For reDavid Lloyd George at his best; an orator who revelled in addressing great crowds.asons that have not been fully examined, Lloyd George began to assume a proprietary interest in munitions. His work as Chancellor of the Exchequer ought to have kept him occupied in monetary and fiscal matters, raising war loans and extending credit, but his voice as a Secret Elite agent in Asquith’s Cabinet repeatedly brought him into conflict with Kitchener. He interfered with War Office orders, placed twenty-million pounds at the disposal of the Master-General of the Ordnance in an effort to support increased capacity from the established armaments firms and virtually freed the Ordnance Department from Treasury control. [1] He also looked for assistance from America.

The Anglo-American Establishment closed ranks behind its British associates, and the U S State Department, which had previously blocked a request from the JP Morgan banking firm to make loans to the allies, issued a press release on 15 October declaring that, on reflection, it had ‘no authority to interfere with the purchase of goods by belligerents, even of munitions, and it would be highly unneutral for it to do so’. Pressure had been exerted on the Woodrow Wilson’s government ‘to permit the belligerent nations to buy goods and raw materials in America’ [2]. And that pressure emanated directly from the JP Morgan banking dynasty, with its Rothschild connection, the powerful Pilgrims Society, which included a select ‘collective of the wealthiest figures of both Britain and the United States who were deeply involved with the Secret Elite,’ [3] and the presidential advisor, Robert Lansing. [4] Though professing an absolutely neutral stance, the door to America had been opened for the allies by President Wilson’s administration from October 1914. The question was, would the War Office use the opportunity well?

The British Cabinet Committee meeting on 21 October agreed to contact the War Office agent in America with a request for 400,000 rifles and three days later sent their representative, Captain Smyth-Pigott to New York. They did not know that Lloyd George, whom the Secret Elite had determined would have ultimate control, had already acted independently. He had sent his most able Treasury expert, Basil Blackett, to America to evaluate the logjam that had built up in military procurement. His first reports insisted that the War Office and the Admiralty had to start co-ordinating their purchasing strategies because suppliers were raising prices and playing one off against the other. [5] Lloyd George met privately in his rooms with Lord Rothschild to seek financial advice shortly before the ‘Prince of Israel’, as the Chancellor dubbed him, died. [6] and, around the same time, a further most important connection was established.

JP Morgan & Co. advertisement covering several of his related companies

In November 1914, the Chancellor of the Exchequer contacted his acquaintance, Edward Charles Grenfell, senior partner of Morgan-Grenfell & Co., and director of the Bank of England, to discuss whether rifle production in the United States could be increased and engineering production switched to munitions manufacture. The line of contact started in the Treasury with Lloyd-George, through Grenfell to J.P. Morgan & Co., the largest investment banking firm in America and back through the same channel to London. Morgan immediately promised to liaise with two firms, Remington and Winchester, ‘friends’ of his group, and an understanding was reached. [7] Delivery would however take eleven months. [8] Trusted Secret Elite agents had created a very pro-British accord which would benefit them all.

But Kitchener would not have it. The War Office complained loudly about this civilian arrangement and Kitchener contacted J P Morgan directly, demanding that the order be cancelled. In his view, munition supply was still War Office business and no-one else’s. Lloyd George was furious; Edward Grenfell, outraged. The carefully planned Trans-Atlantic accord appeared to have been smothered by Kitchener’s intervention, but the Chancellor had powerful friends on both sides of the Atlantic. Grenfell complained bitterly that ‘the manner in which the War Office have dealt with the proposed rifles contract with Morgan, Grenfell and Co, will have a detrimental effect on Public opinion in America.’ [9] It was always a good line to take. American public opinion mattered to the British government. That same day Lloyd George smoothed Edward Grenfell’s ruffled feathers by stating that Kitchener’s communication to Morgan was based on a regrettable ‘misapprehension’ and asked for Morgan’s cooperation’ [10] Subsequent orders were placed with Morgan’s chosen men without War Office interference.

Lloyd George’s next tactic was to use his valued associates from his days as President of the Board of Trade. The British Embassy in Washington had reported that a large number of purchasing agents were abusing their position and accepting ridiculously high prices for goods bought in America, so Sir George Macaulay Booth of the shipping company, Alfred Booth and Co. was dispatched to the United States to assess the extent of the problem. Here he found that British buyers were paying thirty-seven shillings for coats that could have been procured for twenty-four shillings.

Sir Cecil Spring-Rice, the very popular British Ambassador at Washington

The British Ambassador, Spring Rice, recommended that J P Morgan be appointed sole purchaser to protect British interests, and Booth returned in mid-November to report to Kitchener and Churchill, as well as the Board of Trade, that there was an over-riding need for a sole purchaser…and that it should be Morgan. Booth was well aware that in addition to his dominant position in American banking, Morgan controlled a vast tonnage in International Maritime Marine, and an alliance with him would guarantee the use of Booth’s ships in the allied interest. Apparently historians have concluded that it is not exactly clear ‘just which cabinet minister formally asked which British or American Morgan partner to take on responsibility, [for munitions] or when.’ [11] It was clearly Lloyd George. He had the confidence of the Secret Elite and they had facilitated the arrangement.

