Murray Newton Rothbard was a professor of economics. He was also one of the most famous members of the Austrian School.
Rothbard was a student of Ludwig von Mises who in his magnum opus, Human Action presented a praxeological system. It started from action axiom and deduced most of economics.
Rothbard greatly admired von Mises and wanted to continue his praxeological work beyond economics. Step by step Rothbard put the Austrian pieces together into one coherent praxeological system by writing books on economics, politics, sociology and history.
But Rothbard did not stop there. Unlike most other economists Rothbard believed that rational ethics was possible. Just like economics and politics are based on scarcity and property rights so is ethics. He saw history as a battle between cooperation and exploitation, good and evil, freedom and slavery. Exploitation theory and the concept of the ruling elite were central to his theory of history.
Rothbard had a mission. He wanted to reveal the ruling elite by writing a book on world history. He began his task with multi volume history of colonial and early independence America, Conceived in Liberty. As the name of the book already tells us, Rothbard wanted to show how first the British and the federal state threatened the liberty of the Americans.
In fact, he believed that the federal American state to be a much greater threat to liberty than the British monarchy ever was.
Rothbard finished the fourth and final volume of Conceived in Liberty in the seventies. For some reason he never continued the series into the 1800’s. He continued to write history but his writings on the ruling elite are dispersed among his many books and articles. These writings have now been collected and chronologically organized into an excerpted summary.
This essay continues the summarizing project by focusing on the theoretical side of his writings. It demonstrates how Rothbard applied praxeological analysis to develop the traditional theory of the ruling elite into an all-out expose of what Rothbard called RWE, Rockefeller World Empire.
Theory and history
In order to fully understand Rothbard’s analysis of the ruling elite one must start from the beginning: Methodology. The Austrian School starts from methodological individualism. States and other collectives do not act. Only individuals act. However, these individual actions are subjective. How then to scientifically study history?
Ludwig von Mises gave his answer in his last book, Theory and History. An Interpretation of Social and Economic Evolution. Mises developed a thymological method where history is a matter of both scientific theory and subjective understanding.
As the title of the book already tells us, von Mises emphasised that you can study history only through a theory. Otherwise you would be at a loss to organise and understand any events in a coherent manner. Without a theoretical framework – especially economic and political – it is impossible to interpret historical data.
All historians must have a theory, so it is best to have a clear and consistent one. For von Mises and Rothbard this meant that you must start from the axiom of human action and then systematically proceed through the categories and laws of thought (logic) and action (praxeological science).
On this apodictic foundation one then builds the study of interaction (economic and political science) and empirical phenomena (natural science). Science then gives the historian a framework inside which he must subjectively interpret and understand specific historical events.
All historians agree that one must use theories from natural science to understand history. For example, by studying physics we know that witches have not influenced world history except in the imagination of some people. However, not all scientific theories are as clear cut as physics. Even in biological and medical sciences there are many competing theories.
In social sciences the differences between competing theories are so great that there have developed different schools of thought. A historian must compare competing scientific theories and then try to pick the best ones for the study of historical phenomena. If not a polymath then at least he must understand the basics of many sciences.
A historian must understand not only the laws of natural but also social sciences.
Laws of economics
Ludwig von Mises emphasized that the laws of logic and social science are even more certain than the laws of natural science. The former is based on the categories and laws of thought and action. Therefore, they are apodictic and absolute while the latter are hypothetical and ultimately uncertain.
Rothbard proceeded to build social science on these absolute praxeological foundations. He emphasized that the nature of man and existence is restricted by the fact that we are physical beings in a physical universe governed by natural laws. We are individuals who do not live in Eden but in a world of scarcity where conflicts can be prevented only with property rules.
Property can be acquired only by voluntary or aggressive means. Economics studies the former and politics the latter. Both deduce categories and laws of action from the axiom of action.
From the law of value maximization is deduced the law of marginal utility from which is further deduced the law of supply and demand. Rothbard pointed out that a historian must fully understand these laws of as well as the concepts of barter, money, banking and the price system that coordinates the exchanges of millions of people. Otherwise a historian is at a loss to understand how the world really works.
Rothbard himself studied economics under professor Ludwig von Mises. In the sixties Rothbard continued Mises’ praxeological work by publishing a treatise on economics: Man, Economy and the State: A Treatise on Economics.
