Entries in eisenhower (2)


Presidents, Bankers, the Neo-Cold War and the World Bank 

 At first glance, the neo-Cold War between the US and its post WWII European Allies vs. Russia over the Ukraine, and the stonewalling of Greece by the Troika might appear to have little in common. Yet both are manifestations of a political-military-financial power play that began during the first Cold War. Behind the bravado of today’s sanctions and austerity measures lies the decision-making alliance that private bankers enjoy in conjunction with government and multinational entries like NATO and the World Bank.

It is President Obama’s foreign policy to back the Ukraine against Russia; in 1958, it was the Eisenhower Doctrine that protected Lebanon from a Soviet threat. For President Truman, the Marshall Plan arose partly to guard Greece (and other US allies) from Communism, but it also had lasting economic implications. The alignment of political leaders and key bankers was more personal back then, but the implications were similar to the present day. US military might protected its major trading partners, which in turn, did business with US banks. One power reinforced the other. Today, the ECB’s QE program funds swanky Frankfurt headquarters and prioritizes Germany's super-bank, Deutschebank and its bond investors above Greece’s future.

These actions, then and now, have roots in the American ideology of melding military, political and financial power that flourished in the haze of World War II.  It’s not fair to pin this triple-power stance on one man, or even one bank; yet one man and one bank signified that power in all of its dimensions, including the use of political enemy creation to achieve financial goals. That man was John McCloy, ‘Chairman of the Establishment’ as his biographer, Kai Bird, characterized him. The relationship between McCloy and Truman cemented a set of public-private practices that strengthened private US banks globally at the expense of weaker, potentially Soviet (now Russian) leaning countries.

John McCloy and the World Bank Twist

In 1947, President Truman selected then-partner at a Rockefeller law firm, John McCloy, to be the second president of the World Bank (or International Bank of Reconstruction and Development) that would provide financial aid to developing nations after WWII. McCloy demanded the ability to unilaterally restructure the nascent World Bank—absent Congressional debate –such that its bonds would be sold through Wall Street banks.

That linkage altered the future of global financial relationships, by  transforming the World Bank into a securities vending machine for private banks that would profit from distributing these bonds globally, while augmenting World Bank aid with private loans.

World Bank, IMF and other multinational entity decisions about aid vs. austerity or any other ‘reform’ requirements including opening border to private banks, would be controlled by the capital markets. Big private global banks arrange, underwrite and distribute World Bank bonds. Small banks in Greece did not. Financial assistance terms were established to follow a similar hierarchy.

During the Cold War, the World Bank provided funds for countries that leaned toward capitalism versus communism.  Political allies of the United States got better treatment (and still do). The Nations that private bankers coveted for speculative and lending purposes saw their debt loads increase substantially and their industries privatized.  Equally, the bankers decided which bonds they could sell to augment public aid funds, which meant they would have control over which countries the World Bank would support.  The World Bank did more to expand US banking globally than any treaty or entity that came before it.

The Marshall Plan and Eisenhower’s Rise

Another pillar of global reconstructive and foreign policy efforts, the Marshall Plan, would provide further a ide to “friendly” countries in the early years of the Cold War.  Truman unveiled the Marshall Plan in the spring of 1947. He presented it as a way to counter the threat of Communism, warning that Europe was disintegrating economically, and Truman feared Greece and Turkey would fall victim to Communist control. America’s new enemy was not Germany nor the Nazis but Communism and its associated countries.

Under the Marshall Plan, Congress approved $13 billion to aid Europe’s fight against Communism, and also to bolster prime trading partners for American industries and banks. As a result, more currencies became available for conversion into US dollars. The Marshall Plan wasn’t just about helping allies: but about spreading dollar domination.

Chase (now JPM Chase) Chairman, Winthrop Aldrich enthusiastically supported the Marshall Plan. To big banks, lending to developing nations and fighting Communism amounted to the same thing. Plus, the Marshall Plan effectively gave each major US bank its own European country to play in. From 1948 to 1952, Chase amassed the most deals in Europe, nearly $1 billion, followed by National City Bank (now Citigroup). 

Eisenhower, NATO & Bankers

In 1952, General Dwight D. Eisenhower was commander of the North Atlantic Treaty Organization (NATO), the new military alliance established between the United States, Canada, and leading Western European powers to deter Soviet expansion, and promote European political integration. NATO blended military, political, and economic power behind the mantra, “an armed attack against one or more of [the allied countries] shall be considered an attack against them all.”.  In practice, what held for military support, held for opening borders to dollar based trade and private banking business, too.

