Wednesday, May 26, 2010

Capitalist Rothschilds

Capitalist Rothschilds

Daniel O’Connor
Camapign For Liberty
Wednesday, May 26th, 2010

In modern times, The Rothschild family is often referred to as archetypal capitalists who were Europe’s wealthiest family from 1820 onward and gained this position through their ability to exploit the capitalist system–this widely held view is completely false. The Rothschild family was indeed the Continent’s wealthiest family throughout the nineteenth century but they gained this position through the exploitation of governments. Therefore, The Rothschilds should not be labeled as capitalists but rather another group of people in bed with governments, at an enormous scale.

200 years later, this misnomer not only still exists but is probably the most pervasive and deleterious aspect of modern economic thought. People continue to blame society’s problems on freedom while neglecting the incessant cronyism, corporatism and government expansion that permeates the economy. This notion was repugnant in the early years of American society which is why the Rothschild family had such difficulty penetrating The United States economy.

Traditionally, The Rothschild family conducted business in countries where they had strong relations with the governments of those nations; otherwise they refused. In the 1830s and 40s, this presented a huge dichotomy to the five Rothschild brothers who were scattered across Europe’s financial cities because they also recognized the large economic growth taking place in the United States indicating enormous potential for profits. Not only did the family lack a strong relationship with the federal government but The United States was also in the midst of major financial reform revolving around Andrew Jackson’s abolition of the Bank of the United States (BUS).

In the 1998 widely acclaimed book “The House of Rothschild: Money’s Prophets 1798-1848″ by Niall Ferguson, the author notes:

“The Bank of the United States had employed Barings as its European agent but the relationship broke down in 1836-7, and the Rothschilds hurried to offer their services. Biddle (the bank’s head) had ambitious-sounding plans, including “a business with a guarantee of two million pounds sterling to provide advances for goods and stocks,” and a scheme for a quasi-monopoly on cotton exports. It seemed to James (Rothschild) like a financial marriage made in heaven: these were, he enthused, “the wealthiest people in America” and “no less solid” than the Banque of France. At once, he began to imagine “flooding the American market” with his Spanish mercury “so that in six months we will be masters of the market”.” p 373

This alliance never came to fruition as Nicholas Biddle’s power and credibility later dwindled coupled by other large problems that arose within America’s financial system.

“In October 1839 the BUS (Biddle’s bank) suspended payments and in 1841 finally collapsed. Its failure coincided with a rash of defaults by states… In the wake of this fiasco, which saddled the London and Paris houses with a large quantity of thoroughly bad debts, the Rothschilds were content to hand back to Barings the position of bankers to the federal government. “You may tell your government” James was reported as telling representatives of the US Treasury, “that you have seen the man who is at the head of finance of Europe, and that he has told you that you cannot borrow a dollar, not a dollar.” The experience with the BUS had made James wish he had “never become involved with [America].” In future, he concluded, unless the federal government were “prepared to guarantee all the States and make the payments with us” and to set up an officially backed central bank, he would keep his distance.” pp 374-375

Presidents Andrew Jackson and Thomas Jefferson were strongly opposed to a central bank, largely because they had witnessed the corruption surrounding central banks and the way in which large banking institutions profit from wars. A large portion of wealth that the Rothschild family accumulated derived from high interest rates charged to governments in order to help fund wars. Ferguson points out that:

“Historians have never adequately explained how an obscure Jewish merchant banker [Nathan Rothschild]–who only a few years before had been a smuggler, and a few years before that a minor textiles exporter–was able to become the principle conduit of money from the British government to the continental battlefields on which the fate of Europe was decided in 1814 and 1815. Of all the steps in the ascent of the house of Rothschild, this was surely the greatest; yet it is also the least understood.” p 85

The United States Federal Reserve Bank was not officially established until 1913 and therefore the Rothschild family never established a firm relationship with the federal government. Although they did closely monitor the activities in the US economy and took part in activities such as the gold rush and post Civil War financing. In fact, subsequent to The Civil War, large banking conglomerates in the US began to emulate Rothschild practices by pushing hard for a central bank and exploiting the federal government in various ways.

JP Morgan was the most obvious example. JP, like the Rothschilds, helped to provide funding for weapons during war (The Civil War). In the 1890s, JP provided huge sums of gold to the Federal Government. JP also went on to help form Chase Manhattan Bank which is now one of the worlds largest banking conglomerates, under the name JPMorganChase.

