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farmer kept in the dark about the government™s financial policies),
then by the Tin Woodman in search of a heart (the factory worker
frozen by unemployment and dehumanized by mechanization).
Littlefield commented:
The Tin Woodman . . . had been put under a spell by the Witch
of the East. Once an independent and hard working human
being, the Woodman found that each time he swung his axe it
chopped off a different part of his body. Knowing no other
trade he “worked harder than ever,” for luckily in Oz tinsmiths
can repair such things. Soon the Woodman was all tin. In this
way Eastern witchcraft dehumanized a simple laborer so that
the faster and better he worked the more quickly he became a
kind of machine. Here is a Populist view of evil Eastern
influences on honest labor which could hardly be more pointed.
The Eastern witchcraft that had caused the Woodman to chop off
parts of his own body reflected the dark magic of the Wall Street bank-
ers, whose “gold standard” allowed less money into the system than
was collectively owed to the banks, causing the assets of the laboring
classes to be systematically devoured by debt.
The fourth petitioner to join the march on Oz was the Lion in
search of courage. According to Littlefield, he represented the orator
Bryan himself, whose roar was mighty like the king of the forest but

Chapter 1 - Lessons from the Wizard of Oz

who lacked political power. Bryan was branded a coward by his
opponents, because he was a pacifist and anti-imperialist at a time of
American expansion in Asia. The Lion became entranced and fell
asleep in the Witch™s poppy field, suggesting Bryan™s tendency to get
side-tracked with issues of American imperialism stemming from the
Opium Wars. Since Bryan led the “Populist” or “People™s” Party, the
Lion also represented the people, collectively powerful but entranced
and unaware of their strength.
In the Emerald City, the people were required to wear green-colored
glasses attached by a gold buckle, suggesting green paper money
shackled to the gold standard.
To get to her room in the Emerald Palace, Dorothy had to go
through 7 passages and up 3 flights of stairs, an allusion to the “Crime
of ™73.” The 1873 Act that changed the money system from bimetallism
(paper notes backed by both gold and silver) to an exclusive gold
standard was proof to all Populists that Congress and the bankers
were in collusion.15
Dorothy and her troop presented their requests to the Wizard,
who demanded that they first vanquish the Wicked Witch of the West,
representing the McKinley/Rockefeller faction in Ohio (then consid-
ered a Western state). The financial powers of the day were the Mor-
gan/Wall Street/Cleveland faction in the East (the Wicked Witch of
the East) and this Rockefeller-backed contingent from Ohio, the state
of McKinley, Hanna, and Rockefeller™s Standard Oil cartel. Hanna
was an industrialist who was a high school friend of John D. Rockefeller
and had the financial backing of the oil giant.16
Dorothy and her friends learned that the Witch of the West had
enslaved the Yellow Winkies and the Winged Monkeys (an allusion to
the Chinese immigrants working on the Union-Pacific railroad, the
native Americans banished from the northern woods, and the Filipinos
denied independence by McKinley). Dorothy destroyed the Witch by
melting her with a bucket of water, suggesting the rain that would
reverse the drought, as well as the financial liquidity that the Populist
solution would bring to the land. As one nineteenth century
commentator put it, “Money and debt are as opposite in nature as fire
and water; money extinguishes debt as water extinguishes fire.”17
When Dorothy and her troop got lost in the forest, she was told to
call the Winged Monkeys by using a Golden Cap she had found in the
Witch™s cupboard. When the Winged Monkeys came, their leader
explained that they were once a free and happy people; but they were
now “three times the slaves of the owner of the Golden Cap, whosoever
Web of Debt

