Sunday, October 26, 2025

13JULY1931, Prohibition Crushes Germany

 

German stocks dropped MAY1927 when dope profits became liable to income tax; NOV1928 when Hoover was elected & Rothstein killed, SEP1929 when the League of Nations endorsed global dope limitation, DEC1929 when German drug law called stimulants narcotics, 13JULY1931 when Germany signed the Narcotics Limitation Convention.

U.S. Newspapers omitted mention of the wool-packed narcotics intercepted from Hamburg in April and made no mention of the  Dope Limitation Convention signed the day the bottom fell out of Germany's Bourse and banking system. Yet officers of New York's Bank of United States were at that moment still being tried for bank fraud with nary a word about the half-ton of morphine the feds noticed arriving aboard the Alesia 09DEC1930, two days before that bank suffered fatal runs. No government is in a hurry to admit banks are failing because of government prohibition laws, and newspapers prefer to let readers connect the dots:

13JUL1931 Monday, Lawrence Journal-World p1 GERMAN FINANCE THREATENED BY RUNS ON BANKS—Must Be Given Help Quickly. Sackett writes Washington--… Hindenburg Signs Decree Reich undertakes to guarantee deficiencies arising from the Darmstadter’s ”nonliquidity.” Christian Endeavor resolves to Carry On Prohibition Fight… Buck Bradley convicted, sentenced for prohibition violation… (link)
But the facts of the matter were hinted at on p2, where James Gerard, Woodrow Wilson's former Ambassador to Germany, commented that “If Germany goes bankrupt and the Bruening cabinet falls, the country will be left at the mercy of the communists and hitlerites."(link) Gerard was in the thick of things when Hague antidrug Convention--with mission creep from the Harrison Act--tipped the Balkan States opium glut war crisis into WW1.(link) Adolf Hitler participated as a lowly corporal with no clue of what was going on--just as Christian Endeavor prohibitionists in American had no clue their violent laws were in 1931 again pushing Germany toward autocracy, financial instability and war. 

That same page spelled out the July, 1931 situation: (link)
FOREIGN CAPITAL LEAVES GERMANY—Half Billion Marks Withdrawn In The Last Few Weeks-- New York, July 13.--Now it's the watch on the Reichsbank: Germany's strong central bank, fighting what has been a losing battle against intangible forces of enormous power, symbolizes the economic struggle that has threatened her with financial ruin, a battle which, if completely lost, would have far-reaching effects throughout the rest of the world.
The immediate cause of the crisis is the withdrawal of huge volumes of foreign funds from the Reich. In the background, of course, looms the reparations question, with its political uncertainties and considerations both at home and abroad, its questions of ability to pay, its problems of international trade and finance.
Before the World War Germany was a large lender in other nations. ...

Indeed, before WWI Germany competed with Dow Chemical in drug markets, held patents on Aspirin and Heroin and her writ ran large in sizeable areas of drug-consuming China, Samoa, and several African colonies. German warship crews watched Americans conquer Manila and impose fanatical prohibition laws on the Philippine Islanders--prompting a bloody revolt. Another onlooker, China, engulfed in bloody revolts of her own, by boycott persuaded Theodore Roosevelt to take up the Chinaman's Burden and rid the world of free trade in booze and drugs back in 1905.(link) 

Sitting American President Herbert Hoover had lived in China during the Boxer revolt, knew a few phrases in Chinese and in 1931 felt bound and determined to join the anarchic remains of the toppled Qing empire in a holy prohibitionist war on substance production and trade--a war begun by his Republican/Progressive hero, Theodore Roosevelt.

The USA had bound Germany's allies to kowtow to Chinese-style prohibition laws in Armistice Agreements signed in 1919. President Hoover had no need for the League of Nations or Versailles Treaty other than as a lever for added pressure on German pharma to expand global prohibitionism. China used U.S. generosity to pay League member dues and join committees. From 1921 through 1931 civil-war-torn China had its own U.S.-backed representatives urging the League's Advisory Committee on Traffic in Opium and Dangerous Drugs to hogtie and hamper German pharma corporations with pettifogging demands. Europeans, painfully aware that the U.S. prohibition and narcotics bureaus were gleefully killing thousands of America's own citizens, imprisoning tens of thousands more, and hauling large alcohol, sugar and banking corporations into the dock to respond in criminal proceedings involving prison terms, padlockings, huge fines and libel confiscations including luxury yachts and ocean liners, were very, very deferential.

Europeans, saddled with interest payments and WW1 loans gotten from the Wilson Administration had watched as the 1909 Hague Antiopium Convention sprouted additional powers and demands. "Cocaine Negroes" were invented by journalists as hobgoblins prompting politicians to pass a Harrison Act, which was soon interpreted as banning stimulants by renaming them narcotics. Marijuana leaves followed coca leaves as victims of mission-creep amendments worsening wedged legislation in the march toward WW1. After the war, a frustrated prohibitionist U.S. intimidated Great Britain into joining a breakaway Convention to ban all manner of things besides opium under the banner of the "Geneva" Convention of 1925. Finally Germany--the world leader in production of morphine in its myriad guises, cocaine made from Dutch coca grown primarily on Java and Sumatra and developer of synthetic mescaline during WW1--saw itself surrounded by officious and coercive League bureaucrats. Leading the charge was Harry Anslinger, Commissioner of America's brand-new Bureau of Narcotics, busily drawing up violently binding legislation to further chip away at Germany's remaining major industry. 

