The Journal of History     Fall 2003     TABLE OF CONTENTS


The Real Cause of the Depressions

by Jimmy Satori

Yes, it was seventy four years ago, October, 1929 when the "Big Depression" supposedly started, specifically October 29th is the almost universally accepted date on which the depression started. Like so many other reported "facts" about United States history in the past century, this is only a half truth. Half truths are often much worse than outright lies since they more easily mislead people.

In actuality, the roots of the "Great Depression," as it is also known, go back much further. An in-depth report could trace the roots back to before the founding of this country. However, for the purposes of this article they may be traced back to a secret meeting which was held on Jekyll Island, off the coast of Georgia near the end of 1910.

Americans had always been suspicious of and opposed to the idea of a central banking system in the United States similar to those in England, France, Germany, etc. However, that opposition had been "softened up" by depressions skillfully created and managed by J.P. Morgan in 1893 and again in 1907.

These deliberately contrived "depressions," which caused great hardship among common people and farmers, were intended to give validity to the claims that a "central banking authority" was necessary to control the activities of the so-called "robber barons" and large banking cartels when, in reality, it was those very banking cartels which were secretly behind the push for the central bank. (Note: We should not blame private enterprise for the crimes committed by the so-called "robber barons." The crimes committed by the large bankers and industrialists were, in general
achieved through the use of government control and influence. That is monopolistic capitalism, not competitive capitalism upon which this country was founded. It is extremely important to recognize and remember the difference.)

Having set the stage with two "depressions," the conspirators gathered at Jekyll Island to map the campaign to install a central bank system in the United States. Nelson Aldrich, known as "J.P. Morgan's broker in the Senate" issued secret invitations to Henry P. Davison of J.P. Morgan Co.; Frank A. Vanderlip, President of the Rockefeller National City Bank; A. Piatt Andrew, Assistant Secretary of Treasury; Benjamin Strong of Morgan's Bankers Trust Co.; and Paul Warburg of Kuhn, Loeb and Co. At stake was control over the monetary system of the United States and hence over our economy. As a result of that meeting and the secret endeavors which came out of it, in late 1913 the Federal Reserve System was foisted on an unsuspecting American citizenry.

Control of the money supply and of the mass media of this country were the tools which were used to bring about the Great Depression. Before the 1920s there was very little interest in or involvement with the stock market by the average citizen. Prior to about the mid-1920s the bankers had quietly been amassing large amounts of stock shares in many industries in the US. In the early 1920s "human interest" stories began to appear in the newspapers of this country telling about a common person who had become rich in the stock market: "Here's Joe Citizen, last year he was a common janitor struggling to make ends meet. Today, he's a millionaire, drives a Stutz Bearcat and lives in luxury. He got rich by buying stock in the market on margin and when the stock went up he made a killing." The public ate it up.

It was great: You bought stock for only 10% of its value and when the stock went up 10%, you made 100% profit! What an easy way to get rich! A not clearly thinking public went wild over the next few years. The market was going up, and up, and up. You just couldn't lose! The papers fed the frenzy. People were mortgaging their homes, their farms, taking loans against their life insurance, etc. Anything to get into the market and get some of that easy money!

The bankers, through their control of the Federal Reserve facilitated the whole process by lowering the margin requirement (how much of your own money you had to invest) and by making money easily available for loans against whatever you wished to pledge. All this time, the "Big Money Boys" were eagerly selling the stock shares at ever higher prices, which they had bought very cheaply. The boom was on.

What NO-ONE had pointed out to the average investor was that, while if your initial 10% investment went up 10% and you made 100% profit, if it went DOWN 10% you were 100% WIPED OUT! It should have been obvious but who wants to look on the gloomy side. Besides, the market was always going to go UP, wasn't
it? Sadly, NO!

In mid 1929, the "Big Money Boys" gradually started getting out of the market. The Federal Reserve began slowly raising the margin requirements and tightening credit. On October 29, the controls were drastically tightened and then the beginning of the end took place. Those who recognized what the higher margin requirement and tightened credit meant immediately "dumped" what ever stock they held for whatever they could get out of it. A panic started and everyone was trying to sell at once. With everyone selling and nobody apparently buying, inevitably the prices went down and down and down. People were being pauperized overnight. EVERYONE was losing money in the market.

(PSSSST! Come over here! Let me tell you a big secret which practically no one knows: EVERY time someone loses money in the stock market, someone ELSE receives that money! The money doesn't simply evaporate into thin air, it is transferred from one person to another! While hundreds of thousands were being pauperized, others, in on the deal, were becoming fabulously wealthy.)

The market was started down October 29, 1929 and kept going down until about mid 1933! Over three years of decline-- which had never been known before. The Dow Jones went down over 90%! Any time there was any apparent slowing of the downward momentum, there were people who stepped in and sold millions of dollars worth of stock short - selling stock they did not own with the intent of buying it back later at a cheaper price. If you know how and have the resources, you can make money in the market when it is going down as well as when it is going up. If you have enough resources, you can even determine which way the market will go!

The "Big Money Boys" kept it going down for over three years, gaining enormous profits in the process which were added to the fortunes made while the market was going up during the boom years. The whole operation had been hugely successful and vastly profitable but now they were faced with problems. Money doesn't do any good in the bank - it has to be invested to make any real profits. What were they to do with the money? What could they do with it which would not immediately start the economy to recover? How could the money be invested most profitably?


The Journal of History - Fall 2003 Copyright © 2003 by News Source, Inc.