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How FDR wrecked the London Economic Conference and Saved the World

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By Glenn Mesaros

"I'm prouder of that than anything I ever did." FDR to Arthur Krock in 1937, (FDR, by Jean Edward Shepard, 2007).

“The trouble is that when you sit around the table with a Britisher he usually gets 80 percent of the deal and you get the remainder.” (FDR, quoted in “The World in Depression, 1929 – 1939”, by Charles P. Kindleberger)

Why would Franklin Roosevelt cite his "torpedoeing" of the 1933 London based World Monetary and Economic Conference as his proudest accomplishment four years after he created the New Deal, with its CCC, TVA, WPA, social security, and myriad other world changing programs?

The conference had been scheduled at the behest of London bankers before the November, 1932 elections to deal with the currency fluctuations resulting from the Great Depression financial collapse of the gold standard. However, it did not convene until after the famous "100 Days" of the FDR administration, around June 1, 1933.

Britain itself left the gold standard in 1931, and FDR took America off it during his 100 Days. Every nation in Europe was either in, or lurching towards, communism or fascism, including Great Britain, where a sizable political faction supported Mussolini, and the Hitler "experiment". The book, "Royals and the Reich", (2006, by Jonathon Petropoulus) documents this, and shows a youthful Prince Philip, (current Duke of Edinburgh, and married to Queen Elizabeth), marching in a 1937 Nazi funeral, with SA and SS officers.

The German and British Royal families were intermarried through the House of Sachsen-Coburg and Gotha, as the current British monarchy descends from this German family. In fact, they retained their German name until WWI, when the Kaiser's "Gotha" Dirigible (airship) showed up over London to bomb it. The British Royal Family quickly changed their name at that time to the House of Windsor.

Hitler took constitutional power in Germany in early 1933, and then quickly burned down the Reichstag, and declared martial law, and a 1000 year Reich.

Franklin Roosevelt was well aware of this history when dealing with European bankers, including the Nazi Hjalmar Schacht, head of the German Reichsbank. FDR had met several of Hitler's top ministers, and he characterized all of them as "madmen".

Americans were so impressed by the Hundred Days, and supportive of FDR, that 250,000 people lined the streets when he passed through Boston, Massachusetts, in early June, 1933, to take his first Presidential sailing vacation on the New England coast. Newspapers already gave him premature credit for ending the Depression.

Secretary of State Cordell Hull, a determined, and Southern, Free Trader, led the American delegation to the London conference, and was prepared to sign any agreement that "stabilized" the major currencies, including the Pound Sterling and Dollar. FDR had already met various European leaders, including British Ramsey McDonald, during the 100 Days in Washington, and gave them his usual platitudes about "sound money" and "balanced budgets".

However, FDR knew that, while American exports comprised 1/6th of world trade, and American imports comprised 1/8th of world imports, these totals only comprised 5% of American gross domestic product, compared to 25% for Great Britain. He also knew that the European bankers, led by the British Empire (mistakenly called the "Commonwealth"), wanted to tie America down to their deflationary program, which would fix the dollar to trade at $3.50 to the pound sterling. (FDR, Champion of Freedom, by Conrad Black)

By taking the dollar off the gold standard during the 100 Days, it now traded with the pound in a range $ 4 to 4.50, thus making American exports more available to European trading partners. FDR had thus "devalued" the dollar to promote raising domestic farm, and other prices. This had actually raised American wheat prices from 30 cents to One dollar in 1933.

Now, during his sailing vacation, Roosevelt was accosted on all sides by "financial" advisors on the World Monetary and Economic Conference. Delegate James P. Warburg, son of the Federal Reserve Founder, Paul Warburg, sent urgent memos from London demanding that the President agree to "temporary" stabilization; FDR refused. Warburg later joined the proto fascist Liberty League in opposition to the New Deal.

During a stop in Gloucester, Massachusetts, on June 21, the legendary Colonel House of the Wilson Administration, and the well known deflationary Budget Director Lew Douglas, climbed aboard FDR's yacht, the Amberjack, for a prearranged meeting.

Colonel House brought FDR two "gifts": a paper by inflationary monetarist George Warren, from Cornell University, and a book by British economist Sir Basil Blackett, entitled, "Planned Money". Warren had been promoting various monetarist schemes to raise commodity prices.

Blackett was an associate of John Maynard Keynes, and a well known British imperialist, with financial credentials in India and London's Bank of England. If he had not been killed in a car accident in 1935, we would probably know him today as well as Keynes.

Blackett authored his book in 1931 in preparation for the the London Conference, and he cited the recent Report of the Committee on Monetary and Financial Questions of the Ottawa Conference, a British Imperial meeting of the Empire in Canada, as the basis for the British program at the World Monetary and Economic Conference.

"His Majesty's Government desires to see wholesale sterling prices rise... and recognizes that an ample supply of short term money at low rates may have a valuable influence..." This reflects the usual monetarist "wall of money" to placate any credit crisis, as we see today in "Helicopter" Ben Bernanke, and his Federal Reserve system.

The Ottawa report continued, "At the same time it is necessary that these favorable monetary conditions be achieved, NOT by the inflationary creation of additional means of payment to finance public expenditure, but by an orderly monetary policy...." In other words, NO WPA, No TVA, and No New Deal.

