The last view the reader had of Paul M. Warburg in the preceding article was as “an alien not naturalized” secretly closeted with Senator Nelson W. Aldrich and a party of bankers on an obscure island off the southeastern coast of the United States, all the members of the party concealing their identity even from the servants by calling each other by their first names.

That conference in its ultimate results was of the utmost importance to the United States, for then and there were formulated those fiscal devices, those financial methods, those “monetary reforms” which have exerted an influence on every citizen, rich and poor, of the Republic.

Much history was made in that little trip. It irresistibly calls to memory that other trip made in 1915—almost two years before America’s entry into the war—by Bernard M. Baruch. As readers of THE DEARBORN INDEPENDENT of November 27, 1920, will recall, Mr. Baruch had been financial backer of the Plattsburg camp, and in his testimony he said he thought that General Wood would admit this. Then—“I went off on a long trip, and it was while on this trip that I felt there ought to be some mobilization of the industries, and I was thinking about the scheme that practically was put into effect and was working when I was chairman of the board. When I came back from that trip I asked for an interview with the President . . . . The President listened very attentively and graciously as he always does.” Mr. Baruch was an authority on the President’s demeanor, for there was a long period in 1917 and 1918 during which he called at the White House every afternoon.

Two momentous trips in our recent history, both of them signalized and given their principal meaning by the presence of Jews. Not that there should not have been Jews in either case; to insist upon their total exclusion would be going too far. The Jew as a citizen, bearing his part, is one matter; the Jew as a master, directing the national show, is quite another thing. It is by no means agreed that Barney Baruch was the only man in the United States who could have run this nation’s war business. That is the explanation made of the high place he took—that he was the only man who could do it. Nonsense! If that be so, let us close up the nation and hand the keys over to the New York Kehillah. Mr. Baruch could say—“I probably had more power than any other man did in the war; doubtless that is true,” but he had that power because he was for the time the head and front of the Jewish group for war purposes.

If the explanation of Jewish mastery at critical moments were “brains,” well and good, but if it were, it would be more evident to the people; brains do not need to be advertised, they advertise themselves. There is another reason.

The British public recently awoke to the fact that not Lloyd George but Mr. Montagu and Sir Alfred Mond were in charge of the recent negotiations over the German indemnities. These gentlemen are both Jews, one of them of German descent. Of all the British Empire are they the only two men to advise the premier in a great crisis? If they are, why is it? The Montagus, we know, control the silver of the world; Sir Alfred Mond, we know, turned a very neat trick of keeping the sign of the Cross off the war memorials raised to the soldiers of the empire; their Jewishness always so apparent. Both financiers; both the close advisers of the premier; as Baruch to Wilson, so they to Lloyd George.

Apparently there are no Anglo-Saxons on either side of the sea capable of managing these deep matters, if we are to judge from the war administrations—those that have passed off the stage and those that still linger. Lloyd George, for once stung to the quick by the criticism of the British public of his tendency to closet himself with Jews when confronted with a crucial question, retorted bitterly—with what? With the old outworn Jewish propagandist boast, that it ill became people who sang Jewish psalms in church to rag the race that wrote them! A most illuminating defense! The world would give a good deal for a true psalm from Sir Alfred Mond, Mr. Montagu, or even Sir Philip Sassoon, who is soon to become the premier’s son-in-law.

In our own history, Barney Baruch boldly claims his place, he unhesitatingly asserts that he had more power than any man in the war. If Allenby in Palestine needed a locomotive, if the Americans in Russia needed clothing, if the munition mills needed copper—it was Baruch who gave or withheld the word.

Mr. Warburg, being of somewhat finer grain, probably due to his having less than Mr. Baruch of the rough experience of “the Street,” does not make the claim that he is the chief factor in the present monetary system of the United States, nor does THE DEARBORN INDEPENDENT undertake to make it for him lest the cry of “anti-Semitism” wax wrathful again; but fortunately the fact is amply attested by a Jew whose knowledge of the matter is unquestionable.

Readers have doubtless become aware by this time that for a non-Jew to say that a certain Jew is a most important factor in any field is to be guilty of anti-Semitism, while for a Jew or a “Gentile front” to say it is perfectly proper. It is a rather odd etiquette in which simple minds sometimes become confused.

Professor E. R. A. Seligman, of Columbia University, is the sponsor of this great honor for Mr. Warburg. What Professor Seligman says is of such importance, both as to its source and its subject, that quotation is justified: (the italics in all cases are ours)

“It is in a general way known to the public that Mr. Warburg was in some way connected with the passage of the Federal Reserve Act, and his appointment to his present responsible position on the Federal Reserve Board was acclaimed on all sides with a rare degree of approval and congratulation; but I fancy it is known only to a very few how great is the indebtedness of the United States to Mr. Warburg. For it may be stated without fear of contradiction that in its fundamental features the Federal Reserve Act is the work of Mr. Warburg more than of any other man in the country . . . .

