J.P. Morgan’s Efforts to Push the U.S. Into WWI

During the Nye committee of 1930s, Congress investigated the influence of financial interests on the decision for the United States to enter World War I.

Headed by Senator Gerald Nye from North Dakota, it delved into whether there was basis for widespread reports that munitions manufacturers, who made huge profits during the war, pushed the country to war for their own benefit and might do so again. Representatives from major interests testified about their financial ties, including the bank J.P. Morgan and chemical giant DuPont, which produced gunpowder.

Eventually the committee would publish multiple reports on the influence of the munitions industry, wartime taxation, price controls, and naval shipbuilding, but the committee stopped short and never produced any substantial findings on J.P. Morgan.

J.P. Morgan was suspected of heavily influencing the U.S. effort to join the war as the bank’s financial investments in war industries, both in the U.S. and Europe, earned them an incredible windfall.

Financial Ties to the War

The current J.P. Morgan website proudly boasts of the company’s support for the Allies at the time:

During World War I, J.P. Morgan & Co. arranges the largest foreign loan in Wall Street history – a $500 million bond issue to support the English and French governments – and acts as purchasing agent for the Allies, facilitating the purchase of over $3 billion worth of war material and other goods needed by the Allies.

Right at the outset of war, Morgan was designated the exclusive purchasing agent for Britain in the U.S., one of the most lucrative single contracts in American history, earning the company $30 million.

The U.S. government was also pressured to guarantee Morgan’s loans to the allies to keep the flow of munitions going to Europe, without which the Allies would likely lose. That would eventually draw the U.S. further into the conflict.

According to the book, Warhogs: A History of War Profits in America:

The Morgan loans became a source of controversy in one other way. By 1917, when the United States declared war, Britain and France had run out their line of credit. Private investors could no longer safely loan money to these insolvent governments, so the Wilson administration faced an unwelcome decision. The United States had either to guarantee the repayment of the Allied loans, or shipments of war materiel must cease. Since the latter was totally unacceptable—it would mean defeat—there really was no choice in the matter Wilson’s inevitable pledge of repayment thus guaranteed that Morgan and other bankers would be reimbursed in case the Allies defaulted.

J.P. Morgan would also benefit after the war was over through heavy investment in German reconstruction loans.

Read the entire article on the Investigative Economics website.
External Web Site Notice: This page contains information directly presented from an external source. The terms and conditions of this page may not be the same as those of this website. Click here to read the full disclaimer notice for external web sites. Thank you.