Over the past 100 years, Chase has maintained very close ties to the US government and other governments throughout the globe. The bank has been very successful at loaning money to governments through various means such as its close affiliation with Worldbank and The IMF.

The head JPMorganChase, David Rockefeller, maintained close relationships with many global leaders during the bank’s period of internationalization during the 1960s and 70s. David also maintained intimate relationships with members of the US government such as Henry Kissinger and the Dulles brothers during the 1950s, 60s and 70s. In addition, he has also worked very closely with the former head of the New York Federal Reserve, Timothy Geithner and Fed Chairman Paul Volcker, a longtime Chase executive.

It is precisely this type of cronyism which was detested by early Americans while being mastered by the Rothschilds in Europe.

The Rothschilds used their political influence and political intelligence to push out many aspects of their agenda. For example, Nathan Rothschild (in London) was able to make a huge profit by speculating on the stock market as he was the first to receive news of Napoleon’s defeat at Waterloo.

The Rothschild family was also very effective at influencing monetary policy throughout Europe’s major financial cities as they were closely linked to the central banks and they also dominated the world’s precious metals market–specifically gold. Given the sheer quantity of gold the family had acquired through their various expeditions around the globe they were able to manipulate the continent’s money supply. Without the existence of central banks their manipulation tactics would not have been possible.

“James had in fact been sending substantial quantities of gold across the Channel since the beginning of 1825, if not earlier. In the first week of January alone, he had sent gold worth nearly £500,000, which he expected to “impress your Bank” (meaning the Bank of England). By the middle of the month, he was talking about “our old established practice” of “buy[ing] some gold whenever we can find any.”.” p 136

The family was obsessed with gold and imported it from all across the globe including South America, Russia, Turkey and Australia. Their perception and understanding for the value of gold is very much in line with that of modern-day Austrian Economists–it is the best store of value.

However, as the family always invested in gold, they did not always support the notion of gold to be upheld as a currency in circulation. Often times, they preferred the gold for themselves while allowing paper to circulate in the economy by encouraging their political associates to print notes.

Paper notes and govt bonds were much easier to manipulate, especially with greater political intelligence and political influence than any other banker in the market.

They also used faulty scare tactics such as “the fear of deflation” and a contracting economy as a means to keep paper in circulation (similar to modern-day economists who are closely aligned to the federal reserve, or the department of economics at Princeton).

“In 1819, the “bullionists” had effectively won…Dismayed, Nathan sought to dissuade Liverpool from going back on to gold, even pursuing ministers into the country to make his case…Nathan never opposed the resumption of cash payments (linked to gold) as a matter of theoretical principle; he and his fellow bankers made a practical argument that the short-run effects of a deflationary policy would be economically destabilizing, and that this might tend to run counter to the government’s goal of fiscal and monetary stabilization.” p 120-121

Sound familiar?

The family controlled so much gold that when they moved huge quantities of bullion from one central bank to another they were able to flood the market causing inflation and prices to then rise. Throughout a boom period ending in 1824, the family was able to generate huge profits. When Nathan and other bankers began to remove huge quantities of gold from England at the end of the boom in 1825, a bust was taking place and asset prices across the market continued to drop significantly.

The Bank of England then became responsible for fixing the economic crises in 1825. (This scenario should also sound familiar)

Many parallels can be drawn between the practices of the Rothschild family and our modern-day financial system. Although much revenue came from charging interest to governments, they were also engaged in many other areas of the economy. They bought and sold government bonds; traded enormous sums of foreign currencies; invested heavily in certain industries such as textiles and railroads; and they also dominated the commodity industry, globally.

In 2010, banks remain engaged in many of the same practices as the Rothschild family. Banking and finance are indeed a very important aspect of the economy and perfectly acceptable in a free market economy. However, it is when banks collude with governments and exploit the population for their own benefit that the term capitalist gets distorted.

In a free society, the role of government must be limited thus preventing cronyism at a grand scale, as in the case of the Rothschilds. Figures like Jefferson and Jackson acknowledged corruption within government which is why they pushed so hard to separate government and monetary policy by opposing a central bank.

Had Andrew Jackson not succeeded in abolishing The Bank of the United States, perhaps the Rothschild family could have made even greater fortunes by exploiting The U.S. political establishment.

Unfortunately, cronyism and corporatism are probably more rampant today than any other time in American history, as it has become accepted. And it is continuously mislabeled as capitalism.

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