In the spring of 1952 Aldrich traveled to Europe with an entourage of power brokers to persuade Eisenhower to run for president on the Republican ticket. Upon election victory, Ike’s banker sphere of appointees included his secretary of war, Thomas Gates, who would later chair the Morgan Guaranty Bank (now JPM Chase), Aldrich who became Ike’s ambassador to Great Britain, and John McCloy, who would spend the Eisenhower years as chairman of the Chase National Bank (now JPM Chase) assuming Aldrich’s role.

Beside the Marshall Plan, the Truman and Eisenhower doctrines extended US military and economic support to nations that adopted US ideology and that were military allies. Overseas offices of major US banks subsequently swelled to accommodate all the private loan demand that accompanied government support.  

In 1956, W. Randolph Burgess, former National City Bank Vice President, left his Treasury Department post to become the US ambassador to NATO. By that time, the luster of NATO was fading. By 1963, Burgess noted that “the shine of postwar NATO was getting a little dull.” Stronger European countries felt less threatened by Soviet aggression and this made them less pliable to US policies. In addition, their European  banks began spreading their wings globally again. The financial end of the cold war was preceding the diplomatic end by decades.

The International Bank Race

US bankers sought to compete with strengthening European banks by opening more offices overseas and by fighting to eliminate New Deal regulatory restrictions so they could grow domestically and use their size as a broader lending springboard.

Fast forward sixty years later to today , and those seeds of political-military-financial partnerships against the threat of the Soviet Union (now Russia) have sprouted to support US banks and dollar, and US monetary and fiscal policy supremacy the world over.

Much has happened in between; mass deregulation of international banking, technological advancements in trading, and the use of the World Bank (and the IMF and various central banks) to subsidize bank led speculation by submitting weak countries to austerity measures or ‘bailouts’, thereby prioritizing payments to bondholder clients of mega-banks over economic stability. The Big Six banks in the US, a subset of the 30 G-SIBs (global systemically important banks) enjoy a magnitude of government, central bank and multinational entity support that would have been unimaginable back then.

Whether it’s a $17 billion bailout package for the Ukraine. or a $270 billion one for Greece, or Obama doing a 180 on Cuba to keep Russia out, the costs of power alignments are greater than ever for the smaller, weaker countries. Their economic coffers have been pried open by the Western super-powers still calling the political, military and financial shots and again using threats of Russian ‘aggression’ to camouflage expansionary intents.

Under Obama, the US is resurrecting the Cold War and invigorating NATO by promoting the threat notion, just as Truman and Eisenhower did.  Financial supremacy and currency dominance remain central to this strategy. But this time, there’s a more dangerous difference – a level of financial opposition that could become military opposition if sufficiently provoked. The counter-movement from a currency and financial perspective is comparatively small. But it’s growing.  The global position of super-powers and super-banks remains at play in this newly sanctioned financial Cold War.  

For more on historical foundations for present decisions, read: All the Presidents’ Bankers: The Hidden Alliances that Drive American Power (out now in paperback). Also, please watch my interview with Max Keiser


Answers to All the Presidents' Bankers Quiz #1 - some historical facts!

Answers to All the Presidents’ Bankers Quiz #1 (of 3):

March 1, 2014

As promised, here are the answers and some background explanations to the All the Presidents' Bankers Quiz #1 with lots of factoids about the men and families in political and financiall power over the past century. Test your knowledge of the past century of blood, intermarriage, protégé-mentorship and other ties connecting the White House and Wall Street, that form America's political-financial genealogy and elite power circle.  You can also do Quiz #1 at:

All the Presidents' Bankers by Nomi Prins is available for pre-order online now, and out April 8, 2014.  For more , see:

Questions: 1) d, 2) d, 3) b, 4) d, 5) d, 6) d, 7) d, 8) b, 9) a, 10) b

1. Which president's father worked with which elite banker to form the prestigious Metropolitan Club in New York City?

a) Teddy Roosevelt's father and Junius Morgan

b) Calvin Coolidge's father and James Stillman

c) John F. Kennedy's father and John D. Rockefeller

d) Franklin Delano Roosevelt's father and John Pierpont Morgan

FDR's father, James A. Roosevelt and J.P. Morgan were two of the founding fathers of the Metropolitan Club in New York City, where many elite family patriarchs gathered together.

2. Which banker who would later chair a Big Six bank rented one of FDR's New York City townhouses during WWI? 

a) Winthrop Aldrich from the Chase Bank (now part of JPM Chase)

b) James Stillman from the National City Bank (now part of Citigroup)

c) George Baker, Sr. from the First National Bank (now part of Citigroup)

d) Thomas Lamont from the Morgan Bank (now part of JPM Chase)

While FDR served as Assistant Secretary of the Navy in Woodrow Wilson's administration during WWI,  his fellow Harvard alum, Thomas Lamont  rented out his NYC townhouse at 49 East 65th street from 1916-1920.  The annual rental price was $8000, or about $112,000 in today's dollars. Lamont was a partner at the Morgan bank at the time and became Chairman during FDR"s last term as president.

