WEBVTT

NOTE Why did America get into World War I?

1
00:00:00.000 --> 00:00:09.000
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.

2
00:00:09.000 --> 00:00:14.000
It was a pure war for territory and generally European imperial war for territory.

3
00:00:14.000 --> 00:00:22.000
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.

4
00:00:22.000 --> 00:00:30.080
What happened was that around the late 19th century and early 20th century, as investment

5
00:00:30.080 --> 00:00:36.320
bankers became more powerful, financing first railroads and then manufacturing industries,

6
00:00:36.320 --> 00:00:44.680
JP Morgan Company became the major investment bank, and the fortunes of JP Morgan were getting

7
00:00:44.680 --> 00:00:46.320
to decline after 1900.

8
00:00:46.320 --> 00:00:51.320
The basic reason, as in many cases of large businesses, they were used to railroads, they

9
00:00:51.320 --> 00:00:55.320
And they didn't really catch on to the importance of manufacturing until quite late.

10
00:00:55.320 --> 00:01:03.320
And as a result of that, after 1900, the railroads began a long secular decline, which has continued until the present day.

11
00:01:03.320 --> 00:01:09.320
The decline, by the way, of course, came about because of a huge amount of federal and state regulation

12
00:01:09.320 --> 00:01:15.320
and subsidization of railroads since almost the Civil War period, brought about by the railroads themselves, by the way.

13
00:01:15.320 --> 00:01:32.320
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.

14
00:01:32.320 --> 00:01:41.320
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.

15
00:01:41.320 --> 00:01:47.560
And CUNLOA, which was a competing investment bank, German Jewish Investment Bank, was more

16
00:01:47.560 --> 00:01:53.840
astute in investing in manufacturing companies. They began to out-compete the Morgans. World

17
00:01:53.840 --> 00:01:59.280
War I came along as a great bonanza for the Morgans. As soon as the war started in August

18
00:01:59.280 --> 00:02:06.280
1914, Henry T. Davison, who will appear in the story and be a featured person, a powerful

19
00:02:06.280 --> 00:02:11.280
Morgan partner, he took the first boat, he of course could not take a concord in 1914,

20
00:02:11.280 --> 00:02:17.320
he took the first boat to England and cemented a deal with the Bank of England with which

21
00:02:17.320 --> 00:02:23.560
the Morgan's had strong connections before that, making the Morgan investment company,

22
00:02:23.560 --> 00:02:29.520
Morgan JP Morgan Company, the monopoly underwriter for all government bonds, war bonds with England

23
00:02:29.520 --> 00:02:34.280
and France with floating United States, since that was going to be the major war financing

24
00:02:34.280 --> 00:02:40.360
for England and France, and also the Bank of England became the fiscal agent of the Morgan's

25
00:02:40.360 --> 00:02:41.360
and vice versa.

26
00:02:41.360 --> 00:02:47.700
And so we have now the Morgan Bank totally committed economically as well as emotionally

27
00:02:47.700 --> 00:02:52.040
to the British-French war effort and to the victory of the British and French in World

28
00:02:52.040 --> 00:02:53.040
War I.

29
00:02:53.040 --> 00:02:54.840
This, by the way, ties into the Fed.

30
00:02:54.840 --> 00:02:59.520
It's not just a tangential story because we'll see till the end it all fits in with the origins

31
00:02:59.520 --> 00:03:01.480
of the Fed.

32
00:03:01.480 --> 00:03:07.240
And in addition to that, the export industries, which were financing arms, selling arms to

33
00:03:07.240 --> 00:03:13.000
Britain and France, were basically also Morgan-oriented, in other words, the Morgans were heavily invested

34
00:03:13.000 --> 00:03:17.480
in and underwriting these particular export firms, arms exports, munitions, steel, that

35
00:03:17.480 --> 00:03:18.480
sort of thing.

36
00:03:18.480 --> 00:03:23.280
So we had, in other words, from the very beginning of World War I in 1914, a very heavy Morgan

37
00:03:23.280 --> 00:03:25.320
commitment, financial commitment to the Allies.

38
00:03:25.320 --> 00:03:28.880
If the Allies had not won World War I, the Morgan Company would have been down to the

39
00:03:28.880 --> 00:03:46.880
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.