (attempted CIA invasion, 1961).
Other clients included Babcock & Wilcox, naval ship engine and nuclear power plant manufacturer, one of the biggest Pentagon contractors during the Cold War. Du Pont was among the earliest S&C clients, and is still among the largest multinational munitions manufacturers. The relationship with du Pont provided S&C a conduit to a vast German clientele. For the du Pont Corporation and its German partner, I.G. Farben chemical, developer of Zyklon-B poison gas and joint owner of General Motors between the wars, Foster managed to connive to rearm Germany. S&C had a number of major German clients, and both of the Dulles brothers spent a great deal of time there. On a trip in the early 1930s, Foster found time to meet with Herr Hitler, before he was appointed Chancellor in 1933 Mosley (1978) 76-89.
There is some conflict as to which Dulles brother made first direct contact with the Nazis. Mosley states that Foster first met with Herr Hitler before he was appointed Chancellor in 1933 Mosley (1978) 76-89. According to Srodes, Allen, as usual, a step behind his older brother, waited for his initial audience until March, 1933, three months after President Hindenburg handed Hitler the keys to the Reichstag. Srodes (1999), 163. Allen, however, may have had the first personal contact with the Nazis. After Germany defaulted for the second time on its reparations payments in 1929, a group of foreign bankers met under the auspices of the Bank for International Settlements (BIS) at Basle, Switzerland in August 1931 and agreed to temporarily postpone repayments. It was during this "Standstill Agreement" meeting that "Allen met Fritz Thyssen, the Ruhr industrialist." Mosley reports:
"Thyssen had recently secretly joined the Nazi Party and contributed 50 million marks to its funds (and doubled it later), so he was in a position to demand and get visiting privileges with the leader, Adolph Hitler. He took Allen along to a meeting at Party headquarters in Berlin and brought him into Hitler's presence, where he was given a lecture on the blindness of the Americans to the evils of Jewish international finance. Ibid., p. 88"
Regardless who met Hitler first, there is no disagreement with the fact that Dulles brothers stood at the head of the line of American industrialists and bankers lined up to do business with the new Nazi Germany. Emissaries of the Rockefeller dynasty were more cautious, waiting until Autumn 1933 to make their own pilgrimage. William Dodd, American Ambassador in Berlin, noted in his diary that on September 1, Henry Mann of the National City Bank (later Citicorp) and Winthrop W. Aldrich, Chase Bank President, met with Hitler. Dodd records, "These bankers feel they can work with him." Ivy Lee, publicist for Rockefeller was more enthusiastic, leading Dodd to observe that Lee, "showed himself at once a capitalist and an advocate of Fascism."William E. Dodd, AMBASSADOR DODD'S DIARY, p. 31.
Never shy of difficult tasks, at the same time they represented the banks and industry behind the rising Third Reich, John Foster and his younger brother, Allen, parlayed their expertise, fame, and wealth into roles as major powerbrokers within the internationalist wing of the Republican Party. Creating a positive legal and business environment for German investments in the late 1930s was no easy task. During this period, the G.O.P. was more the party of Isolation than of Appeasement. Meanwhile, the Republicans toiled in the political wilderness against FDR and the New Deal at home.
Already attorneys of record for the Rockefeller Standard Oil conglomerate, under the Dulles brothers, Sullivan and Cromwell represented Du Pont, the company's reputation badly tarnished by the 1935 Senate Nye Committee "Merchants of Death" report. The Committee unanimously concluded that du Pont and other firms, having profited massively from World War One, had started rearming Germany in 1924. American chemical manufacturers then turned to building up the explosives industry in Japan after its 1932 invasion of Manchuria. Furthermore, the Nye Committee revealed that American companies had made large investments in Fascist Italy See, Report of the Special Committee on Investigation of the Munitions Industry (The Nye Report), U.S. Congress, Senate, 74th Congress, 2nd sess., February 24, 1936, pp. 3-13. The General Counsel for the Nye Committee at that time was a young New Deal lawyer named Alger Hiss.
As World War Two came to an end, with Democrats still in control of important congressional committees, Dulles clients, such as du Pont partner, Standard Oil, along with General Motors, and their Anglo-German affiliates, were threatened by new rounds of embarrassing exposure of war profiteering and collusion with the Enemy. Leading a massive, hysterical campaign against alleged Communists in the State Department, the Republicans silenced such inquiries, and the public became entranced by the spectacle of McCarthyism.
While the Dulles's publicly maintained some distance on the Senate side from Joseph McCarthy, they found a willing but seemingly unlikely ally to carry out the early stages of the Great Purge of American government. The lead role fell on Rep. Richard M. Nixon, until then an unknown Freshman Congressman from California. Allen leaked confidential CIA files on Hiss to Nixon, who went on to even greater things on behalf the G.O.P. with the help of his cloak and dagger friends in the Party See Anthony Summers, THE ARROGANCE OF POWER: The Secret World of Richard Nixon. New York: Penguin Books (2001) pp. 62-65.