Rothbard emphasised that economics is much more than a mere analysis of trade. Economy is the material basis of civilisation. Policies that threaten private property rights, voluntary exchange and the price system have monumental effects on society. This is why Rothbard always emphasised economic factors in his study of history and especially the ruling elite.
Laws of politics
The Austrian school emphasizes the importance of property and property rules. However, Rothbard went a step further with absolute propertarianism. He believed that all rights must be defined in terms of objective and absolute property rights. This could be done by deducing all property rights from self-ownership with the help of a Lockean homesteading rule, i.e. first-use-first-own-rule. An individual owns himself and can obtain more property only by homesteading, producing or contracting. All rights are property rights.
Rothbard emphasized that only in a propertarian society all interaction can be voluntary. Unfortunately, in practice many people find it easier to commit aggression. Criminals and mafias are an example of aggressive interaction. However, a much more important and pervasive example of aggression is the state. Rothbard emphasized that it is nothing but an institution of aggression. By monopolizing arbitration, it automatically violates the right to self-ownership.
For Rothbard, political science studies the aggressive behaviour that is institutionalized in a mafia-like organisation called the state. With his anarchist insights Rothbard went further than von Mises. In the seventies Rothbard published his anarchist treatise on politics, Power and Market.
Rothbard showed how the state aggressively intervenes in three ways: Autistic intervention (slavery), binary intervention (taxation) and triangular intervention (price controls). Furthermore, the political process makes the state even more mafia-like. It creates special interest groups which try to manipulate the state to give them subsidies (binary intervention) and especially monopolies and cartels (trinagular intervention). In this way the whole state becomes a statist cartel machine.
This has two dangerous consequences. First, the state has the tendency to violate ever more property rights. State is socialism. Second, society is divided into exploiters and the exploited. Since history is dominated by states, Rothbard saw history as a struggle between the elitist exploiters and the exploited populace.
Historian who is ignorant of the interplay of economic and political science is at a loss to understand banking, inflation, business cycles, depressions and in general the consequences of economic interventionism and socialism. Rothbard emphasized that a historian who believes in statism is no more scientific than someone who believes in alchemy and magic. The fact that most historians are blissfully ignorant of praxeology makes then into historians of statist magic and witchcraft.
Laws of ethics
Rothbard largely followed Mises in economics and politics. The big disagreement came in ethics. Mises believed that science must be value-free. He did not judge over questions of justice, right and wrong. Rothbard disagreed.
In the eighties Rothbard published his ethical treatise based on natural law: Ethics of Liberty. There is a clear right and wrong, good and evil. Rothbard bases this on natural law ethics. It starts from the axiom of self-ownership and deduces from there the whole body of ethics concluding that all voluntary interaction is ethical, and all aggression is unethical. This is why Rothbard’s study of history not only portrays and explains but also judges.
Rothbard believed that historians must take ethics into consideration. Unlike most historians who profess neutrality Rothbard makes it clear what ideas and actions are right or wrong. Naturally this makes Rothbard’s study of history even more exciting. It sometimes sounds like a crime story in the tradition of the great classical liberal historian Lord Acton.
The theories of natural and social sciences are crucial in understanding history. However, they are not enough. They just give the correct framework. The next step is to look in detail at real events and sort the gruff from gaff. How is this to be done?
Here again Rothbard is a system builder. Just like in economics, politics and ethics so in history one must apply methodological individualism and proceed from micro to macro, i.e. from individual actions to social phenomena. However, this is not wholly an objective science but involves subjective evaluations of individual plans and actions. Thymological history has the elements of both art and science.
Each relevant action must first be understood on its own terms starting from the individual’s motives. Individual action must be evaluated on the basis of individual’s subjective costs and benefits. It is also important to put the individual into a social context by studying his ideology, family, friendships and career. However, it is not enough to just concentrate on the details. One must connect all the relevant dots into context with intellectual history.
From the praxeological perspective ideas are the building blocks of history. Not all ideas have practical consequences, but all actions are based on ideas. Rothbard emphasised the importance of intellectual history as the foundation of all history.
In the long run it is not states but ideas that rule the world. It is the belief in statism that determines the direction of history. Rothbard emphasized that monopoly on arbitration and violence is in practice the most evil and fatal idea in human history. State itself is aggression and tends to become ever more aggressive and evil. Statism is the cancer of human history.
