Why do we get into World War I? The United States said absolutely there is no ideological problem, there is no real interest involved in this thing, this devastating war for the United States to get involved in.
It was a pure war for territory and generally European imperial war for territory.
Why was the United States hit deep in it? And the major single reason is the influence of certain investment bankers, namely J.P. Morgan & Company.
What happened was that around the late 19th century and early 20th century, as investment
bankers became more powerful, financing first railroads and then manufacturing industries,
JP Morgan Company became the major investment bank, and the fortunes of JP Morgan were getting
to decline after 1900.
The basic reason, as in many cases of large businesses, they were used to railroads, they
And they didn't really catch on to the importance of manufacturing until quite late.
And as a result of that, after 1900, the railroads began a long secular decline, which has continued until the present day.
The decline, by the way, of course, came about because of a huge amount of federal and state regulation
and subsidization of railroads since almost the Civil War period, brought about by the railroads themselves, by the way.
And so by 1900 they began to reap the evil effects of constant government control and regulation and they began to, even though they were monopolized by government, they began to get more inefficient, they began to lose out on technological innovation and so forth.
So the Morgan's began, their railroads began to collapse. The Maverick-New Haven Railroad, which was a big Morgan railroad, went bankrupt I think in 1906 or around that time.
And CUNLOA, which was a competing investment bank, German Jewish Investment Bank, was more
astute in investing in manufacturing companies. They began to out-compete the Morgans. World
War I came along as a great bonanza for the Morgans. As soon as the war started in August
1914, Henry T. Davison, who will appear in the story and be a featured person, a powerful
Morgan partner, he took the first boat, he of course could not take a concord in 1914,
he took the first boat to England and cemented a deal with the Bank of England with which
the Morgan's had strong connections before that, making the Morgan investment company,
Morgan JP Morgan Company, the monopoly underwriter for all government bonds, war bonds with England
and France with floating United States, since that was going to be the major war financing
for England and France, and also the Bank of England became the fiscal agent of the Morgan's
and vice versa.
And so we have now the Morgan Bank totally committed economically as well as emotionally
to the British-French war effort and to the victory of the British and French in World
War I.
This, by the way, ties into the Fed.
It's not just a tangential story because we'll see till the end it all fits in with the origins
of the Fed.
And in addition to that, the export industries, which were financing arms, selling arms to
Britain and France, were basically also Morgan-oriented, in other words, the Morgans were heavily invested
in and underwriting these particular export firms, arms exports, munitions, steel, that
sort of thing.
So we had, in other words, from the very beginning of World War I in 1914, a very heavy Morgan
commitment, financial commitment to the Allies.
If the Allies had not won World War I, the Morgan Company would have been down to the
This gave to the Morgans a particular edge to their commitment to the allied core, a particular intensity, and they started lobbying very heavily in the government to get into the war as fast as possible.