Morgan, Wilson, and War

The Morgan-Progressive Party ploy deliberately ensured the election of Woodrow Wilson as a Democratic President. Wilson himself, until almost the time of running for President, was for several years on the board of the Morgan-controlled Mutual Life Insurance Company. He was also surrounded by Morgan men. His son-in-law, William Gibbs McAdoo, who became Wilson’s Secretary of the Treasury, was a failing businessman in New York City when he was bailed out and befriended by J. P. Morgan and his associates. The Morgans then set McAdoo up as president of New York’s Hudson and Manhattan Railroad until his appointment in the Wilson administration. McAdoo was to spend the rest of his financial and political life securely in the Morgan ambit.

The main sponsor of Wilson’s run for the Presidency was George W. Harvey, head of Morgan-controlled Harper & Brothers publishers; other major backers included Wall Street financier and Morgan associate Thomas Fortune Ryan, and Wilson’s college classmate and Morgan ally Cyrus H. McCormick, head of International Harvester.

Another close friend and leading political adviser of Wilson was New York City banker George Foster Peabody, son of the Boston Brahmin, and a Morgan banker. A particularly fascinating figure in Wilson’s fateful foreign policy was “Colonel” Edward Mandell House, of the wealthy House family of Texas, which was deeply involved in landowning, trade, banking, and railroads. House himself was head for several years of the Trinity and Brazos Valley Railway, financed by the House family in collaboration with Morgan-associated Boston financial interests, particularly of the Old Colony Trust Company. The mysterious House, though never graced with an official government post, is generally acknowledged to have been Wilson’s all-powerful foreign policy adviser and aide for virtually his entire two terms.

By 1914, the Morgan empire was in increasingly shaky financial shape. The Morgans had long been committed to railroads, and after the turn of the century the highly subsidized and regulated railroads entered their permanent decline. The Morgans had also not been active enough in the new capital market for industrial securities, which had begun in the 1890s, allowing Kuhn, Loeb to beat them in the race for industrial finance. To make matters worse, the $400 million Morgan-run New Haven Railroad went bankrupt in 1914.

At the moment of great financial danger for the Morgans, the advent of World War I came as a godsend. Long connected to British, including Rothschild, financial interests, the Morgans leaped into the fray, quickly securing the appointment, for J. P. Morgan & Co., of fiscal agent for the warring British and French governments, and monopoly underwriter for their war bonds in the United States. J. P. Morgan also became the fiscal agent for the Bank of England, the powerful English central bank. Not only that: the Morgans were heavily involved in financing American munitions and other firms exporting war material to Britain and France. J. P. Morgan & Co., moreover, became the central authority organizing and channeling war purchases for the two Allied nations.

The United States had been in a sharp recession during 1913 and 1914; unemployment was high, and many factories were operating at only 60% of capacity. In November 1914, Andrew Carnegie, closely allied with the Morgans ever since his Carnegie Steel Corporation had merged into the formation of United States Steel, wrote to President Wilson lamenting business conditions but happily expecting a great change for the better from Allied purchases of U.S. exports.

Sure enough, war material exports zoomed. Iron and steel exports quintupled from 1914 to 1917, and the average profit rate of iron and steel firms rose from 7.4% to 28.7% from 1915 until 1917. Explosives exports to the Allies rose over ten-fold during 1915 alone. Overall, from 1915 to 1917, the export department of J. P. Morgan and Co. negotiated more than $3 billion of contracts to Britain and France. By early 1915, Secretary McAdoo was writing to Wilson hailing the “great prosperity” being brought by war exports to the Allies, and a prominent business writer wrote the following year that “War, for Europe, is meaning devastation and death; for America a bumper crop of new millionaires and a hectic hastening of prosperity revival.”

Deep in Allied bonds and export of munitions, the Morgans were doing extraordinarily well; and their great rivals, Kuhn, Loeb, being pro-German, were necessarily left out of the Allied wartime bonanza. But there was one hitch: it became imperative that the Allies win the war. It is not surprising, therefore, that from the beginning of the great conflict, J. P. Morgan and his associates did everything they possibly could to push the supposedly neutral United States into the war on the side of England and France. As Morgan himself put it: “We agreed that we should do all that was lawfully in our power to help the Allies win the war as soon as possible.”

Accordingly, Henry P. Davison, Morgan partner, set up the Aerial Coast Patrol in 1915, to get the public in the mood to search the skies for German planes. Bernard M. Baruch, long-time associate of the extremely wealthy copper magnates, the Guggenheim family, financed the Businessmen’s Training Camp, at Plattsburgh, New York, designed to push for universal military training and preparations for war. Also participating in financing the camp were Morgan partner Willard Straight, and former Morgan partner Robert Bacon. In addition to J. P. Morgan himself, a raft of Morgan-affiliated political leaders whooped it up for immediate entry of the U.S. into the war on the side of the Allies, including Henry Cabot Lodge, Elihu Root, and Theodore Roosevelt.

In addition, the National Security League was founded in December, 1914, to call for American entry into the war against Germany. The NSL issued warnings against a German invasion of the U.S., once England was defeated, and it called all advocates of peace and non-intervention, “pro-German,” “dangerous aliens,” “traitors,” and “spies.”