Rothbard repeatedly emphasized that there is no need for a state since voluntary relations are quite enough to organise a society. Even security can be produced by voluntary means with arbitration, covenant communities and insurance companies competing on the free market. Rothbard notes that the classical liberal Gustave de Molinari already pointed this out in his book The Production of Security.
Finally someone was spreading the most important idea of all: Pure freedom. The wheel of history was finally turning and the gates of freedom were opening.
But then something unexpected happened. All the other classical liberals like Frederick Bastiat strongly defended the need for a state. And not only that. They attacked de Molinari as an dangerous utopian.
It is instructive to note the storm of contention that Molinari’s article and his Soirées brought about in the laissez-faire stalwarts of French economics. A meeting of the Societe d’Economie Politique in 1849 was devoted to Molinari’s daring new book, the Soirées.
Charles Coquelin opined that justice needs a ”supreme authority,” and that no competition in any area can exist without the supreme authority of the State.
In a similarly unsupported and a priori fulmination, Frédéric Bastiat declared that justice and security can only be guaranteed by force, and that force can only be the attribute of a ”supreme power,” the State.
Neither commentator bothered to engage in a critique of Molinari’s arguments.
Unfortunately de Molinari caved in. He later renounced his thesis and started to support the existence of the state.
By supporting the existence of the state the classical liberals supported false consciousness that was naturally further strengthened by the state itself through public academia, education and media. Thus, it was the classical liberals who literally doomed mankind into statism and ever-increasing aggression and wars.
When public opinion accepts the existence of the state not only politics but all life and history itself becomes politicised. Society is divided into rulers and the ruled. Rulers are those who control the statist monopoly machinery of arbitration and violence.
In monarchical times this was clear enough but Rothbard emphasises that nothing has fundamentally changed. The state has acquired new democratic clothes, but it still is based on the monopoly of arbitration and violence. The only thing that has really changed is that democracy makes it easier to hide the ruling elite.
However, there is one thing the ruling elite cannot hide very well: the control of the ultimate monopoly, the central bank.
You cannot hide the monopolistic money machine. This is why at the center of Rothbard’s study of history is monetary history and especially the development of banking and the central bank.
Luckily, from a historian’s point of view it is much easier to study states and political history than the much more complex voluntary interactions in free market and culture. It is relatively easy to
see where a politicised aggressive society is heading by just looking at legislation and especially banking regulations.
The task of sorting out the aggressors from the victims is even easier when studying the Anglo-American ruling elite. There the classical liberal ideas have been strongest and political battles have often been relatively clear cut between liberty and statism. Luckily also from the historian’s perspective Anglo-Saxon institutions have relatively good record keeping.
Moreover, both the British prime minister and the American president and their cabinets have great power. This is especially clear when studying foreign policy and wars that are not only politically crucial but in their nature highly centralised. This is why Rothbard in his book Wall Street, Banks and the American Foreign Policy divided his study of American history into the reigns of presidents and prime ministers.
Rothbard is quite traditional in concentrating on political history and the reigns of state rulers. However, unlike most historians Rothbard does not stop there. He studies the selection process of presidents and shows how political parties are controlled by special interest groups and especially by big bankers.
Rothbard emphasised that analysing individual actions or organisational policies it is important to look behind the words into real interests. Cui bono? Who benefits? And when studying the ruling elite this usually boils down to following the money. Only then can draw the big picture from individual actions and plans.
When studying special interest groups Rothbard tries to look behind their rhetoric to see what selfish goals they want to fulfill through political power. Rothbard notes that special interest groups are first and foremost after monopoly and cartel privileges.
It is almost obvious that not only manufacturers and labour unions but also bankers, lawyers, doctors, teachers and especially intellectuals want cartels. Not only because of financial gain but also so that they could have information and interaction cartels that protect their reputations and social networks.
Modern democracy is one vast cartel machine where everybody wants special cartel privileges for themselves but want to deny it to others. Over time special interest groups become ever more skillful not only in manipulating the state but also in manipulating the public with the help of intellectuals. Rothbard shows in detail how intellectuals are easily bought with subsidies and cartel privileges. He names the names and often shows how transparent many intellectuals are in their lying and self-serving hypocrisy.
With subservient intellectuals and media, the ruling elite can set the parameters of debate. The public does not have much of a chance in resisting the ruling elite and its cartel machine. Thus, the public can relatively easily be subjugated under a false consciousness so that they do not even see how they are exploited by the cartel economy.