Nixon claimed he had a "cherished relationship" with Dulles. Ibid.. It was also a useful one. Nixon's destruction of the reputation of Alger Hiss before the House Un-American Activities Committee (HUAC) in the late 1940s served as an unmistakable warning to Congressional committee members and staff about the cost of too vigorous unmasking of the sort of large, U.S.-based multinationals that the Dulles brothers represented for S&C.
Hardly without a conflict of interest as a witness, John Foster voluntarily came forward in 1950 to testify against Alger Hiss in his perjury trial. While Richard Nixon led the inquisition of Hiss before the House Un-American Activities Committee (HUAC), it was John Foster who delivered the coup de grace that destroyed Alger Hiss. Nixon recalled, "I'm told by people in court who watched the jury, they concluded Hiss was more hurt by Dulles's testimony than even by the testimony with regard to the typewriter, the rug, and other things, because they believed Dulles" See, Leonard Mosley, DULLES: A Biography of Eleanor, Allen, and John Foster Dulles and Their Family Network. New York: The Dial Press (1978), p. 336. Even as Secretary of State, John Foster, the consummate lawyer, managed to zealously pursue the interests of his clients, du Pont chemical, Standard Oil, and Germany, while simultaneously hunting leftists, and pursuing the partisan work of the Republican Party. The Dulles's were honored as model lawyers and statesmen with a Washington, DC international airport named after them.
In fact, far from the "outsider" image he cultivated, the Nixon connection to the Dulles network goes back to 1937, when Nixon, then a Third Year law student at Purdue, was personally interviewed by John Foster for employment at S&C. Nixon was rejected by S&C, and he had no more luck at William "Wild Bill" Donovan's rival Wall Street firm, where he got as far as a second interview with the future head of the OSS. Nixon was also spurned for employment by the FBI during that same 1937 job-hunting trip to the East Coast. Later examination of his FBI job application revealed that Nixon had failed to reveal the fact that he had been caught during a night-time break in at the Law School Dean's Office, which was treated as a prank at the time. Also missing from Nixon's application was mention of his arrest as an undergraduate at Whittier College.
The Dulles-Nixon partnership provided the missing political synergy of money and populism that had long eluded the Republicans during the FDR era. Mr. Nixon's destruction of Alger Hiss in front of HUAC was a carefully orchestrated affair. The affair played in perfectly with the Dulles post-war domestic strategy. The indictment of Hiss vilified the New Deal as it simultaneously freed the Republican Party from its Isolationist shackles. Later, President Nixon went out on his own to lead the most notorious covert political action programs in American history. Whereas the Dulles brothers had worked carefully behind the scenes, aware of some limits to the use of covert operations, Nixon launched an open war from the White House on the Democrats, liberals and Left as if he had no real institutional rivals, domestic or foreign. Ultimately, it would be the very intelligence Agency that Allen Dulles had led, and Nixon tried and failed to hijack as a weapon against his own personal political enemies, that would arrange Nixon's undoing at the Watergate complex .
Even the Dulles brothers, whose Eastern Establishment credentials were solid enough, needed special help from above and unusual luck getting to and staying at or near the top. In 1926, after the untimely deaths of several senior partners, John Foster was appointed Managing Partner of Sullivan & Cromwell at the unheard of age of thirty-eight. Foster's career at S&C had been launched by the directors of Morgan bank, who successfully lobbied for his appointment as legal advisor to the Dawes Commission that drew up the terms of repayment of the German War debt. Within a few years, he brought his younger brother, Allen, on board at S&C. The ascendance of the Dulles brothers would be forever linked to the legacy of William Cromwell, the financing of the First World War, and Germany. Neither Dulles believed himself for one minute to be a truly self-made man, or behaved as if he were a free agent, as did Nixon. One must always put the interests of the client first. Nixon apparently never learned that key lesson at Purdue Law School.