he may be” (the bankers and their gold standard). When the Golden
Cap fell into the hands of the Wicked Witch of the West, the Witch
made them enslave the Winkies and drive Oz himself from the Land
of the West.
Dorothy used the power of the Cap to have her band of pilgrims
flown to the Emerald City, where they discovered that the “Wizard”
was only a smoke and mirrors illusion operated by a little man behind
a curtain. A dispossessed Nebraska man himself, he admitted to be-
ing a “humbug” without real power. “One of my greatest fears was
the Witches,” he said, “for while I had no magical powers at all I soon
found out that the Witches were really able to do wonderful things.”
If the Wizard and his puppet were Marcus Hanna and William
McKinley, who were the Witches they feared? Behind the Wall Street
bankers were powerful British financiers, who funded the Confeder-
ates in the Civil War and had been trying to divide and conquer
America economically for over a century. Patriotic Americans had
regarded the British as the enemy ever since the American Revolu-
tion. McKinley was a protectionist who favored high tariffs to keep
these marauding British free-traders out. When he was assassinated
in 1901, no conspiracy was proved; but some suspicious commenta-
tors saw the invisible hand of British high finance at work.18
Although the Wizard lacked magical powers, he was a very good
psychologist, who showed the petitioners that they had the power to
solve their own problems and manifest their own dreams. The
Scarecrow just needed a paper diploma to realize that he had a brain.
For the Tin Woodman, it was a silk heart; for the Lion, an elixir for
courage. The Wizard offered to take Dorothy back to Kansas in the
hot air balloon in which he had arrived years earlier, but the balloon
took off before she could get on board.
Dorothy and her friends then set out to find Glinda the Good Witch
of the South, who they were told could help Dorothy find her way
home. On the way they faced various challenges, including a great
spider that ate everything in its path and kept everyone unsafe as long
as it was alive. The Lion (the Populist leader Bryan) welcomed this
chance to test his new-found courage and prove he was indeed the
King of Beasts. He decapitated the mighty spider with his paw, just
as Bryan would have toppled the banking cartel if he had won the
The group finally reached Glinda, who revealed that Dorothy too
had the magic tokens she needed all along: the Silver Shoes on her feet
would take her home. But first, said Glinda, Dorothy must give up
Chapter 1 - Lessons from the Wizard of Oz

the Golden Cap (the bankers™ restrictive gold standard that had
enslaved the people).
The moral also worked for the nation itself. The economy was
deep in depression, but the country™s farmlands were still fertile and
its factories were ready to roll. Its entranced people merely lacked the
paper tokens called “money” that would facilitate production and
trade. The people had been deluded into a belief in scarcity by defining
their wealth in terms of a scarce commodity, gold. The country™s true
wealth consisted of its goods and services, its resources and the
creativity of its people. Like the Tin Woodman in need of oil, all it
needed was a monetary medium that would allow this wealth to flow
freely, circulating from the government to the people and back again,
without being perpetually siphoned off into the private coffers of the

Sequel to Oz

The Populists did not achieve their goals, but they did prove that a
third party could influence national politics and generate legislation.
Although Bryan the Lion failed to stop the bankers, Dorothy™s proto-
type Jacob Coxey was still on the march. In a plot twist that would be
considered contrived if it were fiction, he reappeared on the scene in
the 1930s to run against Franklin D. Roosevelt for President, at a time
when the “money question” had again become a burning issue. In
one five-year period, over 2,000 schemes for monetary reform were
advanced. Needless to say, Coxey lost the election; but he claimed
that his Greenback proposal was the model for the “New Deal,”
Roosevelt™s plan for putting the unemployed to work on government
projects to pull the country out of the Depression. The difference was
that Coxey™s plan would have been funded with debt-free currency
issued by the government, on Lincoln™s Greenback model. Roosevelt
funded the New Deal with borrowed money, indebting the country
to a banking cartel that was surreptitiously creating the money out of
thin air, just as the government itself would have been doing under
Coxey™s plan without accruing a crippling debt to the banks.
After World War II, the money question faded into obscurity.
Today, writes British economist Michael Rowbotham, “The surest way
to ruin a promising career in economics, whether professional or
academic, is to venture into the ˜cranks and crackpots™ world of
suggestions for reform of the financial system.”19 Yet the claims of