Rothbardian emphasis on the statist cartel machine is radical but not unique. The Chicago school and the Public Choice school also largely agree on the cartel nature of the modern democratic states. However, Rothbard parts their company by explicitly pointing out that by far the most important monopoly is the central bank that leads a bank cartel.
The power of the money machine seems so obvious that it is puzzling why most historians do not zero in on the power of the central bank led bank cartel. Rothbard himself believed that the banks had manipulated the intellectuals through academia and media. He also seems to have believed that most of the economic historians have been outright bought.
What would be more natural? If you had a monopolistic money machine would you not buy off your most important actual and potential opponents?
This is also why Rothbard was supportive of conspiracy research. Naturally he warned of too simplistic conspiracy theories but still believed that conspiracies exist especially among the ruling elite. Thus, it is not surprising that the ruling elite does everything in its power to discredit the whole concept of conspiracy research.
Rothbard emphasized that conspiracy theories are doubly beneficial:
It is also important for the State to inculcate in its subjects an aversion to any outcropping of what is now called “a conspiracy theory of history.” For a search for “conspiracies,” as misguided as the results often are, means a search for motives, and an attribution of individual responsibility for the historical misdeeds of ruling elites.
If, however, any tyranny or venality or aggressive war imposed by the State was brought about not by particular State rulers but by mysterious and arcane “social forces,” or by the imperfect state of the world—or if, in some way, everyone was guilty (“We are all murderers,” proclaims a common slogan), then there is no point in anyone’s becoming indignant or rising up against such misdeeds.
Furthermore, a discrediting of “conspiracy theories”—or indeed, of anything smacking of “economic determinism”—will make the subjects more likely to believe the “general welfare” reasons that are invariably put forth by the modern State for engaging in any aggressive actions. (Murray N. Rothbard. For A New Liberty: The Libertarian Manifesto. New York: Collier Books, 1978. p. 70.)
Educate people and they will see that the emperor has no clothes. Rothbard notes that this was brilliantly expressed already in the 1500’s by de Boetie.
Rothbard notes that it was in America where the battle between the people and the bankers was most explicit. Jeffersonian-Jacksonian movement emphasised that the money monopoly and banking cartel are the foundation of the ruling elite and the greatest danger to freedom.
By the 1830’s Jackson had organised a movement against the central bank. Soon Jacksonians were triumphant, and the central bank was stripped of its privileges. Then the Jacksonians proceeded to do that for all the other banks. However, again the classical liberals failed on the ideological level.
They failed to support both a pure gold standard and 100% reserve banking. First, their support of the gold standard was confused. Virtually all Jacksonians and other classical liberals who supported the gold standard also supported the use of national names for units of gold like the dollar and the pound. This was bound to create confusion in the public mind and make it easier for the opponents of pure gold standard to find excuses for its manipulation and eventual abandonment.
Second, the opposition to fractional reserve banking was never strong enough even among classical liberals. Rothbard noted that one reason for that was the complicated nature of banking.
Afterall, in principle it is possible to have a non-cartellized dollar gold standard and even free banking with less than 100% reserves. On the other hand, if you at the same time have a state then manipulation of money and banking will become a practical certainty.
Businessmen or manufacturers can either be genuine free enterprisers or statists; they can either make their way on the free market or seek special government favors and privileges. They choose according to their individual preferences and values. But bankers are inherently inclined toward statism. (Murray N. Rothbard. Wall Street, Banks, and American Foreign Policy. Burlingame, Calif: Center for Libertarian Studies, 1995. P. 1.)
Not all bankers are inherently statist but only fractional reserve bankers. However, the profits from fractional reserve banking are so great that practically all bankers succumb to temptation and start supporting fractional reserve banking. In practice all bankers are statists.
Fractional reserve bankers and their clients will certainly demand a state bailout once the banks are in trouble. The state will be only too eager to help in exchange for some financing. The symbiosis of fractional reserve banking and the state is all too natural and inevitable. Only a very strong public opinion in favour of unambiguous and pure gold standard and 100% reserves can stop the state and bankers tinkering and manipulating the monetary system.
The symbiosis of the bankers and the state becomes a practical inevitability whenever there is a war. No wonder the American Civil War turned back the clock and the banking system became again highly cartellized. This in turn led to the cartellization of the whole economy. After all, bank cartels have the means to create ever more business cartels.