“When the Aldrich commission was appointed it was not long before Senator Aldrich—to his credit be it said—was won over by Mr. Warburg to the adoption of these two fundamental features. The Aldrich Bill differed in some important particulars from the present law . . . . The concession in the shape of the twelve regional banks that had to be made for political reasons is, in the opinion of Mr. Warburg as well as of the writer of this introduction, a mistake; for it will probably, to some extent at least, weaken the good results which would otherwise have followed. On the other hand, the existence of a Federal Reserve Board creates, in everything but in name, a real central bank; and it depends largely upon the wisdom with which the board exercises its great powers as to whether we shall be able to secure most of the advantages of a central bank without any of its dangers . . . .

“In many minor respects also the Federal Reserve Act differs from the Aldrich Bill; but in the two fundamentals of combined reserves and of a discount policy, the Federal Reserve Act has frankly accepted the principles of the Aldrich Bill; and these principles, as has been stated, were the creation of Mr. Warburg and of Mr. Warburg alone.

“. . . . It must not be forgotten that Mr. Warburg had a practical object in view. In formulating his plans and in advancing slightly varying suggestions from time to time, it was incumbent on him to remember that the education of the country must be gradual and that a large part of the task was to break down prejudices and remove suspicions. His plans, therefore contain all sorts of elaborate suggestions designed to guard the public against fancied dangers and to persuade the country that the general scheme was at all practicable. It was the hope of Mr. Warburg that with the lapse of time it might be possible to eliminate from the law not a few clauses which were inserted, largely at his suggestion, for educational purposes.

“As it was my privilege to say to President Wilson when originally urging the appointment of Mr. Warburg on the Federal Reserve Board, at a time when the political prejudice against New York bankers ran very high, England also, three-quarters of a century ago, had a practical banker who was virtually responsible for the idea contained in Peel’s Bank Act of 1840. Mr. Samuel Jones Lloyd was honored as a consequence by the British Government and was made Lord Overstone. The United States was equally fortunate in having with it a Lord Overstone . . . .

“The Federal Reserve Act will be associated in history with the name of Paul M. Warburg . . . .”—(pp. 387-390, Vol. 4, No. 4, Proceedings of the Academy of Political Science, Columbia University).

It surely cannot be considered invidious for THE DEARBORN INDEPENDENT thus to introduce to the people of the United States a gentleman whose influence upon the country is so vital. Just how vital can be understood only by those who have studied the puzzle of a country filled with the good things of life, and still unable to use them or to share them because of a kink in the pipe line called “money.”

But that Mr. Warburg himself is not entirely unaware of his position is indicated on page 56 of his testimony quoted last week. Mr Warburg had just told the Senate Committee that he was making a heavy financial sacrifice to accept the position on the Federal Reserve Board offered him by President Wilson, and into the fitness of which appointment the Senate was carefully inquiring:

Senator Reed—“May I ask what your motive is, or your reason for making that sacrifice?”

Mr. Warburg—“My motive is that I have, as you know, taken a keen interest in this monetary reform since I have been in this country.

“I have had the success which comes to few people, of starting an idea and starting it so that the whole country has taken it up and it has taken some tangible form.”

Professor Seligman advises us of the strategy that was used to get the whole country to take up Mr. Warburg’s idea, and of the fact that some of the items inserted to appease the public might easily be removed when the public shall have become accustomed to Mr. Warburg and the Federal Reserve Board; but Mr. Warburg adds another hint, to the effect that you can do some things by administration which you cannot do by organization.

For example: Mr. Warburg wanted only one central bank which should be the sole arbiter of finance in the United States. The United States Government would have almost nothing to do save to make the money and stand back of it; the bankers of the United States, and the people thereof, would have nothing to do except what they were told; the one central bank would be the real financial governing authority.

When asked by Senator Bristow to state the fundamental difference between the Aldrich plan and the present Federal Reserve plan, Mr. Warburg replied:

“Well, the Aldrich Bill brings the whole system into one unit, while this deals with 12 units, and unites them again into the Federal Reserve Board. It is a little bit complicated, which objection, however, can be overcome in an administrative way; and in that respect I freely criticized the bill before it was passed.”

There is evidently, then, a method of administration for which severe critics might even use the word “manipulation,” by which the plain provisions of a banking law, whatever they may be, may be, if not evaded, then somewhat adapted.

This idea is brought to mind by a more colloquial expression of Mr. Warburg’s to be found in his address on “bank acceptances” delivered in 1919:

“In this connection I am reminded of a story I once heard concerning a man belonging to a species now soon to be extinct and to be found by our children in Webster’s dictionary only, the ‘bartender.’ A man of this profession, in pre-historic times, was abandoning his position and was turning over his cash-register to his successor. ‘Please show me how it works,’ said the newcomer. ‘I will show you how it works,’ said the other, ‘but I won’t show you how to work it.’”