B. The Multinational Oil Companies
The American stake in recreating a German colossus was enormous, as was Germany's stake in American post-war commercial ascendance over Britain, particularly in the struggle for the Grand Prize, control over the rich oil fields of the Middle East and Central Asia. Thus, began the peculiar alliance of German chemical giant, I.G. Farben, the second largest holder of stock in Standard Oil Company of New Jersey, with U.S. intelligence. By the mid-1920s, both the Dulles brothers had put their tour in the State Department and Military Intelligence temporarily behind them, and had turned to practicing law at Sullivan & Cromwell. There, they structured an interlocking directorate of American and German banks, operating through secret Swiss and Dutch cut-out accounts, to shield the assets of German companies from seizure by the war reparations board. By the mid-1930s, as it became clear that Germany was about to again embark on a war against Britain and France, the Dulles brothers redoubled their efforts to shield German assets and investments from the Allies. Right up to 1942, the consortium of Standard Oil and Texaco was still shipping Saudi oil to Germany, with the Dulles circle in the State Department impeding an investigation until terms favorable to the oil companies were agreed to by the U.S. Government. "The Dulles brothers were traitors", Supreme Court Justice Arthur Goldberg later remarked about the brothers key role in the wartime blackmail of the U.S. and their continued advancement of German interests. Loftus and Aarons, The Secret War Against the Jews, New York: St. Martins Griffin, (1994) at 71, 75-76.
C. The International Banks
Among Cromwell's other clients during the era was Prescott Bush, a director of the Union Banking Corporation in New York, which from 1924 through 1942 acted as the American private bank for the Nazi steel trust headed by Fritz Thyssen, Hitler's earliest and largest financier. Thyssen, who joined the Nazis in 1923, had suffered large personal losses as a result of Allied seizure of his assets following the First World War, set up a triangle of international banks to shelter his assets. According to John Loftus, a former Justice Department special investigator of Nazi war crimes, Thyssen established Union Banking Corporation of New York, the August Thyssen Bank in Berlin, and the Bank voor Handel en Scheepvaart in Rotterdam. Thyssen installed a Brown Brothers Harriman partner, Prescott Bush, as President of Union Bank, and retained Allen Dulles as outside counsel. Union Bank then became the holding company for the Bush family Holland-America Trading Company. Allen Dulles also later represented the Rotterdam bank, which at Thyssen's behest had made the construction loan that built the first Nazi Party headquarters in Munich. Along with William Crownwell, Allen served on the board of J. Henry Schroder bank, the London affiliate of the notorious German Schroeder bank. Under its Chairman, Baron Kurt von Schroeder, the bank "acted as a conduit for I.T.T. money funneled to Heinrich Himmler's S.S. organization in 1944 . . ." See, Anthony C. Sutton, Wall Street and the Rise of Hitler, (1976).
After Pearl Harbor, S&C unsuccessfully defended American I.G., the U.S. holding of I.G. Farben, from seizure by the federal Enemy Alien Property Custodian. Another S&C client at the time was the Silesian-American Corporation, for years managed by Prescott Bush and his father-in-law, George Herbert Walker, until November 17, 1942, when its assets belonging to Nazi Germany were seized under the Trading with the Enemy Act. The Hamburg-America Line, on whose board Bush also sat, was seized as a Nazi company. Indeed, the steamer line had long been one of the principal conveyances by which the German Abwehr intelligence service moved agents into the United States, and transported stolen military technology back to the Fatherland.
Riding on the coattails of Brown Brothers Harriman, the Rockefeller brothers, and the Dulles brothers, whose interests they had served on various boards, neither Prescott Bush nor George Herbert Walker were ever held personally or politically accountable for their roles in financing and directing Nazi-controlled enterprises. Cromwell, himself, was given a lifetime post of overseeing the national fund set up with the proceeds paid by the U.S. to Panama. Until 1937, Cromwell shrewdly invested these funds in New York real estate deals that benefited himself and his other business partners. Cromwell, the "Fox" of Wall Street, literally and figuratively lived out his days as Lord of Panama, one of the most powerful men in the world. After stealing Panama, Cromwell, and his co-conspirators -- the American Robber Barons and the banker-lawyer revolutionaries -- then set their sights on an even bigger hostile takeover target: the great, ancient aggregated wealth and markets of Europe.
Power politics, like investments, must be judged in the light of relative gains or losses over time. Indeed, in the long run, not one of the Great Powers or major institutions on the Continent of Europe actually benefited from World War that ensued from the falling out between East and West in 1887. Of course, the trade war between Russia and Germany, and the general destabilization in Eastern Europe proved a disaster for France and Germany, which were both dragged into the 1913 Russian dispute with Austria over Serbia-Croatia. The resulting conflagration, ironically, destroyed the Autocratic Czar and ruined much of the Prussian-Baltic nobility that had controlled the Russian monarchy through intermarriage and assassination for two centuries. Neither the French nor the British came out of World War One any stronger or richer than before . Quite the opposite is true. The war, of course, also shattered the standing European economic system, greatly weakening the once-dominant continental Jewish banking interests surrounding the Houses of Rothschild and Warburg that once linked the City of London with Paris, and Paris with Berlin, and Berlin with St. Petersburg.