The ruling elite
By the beginning of the twentieth century the power of the cartels had become so enormous that it was becoming obvious to the public. A ruling elite was forming. Thus, we find a famous The Seven Men article in McClure’s:
Seven men in Wall Street now control a great share of the fundamental industry and resources of the United States. Every year they and their successors will control more. They dominate, with their allies and dependents, the national machinery for the making and holding of great corporate monopolies, into which a greater and greater part of the capital and business of the country must inevitably be drawn.
Three of the seven men – J. Pierpont Morgan, James J. Hill, and George F. Baker, head of the First National Bank of New York – belong to the so-called Morgan group; four of them – John D. and William Rockefeller, James Stillman, head of the National City Bank, and Jacob H. Schiff, of the private banking firm of Kuhn, Loeb & Co. – to the so-called Standard Oil-City-Bank group.
Not one of these seven men ever invented a mechanical operation or created a great industry. They are one thing, and one only – makers and traders in monopoly; the oldest and most reliable makers of monopoly in America.
(Masters of Capital in America. The Seven Men by John Moody and George Kibbe Turner. McClure’s Magazine. August 1911. P. 418-419.)
McClure’s article cried out for a scholarly research project into the power structure of America and ultimately the world. That would require many professional historians who would spend years in research. Curiously, the historical profession is much more interested to study the ruling elites of antiquity than it is to study the modern ruling elites. Even historians belonging to the Austrian school are reluctant to study the modern ruling elite in detail.
Fortunately, there have been a few leftist historians who have looked in more detail at the elites and modern power structures. From the New Left there emerged Gabriel Kolko who showed that at the beginning of the twentieth century Big Business had achieved regulatory capture, i.e. it controlled the regulating agencies and thus was largely able to regulate itself so as to minimize competition.
Rothbard integrated Kolko’s analysis into radical Austrian School framework. Then Rothbard took a further step. He proceeded to show how it was the Big Banks who orchestrated not only regulatory but also state capture.
The rule of dynasties
In his history of the modern ruling elite, Rothbard repeats the central thesis of the McClure’s article but in a much more systematic and detailed way. He reveals the names and shows the connections between bankers and politicians. This was not easy since those who control the money machine have a natural interest to deny self-interested behaviour and claim that they are just public-spirited servants. They also have resources to largely buy off the opposition and carefully cover their tracks.
But Rothbard was not discouraged. First, he showed in detail how modern profession of economics was developed by bankers to become their intellectual bodyguards. Second, he studied the personal networks of bankers. Not only who owns what and who works for whom but also who is a friend or related to whom. After all, these usually go hand in hand.
What emerged from this detailed study is what has always emerged throughout history: Dynasties. Those who make it big in business tend to trust their close kin most and create kinship based business dynasties.
This is not surprising since family networks lower information costs. First, if you have raised a child you tend to know his strengths and weakness much better than you would know about a stranger. Second, raising a child tends to create a mutual bond of love and loyalty or at least you will have a good estimation of its strength.
Three American dynasties
McClure’s article noted that banking and business in twentieth century America was centred around three great dynasties or houses: Morgan, Rockefeller and Kuehn, Loeb. Morgans were led by J.P. Morgan, Rockefellers by J.D. Rockefeller and Kuhn, Loeb by Jacob Schiff.
Rothbard agreed but went a step further by joining this analysis of American ruling elite with professor Carroll Quigley’s analysis of the British ruling elite that was centered around Cecil Rhodes and Alfred Milner.
Together the British ruling elite and the House of Morgan formed the Anglo-American Establishment. Rothbard then explains how it was challenged by the new rising power of the House of Rockefeller that build a coalition of various ethnic minority dynasties.
The dynastic nature of the ruling elite is not very surprising. World history is largely a history of royal and aristocratic dynasties. This is natural from both economic and genetic point of view. Neither is it surprising that each dynasty leads a network of families or subdynasties that are connected not only by blood but also by banking and business alliances. Since each subdynasty also has its own network what emerges is largely a hierarchical structure of many concentric rings of family, business and friendship networks.
Naturally these networks are not rigid or exclusive so Rothbard aptly called them ambits of influence. In the middle of the concentric rings is the leader of the family, the patriarch. Usually this is determined by sex and age as with the House of Morgan where the leader was first the patriarch Junius, then his son J.P. and then grandson Jr. or Jack Morgan, as he was called.