3. Which former Chase chairman shared a fascination of puddle jumper planes with which president?

a)  David Rockefeller and John F. Kennedy

b) John McCloy and Dwight D. Eisenhower

c) David Rockefeller and Harry Truman

d) John McCloy and Harry Truman

John McCloy spoke of their shared love of puddle jumper planes in his Oral History. During WWII, while General Eisenhower led the Allied troops in Europe, McCloy served as the Assistant Secretary of War under Henry Stimson in the FDR administration. Brought into the Rockefeller-Chase fold by Nelson Rockefeller, he became Chairman of Chase in 1953 and steered its 1955 $7.5 million merger with Bank of Manhattan (run by J. Stewart Baker) to form Chase Manhattan.

4. Which major banker from which bank worked most closely with FDR behind the scenes in Washington to pass the Glass- Steagall Act?

a) Jack Morgan (J.P. Morgan's son) from the Morgan Bank

b) James Perkins from National City Bank

c) Thomas Lamont from the Morgan Bank

d) Winthrop Aldrich from Chase

Though both Perkins and Aldrich met with FDR at the White House to discuss their support for passage of the Glass-Steagall Act, it was Winthrop Aldrich that took the most active role in supporting the strongest possible version of the Act, at the request of FDR.

5. The father of which president was appointed as the first head of the Securities and Exchange Commission (the SEC) by FDR in 1934 to police the banking industry?

a) Harry Truman

b) Gerald Ford

c) Lyndon B. Johnson

d) John F. Kennedy

Joseph P. Kennedy, John F. Kennedy's father helped FDR secure the state of California which proved a cornerstone of FDR's presidential campaigns. In 1934, FDR appointed him the first president of the new securities regulatory body, the SEC.  He later was appointed US Ambassador to the UK by FDR.

6. Who was the first president to select a major Wall Street bank CEO as  his Treasury Secretary?

a) Bill Clinton

b) George W. Bush

c) George H.W. Bush

d) Ronald Reagan

Ronald Reagan chose Donald Regan, CEO of Merrill Lynch as his first Treasury Secretary. Today, Merrill Lynch by virtue of its 2008 acquisition by Bank of America is part of the Big Six banks.

7. Which president appointed his son-in-law Treasury Secretary, and which banker that would later chair a Big Six bank, was appointed Assistant Treasury Secretary as a result?

a) Warren Harding and Albert Wiggin

b) Calvin Coolidge and Charles Mitchell

c) Teddy Roosevelt and William Potter

d) Woodrow Wilson and Russell Leffingwell

Woodrow Wilson appointed his son-in-law William McAdoo as Treasury Secretary, who in turn selected his Yonkers friend and neighbor, Russell Leffingwell to be his assistant Treasury Secretary.  Leffingwell later became partner and then Chairman of the Morgan Bank.

8. Which President's grandfather ran a bank that ultimately  became one of the Big Six banks that helped finance his campaign?

a) George W. Bush

b) George H.W. Bush

c) Ronald Reagan

d) John F. Kennedy

George Herbert Walker founded an investment bank, G.W. Walker & Co in 1900 that later employed many Bush family members and friends. It was taken over by Merill Lynch, which was subsequently taken over by Bank of America.

9. Which banker briefly dated the sister of which president?

a) David Rockefeller and John F. Kennedy

b) John McCloy and John F. Kennedy

c) Gabriel Hauge and Harry Truman

d) David Rockefeller and Harry Truman

David Rockefeller met John F. Kennedy's sister, Kathleen, at her coming out party in London in 1938, while their father, Joseph Kennedy was serving as FDR's UK Ambassador. According to his memoirs, David 'enjoyed the company of' Kathleen for a brief period after that.

10. The Treasury Secretary of which president recently joined a financial firm founded by a banker whose uncle was appointed one of the first Fed governors by Woodrow Wilson in 1914?

a) Ronald Reagan

b) Barack Obama

c) Bill Clinton

d) George W. Bush

Barack Obama's Treasury Secretary, Timothy Geithner, joined the private equity firm of Warburg, Pinkus after leaving his Washington post. The firm was founded by Eric Warburg, nephew of Paul Warburg, one of the original Fed architects at Jekyll Island and personally selected by Woodrow Wilson as one of its first governors. Wilson's campaign financing came from firms and families connected to Warburg.