Part III.
From Hoover to Roosevelt.
The Federal Reserve and the Financial Elites.
This chapter is grounded on the insight that American politics, from the turn of the 20th
century until World War II, can far better be comprehended by studying the interrelationship
of major financial groupings than by studying the superficial and often sham struggles between
Democrats and Republicans.
In particular, American politics in this period was marked by a fierce struggle between two
major financial industrial groupings.
The interests clustered around the House of Morgan on the one hand, and an alliance of
Rockefeller, oil, Harriman, railroad, and Kuhn-Lebb, investment banking, interests on
the other.
The Morgans began in investment banking, and moved out into railroads, commercial banking,
and then manufacturing.
The Rockefeller-Harriman-Kuhn-Lebb alliance began in their three respective original spheres
and moved into commercial banking.
In most instances, the two mighty combines clashed, for example, in whether or not Theodore
Roosevelt, always closely allied to the Morgans, should use the antitrust weapon to smash Standard
Oil, or whether, in his turn, President Taft, allied with the Ohio-based Rockefellers, should
would try to break up Morgan trusts such as International Harvester or United States Steel.
In other areas, the interests of the two mammoths coincided and they were allies. Thus, both
groups were heavily represented in the drive for measures cartelizing industry that were
sought and lobbied for by the National Civic Federation during the Progressive Era, and
both groups joined to push through the Federal Reserve system.