As a result, a purchasing contract was signed in January 1915 between J.P.Morgan and the British Treasury, appointing the New York firm as its sole purchaser in the United States. It should hardly be a surprise. Morgan was intimately linked to the Secret Elite, [12] had offices in London (Morgan-Grenfell and Co,), Paris (Morgan, Harjes & Co.) and New York, (J.P.Morgan and Co.) and E.C. Grenfell personally acted as the go-between. This was not the usual order of business. Under normal circumstances the British Embassy in Washington would have been the point of liaison. What emerged was unprecedented. Control over the spending of thousands of millions of British tax-payers’s pounds was placed in the hands of an American plutocrat and his British agent in London.

Each morning, Edward Grenfell called at the Bank of England with the latest pound-to-dollar exchange quotations from America. He would discuss this with the joint-permanent secretaries at the Treasury before walking back to his office in Old Broad Street. There, he had the orders of the day encoded and sent by secret cable directly to New York. And here again we find that Secret Elite agents operated above the law of the land, out-with the knowledge of the British cabinet, in contravention of the Defence of the Realm Act and over the head of the official censor. Lloyd George permitted Edward Grenfell in London, access to an unrestricted direct cable to J.P. Morgan in New York so that its messages were more secure and absolutely secret. [13]

J P Morgan building in New York, (left) built in 1914

Ponder for a moment on this unique arrangement. Unrestricted coded cables were sent on a daily basis to a New York banking company agreeing purchasing orders, banking instructions and exchange rates. Taking this line of argument one step further, the men who created and ran the Federal Reserve System were in cahoots with the British central bank to agree the values of their respective currencies without the scrutiny of any political or democratic agency. The Secret Elite, as embodied in the whole Anglo-American Establishment, was absolutely in control. It could be argued that the British economy was being run from J P Morgan’s offices in New York. Is there any clearer example of what was called ‘the Money Power’?

Questions were asked in Parliament when rumours of the government’s agreement were leaked to the press. Morgan was known to favour his own or associated companies to the exclusion of others, a practice which ran contrary to public policy and could adversely affect British manufacturing interests. The MP for Newry, John Mooney, alleged that Morgan companies were buying up goods and selling them on to the British government at higher prices. [14] But to no avail. The deed was done. The public new nothing of this. Indeed no-one knew of this most secret arrangement.

If we take one step back and look at these arrangements in the cold light of reflection, Lloyd George’s interference in armaments and munitions dated from September 1914 when he informed the War Office that he, as chancellor, had set aside £20 million to finance extensions to factories for the production of armaments. His consequent disgust at their intransigence in contacting the armaments ‘trade’, as he called it, to push forward additional supplies of ‘guns, rifles and ammunition’ has been well documented. [15] That he was the first to register serious concerns about the likelihood of a severe shortage of munitions, [16] arguing vehemently against Kitchener in Cabinet meetings that War Office practice was outdated, is in itself interesting. His informants were ‘prominent industrialists’ from ‘all over the country.’ [17] In other words, Lloyd George was the armament trusts’ voice in Cabinet. His confidence was such that he could initiate orders and organise processes, sanction agreements and by-pass War Office restrictions in the knowledge that he would be supported. Little wonder Kitchener felt undermined.

Lloyd George was also in a unique position compared to other Cabinet ministers. He knew of the frequent requests from Sir John French for more shells for his howitzers; requests that became the theme of ‘almost daily telegrams’ from the front. [18] While Kitchener was concerned about the unprecedented rate at which shells were being ‘expended’, urging Sir John French to economise, Lloyd George met with representatives of Vickers, Armstrongs, Beardmore and the Coventry Ordnance to promise them that the government would find the money to increase their capital expenditure on munitions. [19] That money would come from America. Much of that money would be spent in America on armaments and component parts and be paid for, eventually, by the British tax-payer.

So, who did Lloyd George represent?

[1] Michael and Eleanor Brock, HH Asquith, Letters to Venetia Stanley, p. 267.
[2] Kathleen Burk, Britain, America and the Sinews of War, p. 14.
[3] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, p. 312.
[4] See blog post Lusitania 8, published 18/05/2015.
[5] Kathleen Burk, War and the State, The Transformation of British Government 1914-18, p. 89.
[6] David Lloyd George, War Memoirs, Vol. 1,  p.70.
[7] Kathleen Burk, Britain, America and the Sinews of War, p. 14.
[8] J P Morgan, New York, to E C Grenfell, 11 November 1914, PRO LG/C/1/1/32.
[9] Edward Grenfell to Mr Lloyd George, 13 November, 1914, PRO, LG/C/1/1/33.
[10] Lloyd George to Mr Grenfell, PRO LG/C/1/1/34.
[11] Kathleen Burk, Britain, America and the Sinews of War, p. 18.
[12]  Docherty and Macgregor, Hidden History, pp. 212-214.
[13] Kathleen Burk, War and the State, The Transformation of British Government 1914-18, p. 90.
[14] Hansard House of Commons Debate. 20 April 1915, vol. 71, cc175-6.
[15] David Lloyd George, War Memoirs, vol. 1, pp. 79-80.
[16] Richard Toye, Lloyd George and Churchill, p. 133.
[17] Lloyd George, Memoirs, p. 82.
[18]  Ibid., pp. 86-7.
[19]  Ibid., p. 89.