The Great Depression, the BIS, and the Chicago Plan
Chapter V is where Goodson tries to prove the Depression was not a crash. It was a fleece. He walks from the Bank for International Settlements to Louis McFadden’s House speech, then to two money theories that are more interesting than the villain list.
Book: A History of Central Banking and the Enslavement of Mankind by Stephen Mitford Goodson. ISBN-13: 978-1-910881-49-1. Black House Publishing Ltd (1st ed. 2014; 2nd and 3rd 2017). Goodson was a former non-executive director of the South African Reserve Bank.
Eighteen banks, then a conference, then a tower
The chapter opens with a long quote blamed on Montagu Norman, Governor of the Bank of England, speaking to the United States Bankers’ Association and printed in the Idaho Leader on 26 August 1924. Capital must protect itself. Debts collected. Mortgages foreclosed. People lose their homes and become easier to govern. Divide the voters with fights about nothing.
That paragraph circulates hard in conspiracy literature. It is not a well-sourced Norman speech. There is no solid transcript of him saying this in New York. Goodson treats it as a confession anyway. I am flagging it up front.
Around 1900 he counts only 18 central banks, from the Swedish Riksbank (1668) to the Bank of England (1694). Then Genoa, 10 April to 19 May 1922: heads of state plus the Bank of England, the Banque de France, and the New York Fed resolve to plant reserve banks everywhere they do not already exist.
The BIS arrives in Basel in 1930. First job: German reparations. When payments stop after 1933, it pivots to “monetary cooperation.” In practice, Goodson says, it steers a planned system through 60 affiliated central banks. Immunity from national law and tax. Its own police. Archives inviolable under a Swiss deal that traces to The Hague Protocol of 31 August 1929. Meetings with no written agenda and no minutes. On paper: accords, research, trustee. Off paper: the central bank of central bankers.
Quigley, and a list of private banks
Here he brings in a real book. Carroll Quigley’s Tragedy and Hope (1966) describes “a world system of financial control in private hands” run in a feudal style by central banks meeting in secret, with the BIS at the apex. Quigley names Montagu Norman, Benjamin Strong, Charles Rist, and Hjalmar Schacht.
Quigley was a Georgetown historian. The passage is in the book. What Goodson does with it is the stretch: Rothschild ownership of the BIS, a single world currency, a global government. Quigley is describing an Anglo-American financial elite with real meetings. He is not handing over a signed confession.
After the colonial empires go, central banks proliferate. Goodson counts 157. Eight he calls private: Belgium, Greece, Italy, Japan, the South African Reserve Bank, Switzerland, Turkey, and the Fed. Some of those banks do have private shareholders. That is a fair institutional fact. It does not by itself prove a single trust.
How Goodson times the crash
The dollar, he says, holds its value from 1820 to 1910 aside from a Civil War spike. Then the Fed needs six years to wreck it. Prices up 125 percent from 1914 to 1920.
On 18 May 1920 a Washington meeting sits under the title Orderly Deflation Committee of the American Bankers Association. The farm product index falls from 244 in May 1920 to 117 a year later. The Fed contracts credit by $2 billion. Prices are cut in half.
August 1927 is the next lever. Despite 11 of 12 Reserve Banks objecting, they are ordered to cut rates and buy bonds, the ancestor of quantitative easing. The new money goes into stocks, not plant.
On 9 March 1929 Paul Warburg warns member banks and Treasury Secretary Andrew Mellon to get out or sell short. On 24 October the rediscount rate jumps to 6 percent. On 30 October the Fed orders a $2.3 million cut in brokers’ loans. By December 1932 listed securities have fallen from $89 billion to $15 billion.
That $2.3 million figure is tiny next to an $89 billion market. Either Goodson dropped some zeros or he is treating a rounding error as a detonator.
The wreckage is the standard horror: 10,000 of 24,000 banks gone, 200,000 companies bankrupt, 8.3 million unemployed, 24.9 percent out of work. McFadden calls the crash “a carefully contrived occurrence.” Gustav Cassel, in the Financial Times in 1930, says the Fed has “practically absolute power over the welfare of the world.”
So here’s the problem. A 1920s credit boom, the gold standard, a farm crash, and Smoot-Hawley are also in this movie. Goodson has room for one cause: the Fed planned the fleece. That is too clean.
McFadden’s speech, and a death that is not a closed case
On 10 June 1932, Louis T. McFadden, former chair of the House Banking and Currency Committee (1920-1931), unloads in the House. The Fed is “one of the most corrupt institutions the world has ever known.” Not a government bank. A private credit monopoly. He wants the Independent Treasury back, gold bought by the government, the 1913 Act liquidated.
The speech is a real document. Large chunks sit in the Congressional Record. Goodson quotes it at length: Wilson fooled by Colonel House, the Aldrich bill as a European bankers’ tool, Jackson’s war on the Second Bank fought all over again.
Then the last beat. McFadden’s “persistent exposure” leads to his “assassination” on 1 October 1936. He died after a meal. Coronary thrombosis is the official story. Assassination is an allegation in this literature. It is not established fact.
Douglas, Fisher, and the Chicago Plan
This is the part I came for.
C.H. Douglas (1879-1952), an engineer at Farnborough during World War I, notices that total costs exceed wages, salaries, and dividends. He checks hundreds of firms and finds a standing gap: prices are generated faster than incomes. That is the A+B theorem. His fix is Social Credit: pull money creation out of private banks that issue interest-bearing debt, pay every citizen a national dividend, and use a Just Price that cuts retail prices as technology cheapens production.
Two hits, in Goodson’s scorecard. The Social Credit Party takes Alberta in 1935. After a 1929 lecture tour, Japan adopts his policies in 1932. The second claim is the softer one. Japan did go expansionary in the early 1930s under Takahashi Korekiyo. That is not the same as “Tokyo implemented Douglas.”
Then Irving Fisher (1867-1947) at Yale. In March 1913 Senator Robert L. Owen tries an alternative to the Glass-Owen Fed bill. Fisher helps draft it, then, in Emmanuel Josephson’s telling, Yale officials threaten his chair and he folds. That blackmail story is Josephson, recycled. Treat it as a claim.
Fisher later pushes the Chicago Plan of 1933: 100 percent reserves. Banks stop creating money as debt. The state issues money as equity in the commonwealth.
In August 2012, IMF researchers Jaromir Benes and Michael Kumhof publish The Chicago Plan Revisited. They run Fisher’s 1936 claims through a model and say the results “fully validate” him: less cycle volatility, no bank runs, a large cut in public and private debt, even a path to zero steady-state inflation. That paper is real. It is the rare Goodson citation that points at a living technical debate instead of a secret letter.
What holds
BIS opacity is a fair target. No minutes, treaty immunity, a club of governors in a Swiss tower: you do not need a novel to find that undemocratic. Quigley is a real source and a stretched one. The Norman Idaho Leader quote is ballast, not evidence.
The Depression-as-only-a-planned-banker-fleece story ignores too much: the 1920s boom they also pumped, gold, tariffs, farm debt. McFadden’s speech is worth reading. His death is not a solved murder.
Douglas and Fisher are why this chapter is not just a villain tour. A national dividend and a 100 percent reserve system are arguments you can model, attack, and test. The 2012 IMF paper is the cleanest exhibit in the book so far.
Next he takes the same public-money thesis into 1930s Germany, Italy, and Japan. The banking claims will be specific. The regimes will not get a wash.
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