How the FED engineered the Great Depression

Fresh from writing Wall Street and the Fed’s stranglehold on America, based on A Study of the Federal Reserve and Its Secrets by the legendary Eustace Clarence Mullins, I thought it would be of great value to follow the money (in this case the gold) in the FED’s 1925 scheme to take down the stock market to cast the U.S. into the havoc of the Great Depression. This is all the more to increase the value of Mullins’ book and readers’ awareness of this nefarious act and organization.

Beginning on page 95 of Mullins’ tract, he speaks of the Federal Reserve System’s international gold dealings and its active help for the “League of Nations to force the nations of Europe and South America back on the gold standard for the benefit of international gold merchants like Eugene Meyer, Jr. and Albert Straus.” This effort was also aided by a classic incident, the sterling credit of 1925.

In an article for the English periodical, The Spectator of January 1925, J.F. Darling wrote that “Obviously it is of the first importance to the United States to induce England to resume the gold standard as early as possible. An American controlled Gold Standard, which must inevitably result in the United States becoming the world’s supreme financial power, makes England a tributary and satellite, and New York the world’s financial centre.”

Darling didn’t point out that the American people had as little to do with this as the British people and that resuming the gold standard in Britain would profit only the small cadre of international gold merchants who own the world’s gold. Banker’s Magazine happily wrote in July, 1925 that “The outstanding event of the past half year in the banking world was the restoration of the gold standard.”

The Governor of the Federal Reserve Bank of Richmond, George Seay, testified before the House Banking and Currency committee that “A verbal understanding was confirmed by correspondence extending Great Britain a two hundred million dollar gold loan or credit. All negotiations were conducted between Benjamin Strong, Governor of the Federal Reserve Bank of New York, and Mr. Montague Norman, Governor of the Bank of England.” But beneath the surface of this beneficence was a larger, more lethal purpose that the gold buys conferred.

The plan was to get England back on the gold standard and the loan was met by Federal Reserve funds in bills of exchange and foreign securities. The idea aimed to include a lot of gold, but not more than $200 million worth on credit at any one time to England over the next two years. It was obvious to some that international bankers Benjamin Strong and Montague Norman’s scheme was not to advance U.S. business and industry, but to further build up Britain’s pile of gold. In fact, a hundred million dollar loan from J.P. Morgan was thrown in to richen the pot.

Winston Churchill, then British Chancellor of the Exchequer, later complained that the cost of the loan to the Brits from Morgan was $1,125,000 the first year, representing the profit of the J.P. Morgan Company. The London Economist wrote, “Almost immediately after World War I a close ‘cooperation’ was established between the Bank of England and the Federal Reserve authorities, and more especially with the Federal Reserve Bank of New York (italics mine).” This romance was due to the purported “cordial relations” between Mr. Norman of the Bank of England and Mr. Strong, the New York Federal Reserve Bank, purportedly a desire “to help the Bank of England,” with “close cooperation in the fixing of discount rates between London and New York.” In that half-truth was a larger, more devastating reality.

Cut to the Senate Hearings on the Federal Reserve System in 1931. One of the authors and First Secretary of the Federal Reserve Board, H. Parker Willis, asked Governor George Harrison, Strong’s successor as Governor of the Federal Reserve Bank of New York: “What is the relationship between the Federal Reserve Bank of New York and the money committee of the Stock Exchange?” Of course, “There is no relationship,” Harrison replied. “No assistance or cooperation in fixing the rate in any way?” asked Willis.

“No,” replied Harrison, “although on various occasions they advise us of the state of the money situation and what they think the rate ought to be.” This was a direct contradiction of the previous statement. The Federal Reserve Board of New York, which set the discount rate of the Reserve Banks, actually maintained a cozy liaison with the money committee of the Stock Exchange.

The House Stabilizations Hearings of 1928 “proved conclusively” that governors of the Federal Reserve System had been holding meetings with the heads of the big European central banks. Some congressmen knew something big was being planned, but how big, how shaking in effect would it be, they had no idea. Even if they had a clue that the plot would culminate in the Great Depression, it was Mullins’ belief that there would have been nothing by then they could have done to halt it. The proverbial die had been cast. The international bankers who maneuvered gold, in fact, could come down on any country. And the U.S. to them was as helpless as any.

In House hearings that followed, one Mr. Beedy pointed out that there were “violent fluctuations under Money Rates in New York.” As rates of money rise and fall in big cities, loans made on investments take advantage from them, this time a violent change. Yet industry didn’t make much of them, and showed no great rises or declines.

Yet Governor Adolph Milles commented, “This was more or less in the interests of the international situation. They sold gold credits in New York for sterling balances in London. The fact was the Federal Reserve could attract gold to make money rates higher, to the point where monetary concerns of Europe can be altered. Thus in the summer of 1927, the Federal Reserve Board set out on a policy of open-market purchases, followed by reduction in the discount rate at the Reserve Banks.