To the victors, according to the ancient maxim, goes the spoils of war; in the modern era, the wages of war are paid out in dividends and annuities. During World War One, the United States went from being a major debtor to being the world's largest lender. By the 1919, Morgan and the other New York banks were financing some $10 billion in loans to the Allies , atop the $26 billion in reparations payment demanded of Germany by the Allies over a 58 year period under the Young Plan. There was nothing new about this, except for the scale of the loans and the magnitude of the casualties. All the great banking fortunes of Europe and Britain had been built largely on the war debts of the 18th and 19th Centuries. Indeed, the seed of the great Morgan banking fortune was its role in the syndicate that underwrote the $1.5 billion refinancing of the American Civil War debt.
In any investigation, the first question is -- who actually benefits from the deed? C'est, que bono? If not the Jewish bankers, the Imperial Germans, the French Republicans, or the Czarist Russians, who then might have had both motive and opportunity to carry off a financial and political revolution on a worldwide scale? The established players on the European Continent, all, and without exception, suffered great losses from World War. No one gained, in fact, except the Russian Bosheviks and, when all was said and done, American bankers and industrialists. We may add to this certain speculators of the second and third ranks, who may have realized impressive returns as skillful opportunists. Likely, however, none but the most powerful and canny interests, securely removed from the chaos, could have made a consistent killing on the markets for government and corporate bonds, currencies, and commodities with each new assassination, war fever, and coup attempt.
Finally, we come to the personal animus felt by certain leading Americans toward the established financial icons of the Old World. During a 1904 outburst, J.P. Morgan "inveighed bitterly against the growing power of the Jews", recalled Lord Revelstoke, Morgan's friend and business associate at the London House of Barings. Morgan "said more than once that our firm and his were the only two composed of white men". See, Jean Strouse, MORGAN: American Financier, New York: Random House (1999) pp. 537-538. These harsh feelings were reciprocated. As early as 1879, Nathan Rothschild, head of the London House, said about the Morgans that he refused "to join any American Syndicate and be at their mercy or command." See, Niall Furguson, THE HOUSE OF ROTHSCHILD; The World's Banker 1849-1999. New York: Penguin Viking (1999) at 348. Whether on account of the accumulation of snubs and slights dealt out by the European aristocrats and financiers to the minions of "new money", or out of the sheer ruthlessness on both sides, the trade in money across the Atlantic was poisoned. The relationship between the Rothchilds and their European satellites with the rising financial titans of America were characterized by barely-disguised hatred.
Feelings were particularly bitter on the part of the Americans. By the turn of the Century, the fortunes on Wall Street had grown as large or larger than those in London and Paris, combined. Yet, the old order continued to exclude the Americans from many of the most lucrative deals in the world, those – such as in South Africa -- conducted within the British and French Colonial Empires. Despite the incredible new wealth on Wall Street, and the growth of the American economy, the nation faced a serious financial and monetary crisis in the 1890s. This was in no small part due to the imposition of the gold standard, and the chronic lack of gold specie reserves by the Federal Government, which meant that money was tight at a time of general economic expansion. Retail banks did not have cash to lend to farmers and businesses too small to access the money markets to raise capital. Populists, such as William Jennings Bryant, bitterly denounced the "cross of gold" upon which small business had been sacrificed to maintain the stability of the currency, and hence the convertibility of international exchange rates. Having essentially cornered the world gold market, the Rothschild syndicate was an all-too-visible symbol of greed on both sides of the Atlantic. Global bankers being inaccessible to common people (well-protected, as they were then and still are, by the world's most powerful statesmen) public antagonisms turned on their less privileged co-religionists – the small town retailers, tailors, and traders – the everyday Jews, who reaped the whirlwind of social violence and scapegoating that resulted, ultimately, in the Holocaust.
If one wants an explanation that makes sense for the rise of anti-semitism in the late 19th Century (as well, for the new-found internationalism of the U.S.A.), it is that most of the biggest bankers in Europe at that time were Jews, while the New York money men were predominantly Episcopalian. The latter simply wanted what the former had, and were quite willing and able to pay the dregs of the earth to grab it. As was clear well before the fact, World War would shift the fulcrum of global financial power to New York, removing what little protection the Jews of Europe once enjoyed under the Rothschild umbrella.
While seizure of the world financial markets presents an obvious motive, and anti-semitic envy the driving animus, only a few could carry it off or hope to survive to enjoy the proceeds. Add to this scenario the services of modern mercenaries and knightly orders -- semi-independent intelligence services, lawyer-warriors, and half-witting anarchist agents provocateur -- who provided the sparks for revolution and war. Finally, there was the emergent yellow press, secretly paid and closely controlled by political police and industrialists, that made World War One seem to the average person to be either a patriotic necessity or some kind of huge, awful accident. No great surprise, therefore, that the bodies piled up all over Europe; yet, few have asked, qui bono?