The NSL also advocated universal military training, conscription, and the U.S. buildup of the largest navy in the world. Prominent in the organization of the National Security League were Frederic R. Coudert, Wall Street attorney for the British, French, and Russian governments; Simon and Daniel Guggenheim; T. Coleman DuPont, of the munitions family; and a host of prominent Morgan-oriented financiers, including former Morgan partner Robert Bacon; Henry Clay Frick of Carnegie Steel; Judge Gary of U.S. Steel; George W. Perkins, Morgan partner, who has been termed “the secretary of state” for the Morgan interests; former President Theodore Roosevelt; and J. P. Morgan himself.

A particularly interesting founding associate of NSL was a man who has dominated American foreign policy during the twentieth century: Henry L. Stimson, Secretary of War under William H. Taft and Franklin D. Roosevelt, and Secretary of State under Herbert Hoover. Stimson, a Wall Street lawyer in the Morgan ambit, was a protégé of Morgan’s personal attorney, Elihu Root, and two of his cousins were partners in the Morgan-dominated Wall Street utility stock market and banking firm of Bonbright & Co.

While the Morgans and other financial interests were beating the drums for war, even more influential in pushing the only partially reluctant Wilson into the war were his foreign policy Svengali, Colonel House, and House’s protégé, Walter Hines Page, who was appointed Ambassador to Great Britain. Page’s salary in this prestigious influential post was handsomely subsidized through Colonel House by copper magnate Cleveland H. Dodge, a prominent adviser to Wilson, who benefited greatly from munitions sales to the Allies.

Colonel House liked to pose as an abject instrument of President Wilson’s wishes. But before and after U.S. entry into the war House shamelessly manipulated Wilson, in secret and traitorous collaboration with the British, to push the President first into entering the war and then into following British wishes instead of setting an independent American course.

Thus, in 1916, House wrote to his friend Frank L. Polk, Counselor to the State Department and later counselor to J. P. Morgan, that “the President must be guided” not to be independent of British desires. Advising British Prime Minister Arthur Balfour on how best to handle Wilson, House counseled Balfour to exaggerate British difficulties in order to get more American aid, and warned him never to mention a negotiated peace. Furthermore, Balfour leaked to Colonel House the details of various secret Allied treaties that they both knew the naïve Wilson would not accept, and they both agreed to keep the treaties from the President.

Similarly, soon after the U.S. entered the war, the British sent to the U.S., as personal liaison between the Prime Minister and the White House, the young chief of British military intelligence, Sir William Wiseman. House and Wiseman quickly entered a close collaboration, with House coaching the Englishman on the best way of dealing with the President, such as “tell him only what he wants to hear,” never argue with him, and discover and exploit his weaknesses.

In turn, Britain’s top intelligence agent manipulated House, constantly showering him with flattery, and established a close friendship with the Colonel, getting an apartment in the same building in New York City, and traveling together abroad. Collaborating with House in his plan to manipulate Wilson into pro-British policies was William Phillips, an Assistant Secretary of State who had married into the Astor family.

Collaborating with House in supplying Wiseman with illegal information and working with the British agent against Wilson were two important American officials. One was Walter Lippman, a young socialist who had been named by Morgan partner Willard Straight as one of the three editors of his New Republic, a magazine which, needless to say, led the parade of progressive and socialist intellectuals in favor of entering the war on the side of the Allies.

Lippmann soon vaulted into important roles in the war effort: assistant to the Secretary of War, then secretary of the secret group of historians called The Inquiry, established under Colonel House in late 1917 to plan the peace settlement at the end of the war. Lippmann later left The Inquiry to go overseas for American military intelligence.

Another important collaborator with Wiseman was businessman and scholar George Louis Beer, who was in charge of African and Asian colonial matters for The Inquiry. Wiseman secretly showed British documents on African colonies to Beer, who in turn leaked Inquiry reports to British intelligence.

The plans of Colonel House and his biased young historians of The Inquiry were put into effect at the peace settlement at Versailles. Germany, Austria-Hungary, and Russia were cruelly dismembered, thus ensuring that Germany and Russia, once recovered from the devastation of the war, would bend their energies toward getting their territories back. In that way, conditions were virtually set for World War II.

Not only that: the Allies at Versailles took advantage of the temporary power vacuum in Eastern Europe to create new independent states that would function as client states of Britain and France, be part of the Morgan/Rothschild financial network, and help keep Germany and Russia down permanently. It was an impossible task for these new small nations, a task made more difficult by the fact that the young historians managed to rewrite the map of Europe at Versailles to make the Poles, the Czechs, and the Serbs dominant over all the other minority nationalities forcibly incorporated into the new countries. These subjugated peoples—the Germans, Ukrainians, Slovaks, Croats, Slovenes, etc.—thus became built-in allies for the revanchist dreams of Germany and Russia.

American entry into World War I in April 1917 prevented negotiated peace between the warring powers, and drove the Allies forward into a peace of unconditional surrender and dismemberment, a peace which, as we have seen, set the stage for World War II. American entry thus cost countless lives on both sides, caused chaos and disruption throughout central and eastern Europe at war’s end, and the consequent rise of Bolshevism, fascism, and Nazism to power in Europe. In this way, Woodrow Wilson’s decision to enter the war may have been the single most fateful action of the twentieth century, causing untold and unending misery and destruction. But Morgan profits were expanded and assured.