The first ring around the patriarch consists of his wife and their closest relatives. In this way the first ring consists of a coalition of several families. In the House of Morgan, the patriarch Junius had married Juliet Pierpoint who was from a well-connected Wasp family. Thus, Junius named his son and heir John Pierpoint. From birth J.P. was destined to rule over a great House. The first names of the members of the ruling elite usually reveal a dynastic alliance.
The banking house of Kuhn, Loeb was led by Abraham Kuhn and Solomon Loeb. Kuhn, Loeb was part of an interlocking Jewish network of bankers. As was customary at the time, the alliance between Abraham Kuhn and Solomon Loeb was cemented by marrying Kuhn’s daughter to Loeb.
When Kuhn, Loeb became a very successful banking house they invited from Germany a young banker, Jacob Schiff. Soon they gave him not only the hand of Loeb’s daughter but also a leadership position in the company. Jacob Schiff became the undisputed patriarch of the House of Kuhn, Loeb.
The evolution of Rockefeller dynasty leadership was more complex. The patriarch William or “Big Bill” as he was called, stepped down because of his shady past. He gave the family leadership to his three sons John D., William Jr. and Frank. The oldest son John D. was officially the leader of this triumvirate, but his brother William Jr. seems to have been as powerful. Frank was the youngest and pushed aside since he was often in bad terms with his older brothers.
John D. married Laura Spellman, while William Jr. married Almira Goodsell. Neither Spellmans nor Goodsells were part of the ruling elite. This only shows how the Rockefellers were outsiders and almost self-made men. Their power flowed from their successful oil business.
In order to defend their expanding business empire, the need for family alliances became ever more important for them. Consequently, John D. married his only son John D. Jr. to Abigail Aldrich from the Aldrich political family while William Jr. married his two sons to the daughters of the Stillman banking family. By joining their economic oil power with both political and banking power Rockefellers were able to create the all-important banking dynasty that would later control both the Chase and Citycorp banking giants.
Additional rings of power include further relatives, leading employees and trusted friends. Also religion, race and ideology can play a role depending on the strategies and traditions of the dynasty. In the early twentieth century ethnicity was also very important. This can also be seen from the three ruling dynasties. They all had a distinct ethnic character. The Morgans were mostly elitist Wasps while the Kuhn, Loeb were Jews. Rockefellers were the real outsiders, English-German protestants with unclear ancestry.
The New World Order of The Three Houses
Rothbard showed that the three Houses heartily agreed on the need to build a cartel economy first for America and then for the whole world. Rothbard shows in detail how the houses cooperated in cartelizing the economy in three ways.
First, they tried to manipulate public opinion by systematically supporting progressive intellectuals who believed that the state must regulate the economy. Intellectuals were naturally grateful for financial support and plush positions in universities and media. Thus, they were not inclined to complain when the three Houses took a leading position in state organs regulating their own businesses effectively creating state sanctioned cartels. The excuse offered to the public was the so-called state-business partnership. By 1914 the three houses had already achieved both regulatory and state capture.
Second, the three Houses united in manipulating the state to start building a global empire. In this way other countries could be forced to accept American led cartels in the name of “Open door”-policy. Especially important for the Houses was making sure that their loans abroad would not be threatened. Every time a revolution was threatening American cartels or loans the state department and the army sent in either covert intelligence officers or the marines. Or both.
Rothbard notes that both world wars were also a matter of protecting American cartels and loans. The Monroe Doctrine, Open Door-policy, military-industrial cartel the domino theory were the means to extended the national cartel economy into an international cartel economy.
Third, the three Houses all agreed on the need to cartelize the banking industry with a central bank. Rothbard shows in great detail how for over twenty years they systematically worked for an American central bank by manipulating the public and politicians. They finally succeeded in 1913 with the establishment of the Federal Reserve Bank, which was neither federal nor a reserve bank. Then they started to work for a world state and a world central bank. This globalist project is still ongoing with the help of NATO protected petrodollar.
War of the Three Houses
The three Houses heartily agreed on the need for a national and then a global mega cartel. However, not surprisingly they disagreed on who should be the master running it. At the beginning of the 20th century a great battle of titans ensued where Morgans pushed for supremacy and tried to destroy or at least submit both the Houses of Rockefeller and Kuhn, Loeb.