When Chairman MacFadden asked why the Federal Reserve Bank was doing this, that is trying to change rates, it turned out that the three largest central banks in Europe had representatives in the U.S., Governor of the Bank of England, Mr. Norman; President of the German Reichsbank, Mr. Schacht; and Professor Rist, Deputy governor for the Bank of France. They were involved in talks for several days. The appearance of a social affair was given, but in fact, it was a formal meeting of the board and that these banksters were “interested” in the way that the gold standard was working. Therefore, seeing an easy money market in New York and lowers rates, which kept gold from moving from Europe to this country, it would be very much, perhaps too much, to the interest of the ‘international money situation’ that existed, and thus in bankers’ deep interest.

Although no formal conclusion was reported, something was going on that came out at an Open-Market Policy Committee of the Federal Reserve System to effect some $8 million worth of securities purchased in August consistent with this plan, which included the bankers from abroad. In fact, it was a whole change of policy for our entire financial system which resulted in this situation that the U.S. had never before been confronted with financially, and which subsequently caused the stock market speculation boom of 1927–29. Even if it had been noticed, despite its importance, it made no matter of record at the time in Washington, D.C.

But the Federal Reserve System should have been used to stabilize the purchasing power of the American dollar rather than be influenced by the financial interests of Europe. Tragically, we would see, the visit of these foreign bankers resulted in money becoming cheaper in New York. During the meetings, members of State, Treasury, and the Federal Reserve System were there, and a member of the Foreign Department of the Federal Reserve Bank of New York. This important conference didn’t just happen. The prominent members of the banks from Germany, France and England were here at the suggestion of the Federal Reserve Board, to get them to lower the board’s discount rate. To make the purchases in the open market, they got the gold.

But it turned out it was the League of Nations that had actually called them all together. The League of Nations had been formed supposedly as a kind of United Nations in the Paris Peace Conference of 1919. But, like the UN, its duties often became much more than making peace.

Thus, it was one of those backstairs, backdoor meetings, which aimed in a way at the destruction of the Federal Reserve Board itself. When you desire to stabilize the value of gold, you have to cooperate with other countries, and mostly with their central banks. The secret meetings between the Federal Reserve Board Governors and heads of the European central banks were not held to stabilize anything, but rather to talk about the best way of getting the gold held in the United States by the Federal Reserve System back to Europe—and also to get the nations of that continent back on the gold standard.

Mullins writes, “The League of Nations had not yet succeeded in doing that because the U.S. Senate had refused to let Woodrow Wilson betray us to an international monetary authority. It took the Second World War and FDR to do that.”

In fact, Europe needed the gold which we had, and the Federal Reserve System stealthily gave it to them, $500 million worth. The passage of that gold out of the U.S. caused the deflation of the stock boom and the collapse of business prosperity in the 1920s, resulting in the Great Depression. Mullins comments that it was the worst calamity which has ever befallen this nation.

It is completely logical to say that the American people suffered that depression as a consequence and a punishment for not wishing to join the League of Nations. The bankers understood what would happen when and if that 500 million worth of gold was shipped to Europe. Mullins writes, “They wanted the Depression because it put the business and finance of the United States completely in their hands.”

The Federal Reserve System did not want stabilization and the American businessman did not want it. They wanted those gyrations in prices, not only in securities but commodities and trade generally, as you see now. Those in control, making their profits now as then, make it from that very instability. If not in a legitimate way, there is always a way to produce it by general upheavals such as have characterized society in the past as today.

“Revolutions have been promoted by dissatisfaction with existing conditions,” writes Mullins, “the control being in the hands of the few, and the many paying the bills.” The rest is history albeit buried under the dust and suffering generations of time. In fact, it takes on particular relevance in light of the “Egyptian Spring” and other revolutions occurring currently in the Middle East, Africa and Europe, many affected by the United Nations, the FED, Wall Street, with CIA/USA funding and operatives.

I would advise our present-day Federal Reserve Board to take heed that the United States never be manipulated into a disaster of Depression magnitude again. Don’t kill the goose that lays the golden eggs, or one day its true owners, the people and taxpayers of America, that sleeping giant may just take your heads in exchange.

For further, comprehensive reading on the Federal Reserve System, I highly recommend The Federal Reserve is a PRIVATELY OWNED Corporation, by Thomas D. Shauf. It is a cornucopia of valuable, eye-opening information. Every American concerned with our present economic condition should read this 45-page essay.

Jerry Mazza is a freelance writer, life-long resident of New York City. An EBook version of his book of poems “State Of Shock,” on 9/11 and its after effects is now available at and He has also written hundreds of articles on politics and government as Associate Editor of Intrepid Report (formerly Online Journal). Reach him at

Comments are closed.