Blackett continued in another chapter entitled, "A British Monetary Programme": "There is a strong body of opinion in Germany, and not the least among the Nazis, which would see in the new programme the opportunity for which it has been looking to escape from the tyranny of the gold standard." He wrote this in 1931, before Hitler even took power, and it clearly represents the British proclivity for Nazi hegemony in continental Europe, under British Empire supervision.

"Much would depend on the force with which the British proposals were presented.... the British government ... and other governments ... must be convinced that a stable level of internal prices can be successfully maintained by a group of countries which does not include the United States...."

"Historical causes and the logic of existing facts would naturally give British sterling a special position... the sterling area, or the sterling Empire, or even 'Sterlingaria'.... in view of the greater experience of London in management of currency and exchange..."

More than a decade later, Blackett's sidekick, John Maynard Keynes, showed up at the Bretton Woods International Monetary conference, and proposed a similar "world monetary system", which would revolve around the London directed "bancorp" unit. FDR appointees, led by Harry Dexter White, who was later accused by neo-cons of being a Soviet agent because he collaborated with our Russian allies during WWII, vetoed this policy, and Keynes had to submit to the US dollar as the main world currency, backed by gold at $35 an ounce.

The Bretton Woods Conference of 1944 represented what FDR knew could NOT be achieved in 1933, and created stable world economic growth for 30 years until Nixon ended it 1971. Since then the Anglo-American bankers have torn down the FDR New Deal programs, and given us the Great financial Crash of 2008, and potential New Dark Age.

Meanwhile, June, 1933, FDR continued his New England sailing vacation, amidst a swirl of conflicting messages to and from the London Monetary and Economic Conference. A speculative frenzy hit the dollar, driving it to 4.43 per pound, as the gold bloc countries at the conference threatened to abandon their precious gold standard. FDR replied to Hull: "I do not greatly fear setback to our domestic price level restoration even if all these nations go off gold."

FDR serenely sailed his yacht into Campobello Island, on the Maine coast, where he had contracted polio in 1921, and invited four correspondents to his cottage there on June 30, where he expounded on the London conference for one hour. This informal press conference became the famous New York Times article, datelined from Campobello, which sank the London conference.

He told the correspondents that the US would not at this time agree to any stabilization agreement, and furthermore, "not allow the dumping of products by any cheap producer on American markets."

On Sunday, July 2, FDR boarded the USS Indianapolis to return to Washington, D.C. During this trip, he composed a further message to the London Conference in the Captain's cabin, which said,

"I would regard it as a catastrophe amounting to a world tragedy if the great Conference of Nations, called to bring about a more real and permanent financial stability and a greater prosperity for the masses of all nations, should, in advance of any serious effort to consider these broader problems, allow itself to be diverted by the proposal of a purely artificial and temporary experiment affecting the monetary exchange of a few nations only... The sound internal economic system of a nation is a greater factor in its well being than the price of its currency in changing terms of the currencies of other nations."

He called stabilization one of the "old fetishes of so-called international bankers".

This naturally created a storm in London. Lord Philip Snowden called the FDR message a "classic example of conceit, hectoring, and ambiguity." British Prime Minister Ramsey MacDonald wept, and told FDR emissary Ray Moley that "this doesn't sound like the man I spent so many hours with in Washington." The conference ended on July 27, 1933.

However, Americans greeted the news with great joy, since their (correct) perception had been of European leaders deceiving every president since Woodrow Wilson had his pious 14 points dumped into the garbage of the Versailles Treaty which ended WWI, and created WWII.

Columnist Ernest K. Lindley, who had written the famous FDR "Oglethorpe" campaign speech in 1932, spoke for all Americans when he opined that Roosevelt had shown the world "that the United States has a President whose first regard is the national interest."

Will Rogers, the famous entertainer, similarly concurred that Uncle Sam had finally taken part in an international conference without being "taken" by wily Europeans.

Kindleberger makes the point that FDR had to protect American recovery in 1933 with his 100 Days program, and thus block the British at the London Economic Conference. Later FDR created the Bretton Woods International monetary system of fixed exchange rates in 1944. This created world development for several decades until the “old fetishes” of British Bankers recreated the floating exchange rates and inflation of the 1970's.

Today, in 2009, we happily see that President Obama, whose grandfather was tortured by the British in Kenya during the 1950's*, openly snubbed British Prime Minister Gordon Brown in his recent visit, and even returned former President Bush's Oval Office bust of Winston Churchill to him, to be replaced by one of Abraham Lincoln.

However, we still saw Congress openly groveling to Gordon Brown, who was Chancellor of the Exchequer for a speculation decade under Tony Blair, and a close friend of Alan "Bubbles" Greenspan, for whom he procured a Knighthood from Queen Elizabeth in 1992. (See "Gods that Failed", 2009, by Guardian Economics Editors)

If President Obama learns anything from FDR, he should fire derivatives bookie Larry Summers, and immediately end his Bailout Policy of the Banks, and submit them to standard bankruptcy proceedings, as called for in Larouche's Homeowners' and Bank Protection Act, written in July, 2007. The trillions of speculative derivative debts cannot ever be paid, and must be written off.

The world will not end when he does this. It will begin again.

- 30 -

Based on FDR: The New Deal Years 1933 - 1937, by Kenneth S. Davis.

* Imperial Reckoning: The Untold Story of Britain's Gulag in Kenya.

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