The politics of Mr. Warburg and the firm of Kuhn, Loeb & Company formed part of the inquiry, and Mr. Warburg made some interesting revelations which illustrate the oft-repeated statement that it is part of Jewish policy—perhaps of large financial firms generally—to attach themselves to both parties so that certain interests may be the winners regardless of which party is defeated.

Senator Pomerene—“What are your politics?”

Senator Nelson—“No; we have not raised that before this committee.”

Senator Reed—“It has not been raised here, but I should like to know.”

Senator Pomerene—“It has been raised before the Senate.”

Senator Reed—“I will say why I should like to know.”

Senator Pomerene—“Well, I have no objection to saying what was in my own mind.”

The Chairman—“I will say that I do not know what Mr. Warburg’s politics are.”

Senator Pomerene—“Well, I did not.”

Senator Shafroth—“I do not know and I do not care to know.”

Senator Pomerene—“I heard the statement made that the entire board was Democratic, and I had understood that Mr. Warburg was a Republican, or had been, in his affiliations.”

Mr. Warburg—“Well, so I was; and my sympathies were entirely, in the early campaign, for Mr. Taft against Mr. Roosevelt in the first fight. When later on Mr. Roosevelt became President Wilson’s opponent my sympathies went with Mr. Wilson . . . .”

Senator Reed—“Well, you would count yourself a Republican, generally speaking?”

Mr. Warburg—“I would.”

Senator Bristow—“It has been variously reported in the newspapers that you and your partners directly and indirectly contributed very largely to Mr. Wilson’s campaign funds.”

Mr. Warburg—“Well, my partners—there is a very peculiar condition—no; I do not think any one of them contributed largely at all; there may have been moderate contributions. My brother, for instance, contributed to Mr. Taft’s campaign.”

Senator Bristow—“Just what would you consider a moderate contribution to a presidential campaign?”

Mr. Warburg—“Well, that depends who the man is who contributes; but I think anything below $10,000 or $5,000 would not be an extravagant contribution, so far as that should be—”

(Examination resumed another day)

Senator Bristow—“Now, Mr. Warburg, when we closed Saturday some Senator asked you in regard to political contributions, and I understood you to say that you contributed to Mr. Wilson’s campaign.”

Mr. Warburg—“No; my letter says that I offered to contribute; but it was too late. I came back to this country only a few days before the campaign closed.”

Senator Bristow—“So that you did not make any contribution?”

Mr. Warburg—“I did not make any contribution; no.”

Senator Bristow—“Did any members of your firm make contributions to Mr. Wilson’s campaign?”

Mr. Warburg—“I think that is a matter of record. Mr. Schiff contributed. I would not otherwise discuss the contributions of my partners, if it was not a matter of record. I think Mr. Schiff was the only one who contributed in our firm.”

Senator Bristow—“And you stated that your brother had contributed to Mr. Taft’s campaign, as I understand it?”

Mr. Warburg—“I did. But again, I do not want to go into a discussion of my partners’ affairs, and I shall stick to that pretty strictly, or we will never get through.”

Senator Bristow—“I understood you also to say that no members of your firm contributed to Mr. Roosevelt’s campaign.”

Mr. Warburg—“I did not say that.”

Senator Bristow—“Oh! Did any members of the firm do that?”

Mr. Warburg—“My answer would please you probably; but I shall not answer that, but will repeat that I will not discuss my partners’ affairs.”

Senator Bristow—“Yes. I understood you to say Saturday that you were a Republican, but when Mr. Roosevelt became a candidate, you then became a sympathizer with Mr. Wilson and supported him?”

Mr. Warburg—“Yes.”

Senator Bristow—“While your brother was supporting Mr. Taft?”

Mr. Warburg—“Yes.”

Senator Bristow—“And I was interested to know whether any member of your firm supported Mr. Roosevelt.”

Mr. Warburg—“It is a matter of record that there are.”

Senator Bristow—“That there are some of them who did?”

Mr. Warburg—“Oh, yes.”

Senator Bristow—“Will you please indicate—or do you care to indicate—what members of your firm supported Mr. Roosevelt in that campaign?”

Mr. Warburg—“No, sir; I shall have to go on the principle that I cannot disclose the business of a member of my firm.”

The result was this: that in a three-cornered fight between three candidates, Roosevelt, Taft and Wilson, the men who constituted the firm of Kuhn, Loeb, & Company, chief Jewish financial institution of the United States, distributed their support among all three. Schiff for Wilson; Felix Warburg for Taft; and an unknown for Roosevelt—was that unknown Mr. Kahn? In any case, Wilson won, and the above examination relates to a member of the firm of Kuhn, Loeb & Company receiving an important appointment which gave him large power over the finances of the United States.