Web of Debt

these cranks and crackpots have consistently proven to be correct.
The U.S. debt burden has mushroomed out of control, until just the
interest on the federal debt now threatens to be a greater tax burden
than the taxpayers can afford. The gold standard precipitated the
problem, but unbuckling the dollar from gold did not solve it. Rather,
it caused worse financial ills. Expanding the money supply with
increasing amounts of “easy” bank credit just put increasing amounts
of money in the bankers™ pockets, while consumers sank further into
debt. The problem has proven to be something more fundamental: it
is in who extends the nation™s credit. As long as the money supply is
created as a debt owed back to private banks with interest, the nation™s
wealth will continue to be drained off into private vaults, leaving
scarcity in its wake.
Today™s monetary allegory goes something like this: the dollar is a
national resource that belongs to the people. It was an original inven-
tion of the early American colonists, a new form of paper currency
backed by the “full faith and credit” of the people. But a private bank-
ing cartel has taken over its issuance, turning debt into money and
demanding that it be paid back with interest. Taxes and a crushing
federal debt have been imposed by a financial ruling class that keeps
the people entranced and enslaved. In the happy storybook ending,
the power to create money is returned to the people and abundance
returns to the land. But before we get there, the Yellow Brick Road
takes us through the twists and turns of history and the writings and
insights of a wealth of key players. We™re off to see the Wizard . . . .

Web of Debt

Chapter 2

“Orders are -- nobody can see the Great Oz! Not nobody ” not
nohow! . . . He™s in conference with himself on account of this trouble
with the Witch. And even if he wasn™t you wouldn™t have been able
to see him anyway on account of nobody has “ not even us in the
- The Wizard of Oz (1939 film),
“The Guardian of the Gates”

T he Federal Reserve did not yet exist when Frank Baum
wrote The Wonderful Wizard of Oz, but the book™s image of
an all-too-human wizard acting behind a curtain of secrecy has been
a favorite metaphor for the Fed™s illustrious Chairman, who has been
called the world™s most powerful banker. Unlike the U.S. President,
who must worry about re-election every four years and can serve only
two terms, the head of the Fed can be reappointed indefinitely and
answers to no one. Alan Greenspan served for more than eighteen
years under four Presidents before he retired. In a 2001 article titled
“Greenspan: Financial Wizard of Oz,” journalist Paul Sperry wrote of
that long-standing Chairman:
You may think that congress “ and therefore the people “ can
control him. But all lawmakers can do is call him to testify
periodically . . . . The hearings are an exercise in futility, not
accountability, because Greenspan just obfuscates till everyone
is bored silly. You may think that the press can pin him down.
In fact, we have no access to him. No press conferences or

Chapter 2 - Behind the Curtain

interviews are allowed. The high priest is untouchable in his
marble temple here on Constitution Avenue.1
Sperry quoted another Fed-watcher, who remarked:
Here™s this guy, projecting this huge brain, and everyone™s in
awe of him. But pull back the curtain and there™s just this little
man frantically pulling at levers to maintain the image of an
intellectual giant.2
Why is it necessary for the Federal Reserve to act behind a curtain
of secrecy, independent of congressional oversight and control? Sup-
posedly it is so the Fed can take actions that are in the best interests of
the economy although they might be unpopular with voters. But as
Wright Patman, Chairman of the House Banking and Currency Com-
mittee, pointed out in the 1960s, Congress makes decisions every day
that are unpopular, including raising taxes, cutting programs, and
increasing expenditures; yet it does so after open debate, in the demo-
cratic way. Why can™t the Fed™s Chairman, who doesn™t even have to
worry about re-election, lay his cards on the table in the same way?
The Wizard of Oz could no doubt have answered that question: the
whole money game is sleight of hand, and it depends on deception to

A Game of Smoke and Mirrors

Illusion surrounding the Federal Reserve begins with its name. The
Federal Reserve is not actually federal, and it keeps no reserves ” at
least, not in the sense most people think. No gold or silver backs its
Federal Reserve notes (our dollar bills). A booklet published by the
Federal Reserve Bank of New York states:
Currency cannot be redeemed, or exchanged, for Treasury gold
or any other asset used as backing. The question of just what
assets “back” Federal Reserve notes has little but bookkeeping
The Federal Reserve is commonly called the “Fed,” confusing it
with the U.S. government; but it is actually a private corporation.4 It
is so private that its stock is not even traded on the stock exchange.
The government doesn™t own it. You and I can™t own it. It is owned
by a consortium of private banks, the biggest of which are Citibank
and J. P. Morgan Chase Company. These two mega-banks are the
financial cornerstones of the empires built by J. P. Morgan and John


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