In this the Morgans tried to take over both the Democrat and Republican parties. The process climaxed with the mysterious assassination of Rockefeller-allied President William McKinley. His vice president Theodore Roosevelt was totally in the Morgan camp. Now president, Roosevelt proceeded to wage war against Big Business with progressive antitrust legislation. However, only Rockefeller trusts like Standard Oil were broken up while the Morgan trusts like US Steel were left relatively untouched.
But Rockefellers did not submit. In a few years they managed to get their man Taft president and he then in turn proceeded to break Morgan trusts. All the while public believed that there was a true progressive war on Big Business.
Why did the Houses choose to go to war with each other? Why not just have peacefully coexisting cartels? Economics gives the answer: Cartels are always unstable and tend to break up. This is because of both internal and external competition. The members of cartels have a great incentive to undercut each other. Those outside the cartel have an even greater incentive.
Moreover, a coalition cartel of the three Houses was extremely unstable especially since each one wanted to control the ultimate money machine, the FED. Rothbard noted that in a politicised economy there is an inexorable tendency toward a monopoly. Within each statist country and ultimately globally there is a tendency towards centralisation of power into the hands of one cartel and one dynasty.
From Morgan to Rockefeller World Empire
The war of the titans raged during the first decades of the twentieth century. The Morgans almost pulled it off. They countered the Rockefeller-Taft attack by breaking the Republican Party with a new Progressive Party led by Theodore Roosevelt. In this way the Democratic Party won the election and Morgan man Woodrow Wilson became the president. Wilson helped not only to create the FED but also helped Morgan to take control of it. Then Morgans multiplied their profits by taking America into the First World War. After the war they effectively controlled most of the world together with their ally, British Empire.
In the twenties the House of Morgan was at the pinnacle of its power. However, they got carried away by printing too much money to support their cartels and especially their economically ailing ally, Britain. This ultimately led to the collapse of the stock market and the Great Depression.
Morgans now temporarily weakened, the Rockefellers and their Kuehn, Loeb allies decided to strike. They gathered around Franklin D. Roosevelt a huge coalition of “outsiders” – Italians, Irish, Latinos, Blacks, Jews and Mormons. With the help of the Great Depression, F.D. Roosevelt was elected president. At the guise of the war against Big Business the New Deal stroke at the heart of investment banking and big utilities companies, not coincidentally the heart of Morgan power.
The Rockefeller-led coalition was triumphant, but it was also smart. The Rockefellers realised that the tide could again turn especially because the Morgans always could count on their loyal ally, the British Empire. Thus, the Rockefellers were happy to make Morgans their junior partners together with the Kuhn, Loeb. Ever since the three Houses have coexisted in relative peace under the leadership of what Rothbard used to call RWE, the Rockefeller World Empire.
Rothbard was a system builder. He transformed the Austrian School into a Radical Austrian School by building a coherent praxeological system that started from the action axiom and deduced from it the basic structure of economics, politics and ethics. However, Rothbard did not stop there. He used that theoretical structure to study history. What he saw was a battle between the exploited and the exploiters.
The exploiting ruling elite was led by three ethnically based banking and business dynasties: Morgans, Rockefellers and Kuhn, Loeb. They all worked together to create an imperialist cartel-economy led by the American central bank, FED. Soon, however, they started to fight among themselves over its control. The Morgans had the support of the British Empire and soon triumphed. At the end of the 20s they over-played their hand with too much money printing that led to the Great Depression.
Rockefellers saw an opening, created a coalition of outsider dynasties and together with Kuhn, Loeb defeated the Morgans. However, Rockefellers were smart enough not to try to totally destroy Morgans who still had the backing of the mighty British Empire. Instead, Rockefellers encouraged intermarriage between the dynasties and created a relatively unified ruling elite that was led by the Rockefellers, or as Rothbard put it: RWE, the Rockefeller World Empire.
It is this Empire that is behind globalism. It is RWE that is trying to build a world central bank. It tries to destroy nationalism not only with cultural Marxism but also with ever bigger and centralized federal states such as US and EU. It is in the process of destroying all national currencies and merging them into one international world currency backed by a world central bank.
Rothbard believed that the Austrian School gives historians all the tools to study the ruling elite in detail. However, for some reason even historians sympathetic to the Austrian school have not continued Rothbard’s study of the ruling elite. Over 20 years have passed since Rothbard’s death in 1995. Let us hope historians will someday have the courage of Rothbard to name names and show who exactly are our exploiting overlords and what are they exactly up to.