The point of not discussing the affairs of Kuhn, Loeb & Company was frequently made by Mr. Warburg.

“I cannot discuss the affairs of the firm nor my partners, nor be asked to criticize acts of my partners, either to approve them or in any other way. I would like to say that before we come to the point where I would feel that I should not answer any question,” said Mr. Warburg.

The principle of this objection was conceded by the Senate Committee, but that it ought to serve as a blanket injunction against a number of pertinent inquiries was doubted.

Senator Bristow—“But you are a partner in this firm, and have you not had something to do with its operations and its management?”

Mr. Warburg—“Yes.”

Senator Bristow—“Does that not go to show your general views and practices as a financier and as a citizen and as a business man?”

Mr. Warburg—“Yes; but you have got to take them individually. . . . I cannot permit my firm to be drawn into this discussion.”

Senator Bristow—“But how can you divest yourself from your firm when you have been one of the managers of the firm?”

Mr. Warburg—“I shall divest myself of the firm.”

Senator Bristow—“If the firm has done something that I might think was improper—to illustrate, being called upon to say whether or not I approve your nomination to this responsible position—have I not a right to know what your attitude was in regard to that transaction which your firm performed?”

Mr. Warburg—“Well, inasmuch as my answer there might be a criticism of my firm, I would beg to be excused, and I would leave it to the committee to draw its own conclusions. . . .”

In examining Mr. Warburg about the handling of $100,000,000 Southern Pacific securities, the same difficulty was experienced; Mr. Warburg objected, “but we are getting here again into the transactions of my firm!”

To which Senator Bristow retorted—“Ah! but when you participated in the profits of the transaction, is it not a part of your business life?”

Mr. Warburg—“Certainly it is a part of my business life, and there is no reason why I should not be proud of it. But as a matter of principle I think we should not get into a discussion of the business of my firm.”

Senator Bristow—“I am discussing your business.”

Mr. Warburg—“No, you are discussing the firm’s business.”

Senator Bristow—“Did you get any of the profits that came from the handling of this $100,000,000?”

Mr. Warburg—“You may take it that whatever my firm did I got my profits—my share in the profits.”

Senator Bristow—“Your share in the profits. Now, without being specific, I take it for granted that this was quite material; that that was quite a material interest in size; that is, that you are one of the important members of the firm.”

Mr. Warburg—“I am one of the important members of the firm.”

Senator Bristow—“Yes, I think the testimony and the report here show that you are the third important member—or the second, which is it?—of the firm.”

Mr. Warburg—“We are not numbered.”

Senator Bristow—“You are not; all right.”

Mr. Warburg—“There is Mr. Jacob H. Schiff who is the senior.”

Senator Bristow—“Yes.”

Mr. Warburg—“And the others rank very much alike.”

Senator Bristow—“Yes. We may take it for granted, then, that whatever profits accrued to your firm in the handling of this business here since you became a member of it, you participated in the profits as one of the partners.”

Mr. Warburg—“Yes, sir.”

Senator Bristow—“Yes. So I will assume then, of course, that you participated in the marketing of $113,000,000 of Union Pacific, and so on.”

The responsibilities of a member of the Federal Reserve Board, especially such a member as Paul M. Warburg would be (for it was recognized that because of his purpose and connections he would become a dominating factor), were very great, especially at the time when the appointment was being considered. They are as important now, of course, but in a different way; it is not now a question of military safety. This thought was evidently in the mind of the senators, as the following shows:

Senator Hitchcock—“Mr. Warburg, one of the important functions of the board is to guard the gold supply of the country, and it has been thought that it is very important to have men on the board who had at heart only the interests of the United States, and had no foreign interests or alliances. You have said that you proposed to divest yourself altogether of your banking connections in Germany. Have you any other interests in Europe?”

“No, not to speak of,” said Mr. Warburg. “I may have very unimportant things, like everybody has; but I could dispose of those; it would not amount to anything.”

Senator Hitchcock—“Nothing in the line of banking?”

Mr. Warburg—“No.”

A few moments later the chairman, Senator Owen, said—(the date was August 1, 1914)—“We are on the eve of a great European war, and the organization of this board is of great national importance.”

At this time, Mr. Warburg was a member of the Hamburg firm. He testified (p. 7)—“I am going to leave my Hamburg firm, though the law does not require me to do so.”

A part of the German firm of his father and brothers, a part of the American firm to which he and his brother were related by marital as well as financial ties, Mr. Warburg repeatedly said he would break off all business relationships so that he, like Caesar’s wife (to quote himself), should be above suspicion.