Above the President

The relevance of much of what happens in the world today escapes public scrutiny, compliments of the corrupt corporate media. This site aims to help change that. Topics include the UN, oil pipelines, monetary policy and the fate of empires.

Friday, July 29, 2005

Detering and Sinclair Duke it Out

There's a lot of ignorance out there about what caused the runaway hyperinflation in Germany in the early 1920s. Most people believe the reparations imposed by the Treaty of Versailles had something to do with it, forcing the Weimar government to devalue its currency so as to meet its debt obgliations.


The Imperial Palace Hotel in Genoa, Italy
where the
Treaty of Rapallo was concluded

To understand the real reasons for the runaway hyperinflation, one must first understand the Treaty of Rapallo, signed by representatives of Germany and the Soviet Union on April 16th, 1922 at the World Economic Conference in Genoa, Italy. The treaty re-established diplomatic relations between the two countries, renounced financial claims on each other and pledged future cooperation. Specifically, Germany agreed to ship important new technologies over to Russia, in exchange for which Russia would forgive the (enormous) debt Germany owed her. Representing Germany was Walther Rathenau, who was serving at the time as the German foreign minister.

The ongoing World Economic Conference was convened by the British for (roughly) three important reasons:
  1. London desired, if possible, to return to a pre-1914 gold standard.
  2. London was ready to recognize and establish diplomatic relations with the new Soviet government in Russia.
  3. London wanted to do all this without the help or prescence of the Americans, for reasons that will shortly become very clear.
London of course anticipated new, lucrative business contracts to begin flowing out of Russia, once diplomatic relations with the Soviets had been normalized. Specifically, the Communist government had already promised Royal Dutch Shell and other British firms concessions to the rich mineral wealth of the Baku oil fields in (what is now) Azerbaijan.


Royal Dutch Shell (UK) battles it out with Standard Oil (US)
for control of the Soviet Baku oil fields in Azerbaijan

As a historical note, one should realize that London had spent the past 3-4 years (since 1918 or so) battling the Communist government in Moscow tooth and nail. Some examples of (covert and overt) British engagement in Russia against the Soviet Communists include:
  • British financial support for the White Russian Counterrevolution, which fought against Lenin and his Red Army.
  • British Colonial Minister Winston Churchill helped Boris Savinkow set up a "goverment in exile" in opposition to Lenin's Communist goverment.
  • British agents Sir Robin Bruce Lockhart and Sidney Reilly made an assassination attempt upon Lenin in August 1918 (or at least, they were accused of having done so by the Soviet government).
It would take us too far afield to discuss all the reasons why London was so strongly opposed to Lenin (at least initially), but the short version of the story is that Lenin and his Soviet government were put in power by the Rockefellers (operating out of the U.S.) and their Standard Oil Company (now Exxon).


Royal Dutch Shell Head, Sir Henry Detering

So essentially what's happening here in a (corporate) battle for concessions to the vast mineral wealth of Russia. On the one side you have Standard Oil, who is backing Lenin and the Communist government in Russia. On the other side you have Royal Dutch Shell, who (operating through the British government) is doing everything in their power to topple the Communist goverment in Russia and win their own concessions to Baku.

Harry Sinclair and the Teapot Dome Scandal

The Sinclair Oil Company was form on May 1, 1916 when Harry Sinclair brought together the assets of eleven smaller petroleum companies under one corporate umbrella. The company quickly grew to be one of the largest oil companies in the United States. Sinclair initially ran the operation out of Oklahoma, although today the company is based in Utah.


Teddy Roosevelt served as U.S. president from 1901 to 1909.
Two of his sons worked for Harry Sinclair's oil companies.
A third son staged a coup in Iran in 1953, on behalf of U.S. oil.

By most outward appearences, Sinclair was the proverbial American "self-made" man. A closer look under the covers, though, reveals that it was his connections - and specifically his connections to Standard Oil - that made Sinclair who he was. Teddy Roosevelt, Junior, son of the former U.S. president, sat on the board of directors of the Sinclair Refining Company, and his brother, Archibald Roosevelt, was a vice-president at Sinclair Oil. William Boyce Thompson, a director at the Rockefeller's Chase Manhattan Bank in New York (the bank through which Standard Oil did most of its business) was also a member of Sinclair's board of directors.

The picture that emerges is one in which the Rockefellers used Harry Sinclair and his oil companies to further their own interests, whenever it was more politically expedient not to "reveal" the "hand" of Standard Oil directly. It's no therefore coincidence (or surprise) that just after the 1917 Russian Revolution, Harry Sinclair traveled to Russia and met with Lenin to negotiate oil concessions for his company in Siberia. Remember, it was the Rockefellers who put Lenin in power in the first place.


The Soviet island of Sakalin (in red)
was believed to hold oil mineral wealth

In so far as the Soviet oil concessions were concerned, Sinclair had already traveled to London repeatedly (1918-1921), along with his corporate vice-president Archibald Roosevelt and U.S. Senator Albert Fall (R-New Mexico), to meet and negotiate with Soviet foreign minister Leonid Krassin. They met to discuss concessions not only in Baku, but also deep in Siberia, including those on Soviet island of Sakalin (in the Pacific Ocean). The Sinclair Group was prepared to offer $115 million to the Soviets for these concessions, as well as using their contacts in the Harding administration (Senator Fall had been appointed Secretary of the Interior by President Warren G. Harding in March 1921) to press for U.S. diplomatic recognition of the new Soviet government.


1924 political cartoon depicting the Teapot Dome Scandal

The parties were all prepared to sign their names on the dotted line, when - out of the blue - a scandal that eeriely forshadowed the Watergate crisis of the Nixon years embroiled the key American stakeholders, including Albert Fall, Harry Sinclair and President Harding. In early 1922, reports began to surface that Albert Fall (now acting as the U.S. Secretary of the Interior) had leased - without competitive bidding - the Teapot Dome, Wyoming oil fields to Harry Sinclair and the Elk Hills, California oil fields to Edward L. Doheny. Albert Fall was eventually forced to resign his position as Secretary of the Interior in March, 1923, and the scandal even reached all the way into the office of the president, as Harding had officially transferred control of the oil fields from the Navy to the Department of Interior in 1921 by Executive Order. Fall, Sinclair and Doheny were all convicted on various charges of bribery, conspiracy and contempt of court. The oil fields were eventually restored to the U.S. government by a Supreme Court decision in 1927.


U.S. Senate investigates the Teapot Dome Scandal

Harry Sinclair's photo "graced" the front page of the Wall Street Journal (and other prominent papers) on April 14, 1922. President Harding died under very suspicious circumstances about a year later. His successor, Calvin Coolidge, showed no interest either in Harry Sinclair or in U.S. recognition of the Soviet Union. U.S. diplomatic recognition of the Soviet regime would have to wait another decade until Franklin D. Roosevelt came into power.

Black rook takes white queen.

In one fell swoop, Detering (who was the source of the initial Teapot Dome rumors) and his backers in British intelligence had swiftly and decisively removed their American competition (i.e., the Rockefellers), and were now prepared to "negotiate" for concessions with the (Rockefeller-backed) Soviets on their own terms. So as to kick these negotiations off in the proper spirit, the British convened the World Economic Conference in Genoa, Italy in April 1922.

In the next post, we'll have a look at what all this has to do with the German hyperinflation of the 1920s.

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