Federal Reserve System. This was considered by the Fed's supporters as its first real test, and it passed with flying colors. Americaninflation during that period was only slightly less than in England,which had been more deeply committed to war and for a longerperiod of time. That is not surprising inasmuch as a large portion ofEurope's war costs had been transferred to the American taxpayers.
After the war was over, the transfusion of American dollarscontinued as part of a plan to pull England out of depression. Themethods chosen for that transfer were artificially low interest ratesand a deliberate inflation of the American money supply. That wascalculated to weaken the value of the dollar relative to the Englishpound and cause gold reserves to move from America to England.
Both operations were directed by Benjamin Strong and executed bythe Federal Reserve. It was not hyperbole when President HerbertHoover described Strong as "a mental annex to Europe."
Before Alan Greenspan was appointed as Chairman of theFederal Reserve by President Reagan in 1987, he had served on theBoard of the J.P. Morgan Company. Before that, however, he hadbeen an outspoken champion of the gold standard and a critic ofthe System's subservience to the banking cartel. In 1966 he wrote: When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us.... The " F e d " succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market—triggering a fantastic speculative boom.... As a result, the American economy collapsed.
After his appointment to the Fed , Greenspan became silent onthese issues and did nothing to anger the Creature he now served.
AGENTS OF A HIGHER POWER
When reviewing this aspect of the Fed's history, questions ariseabout the patriotic loyalty of men like Benjamin Strong. How is itpossible for a man who enjoys the best that his nation canoffer—security, wealth, prestige—to conspire to plunder his fellowcitizens in order to assist politicians of other governments to 1. Galbraith, p. 180.
2. Greenspan, pp. 99-100.
THE GREAT DUCK DINNER
475
continue plundering theirs? The first part of the answer wasillustrated in earlier sections of this book. International moneymanagers may be citizens of a particular country but, to many ofthem, that is a meaningless accident of birth. They considerthemselves to be citizens of the world first. They speak of affectionfor all mankind, but their highest loyalty is to themselves and theirprofession.