So on that very day of Germany's disastrous capitulation to Sino-American prohibitionism, former ambassador Gerard mentions aloud the name of the xenophobic and anti-Versailles Treaty politician whose national socialist party in the 1930 elections had grown to second-largest in all of Germany--Adolf Hitler.  Officers of huge German chemical and pharma corporations--facing the abyss of disaster--calculated that this demagogue of power Christianity was their only hope of escaping League encirclement and officious impositions by American-backed international prohibitionist conspiracies. Campaign contributions began to flow...

* * *

Interesting reading: The Latin American Narcotics Trade and American National Security is a compendium of shrill prohibitionist propaganda articles produced during the Reagan-Bush "Just Say No," "War on Drugs," "Zero Tolerance," and "Drug-Free America" campaigns leading up to the Crash  of 1987. Edited by Donald J Mabry during the subsequent recession and unemployment crisis as the DEA invaded many South American countries, the collection is yet another call to arms--this time to invade and conquer Panama as part of another attempt to claw back overseas dollars. Recall that after Herbert Hoover's policies wrecked both the U.S. and German economies, sudden departures of  deposits and gold prompted drafting of a nationwide Banking Moratorium which included government confiscation of all remaining gold. Lame-duck Hoover handed this plan to incoming President Franklin Roosevelt just before Inauguration Day, and FDR--who had watched the 1931 Moratorium destabilize the global economy--renamed it the Banking Holiday.
Nixon's prohibition policies a half-century later again trapped the U.S. The nation was forced off the gold standard thanks to a diaspora of dollars presented for gold. By the time Mabry's compilation was launched to soften up the public for another prohibition war, it inadvertently included most of the evidence anyone could ask for to prove that dishonest laws making a crime of production and trade must inevitably lead to panics, crashes, economic destabilization, hyperinflation and war. Following the looting of Panama, libraries withdrew it from their collections and I ended up with a bargain copy. The collection sets forth a detailed record of how fanatics get a "reasonable" law passed, then proceed to "amend" and worsen it so as to sidestep the Constitutional ban on ex-post-facto laws. The resulting mutation proceeds to clobber the economy to smithereens. This exact same pattern was followed with the League of Nations' Narcotics Limitation Convention that raised Hitler to power then brought on another World War. League of Nations records also reveal how the French opium régie, in what later became Vietnam was--by the economics of the Limitation Convention--absorbed in by something Harry Anslinger described as a monstrous Communist narcotics conspiracy. This is described in the Mabry collection and in Anslinger's own writings.  They do a tale unfold, but it's hardly the one they intended. 


Get the big picture in Prohibition and The Crash on Amazon Kindle in two languages. After this you’ll be able to explain to economists exactly how fanaticism and loss of freedom wrecked the U.S. economy.

ProhicrashAmazon

Prohibition and The Crash, on Amazon Kindle (link)

ASYLUM APPLICATION FORM i589 INSTRUCTIONS IN PORTUGUESE: INSTRUÇÕES PARA O FORMULÁRIO DE ASILO i589. What we did was make the Political Asylum instructions accessible to and understandable by people accustomed to thinking in Portuguese. This costs one dollar ($1) and you can read it on a cellphone with the Kindle app.(link)

Comment at LIBtranslator, my political economy blog at https://libertrans.blogspot.com/

Brazilian Sci-fi from 1926 featuring the adventures of a Rio de Janeiro man-about-town and the beautiful daughter of an elderly scientist–touting alcohol prohibition, eugenics and racial collectivism–in America’s Black President 2228 by Monteiro Lobato, translated by J Henry Phillips (link)

Three dollars on Amazon Kindle

I also produce books and articles in Portuguese, using Brazilian historical sources at http://www.expatriotas.blogspot.com or www.amigra.us and in English at Libertariantranslator.wordpress.com (link)


My financial history blog, http://www.Libertrans.us, is LIBtranslator, readable at libertrans.blogspot.com

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Background and context for the U.S.-caused 1931 Panic that raised Hitler to power in Germany

 

   






Wednesday, October 8, 2025

1931--Germany at the Brink

 

Enormous propaganda efforts were invested in making making it appear the financial collapse of the world's largest pharma and chemical industries just happened to coincide with the 1931 League of Nations dope convention throttling Germany's production and output (link)

On 12JUL1931, German officials realized the failure of the Damstadter und Nationalbank could not be concealed. Fortunately, the press refrained from linking the Nordwolle wool mills collapse with the tons of morphine loaded into packed woolens aboard the USS Milwaukee at the nearby port of Hamburg, just as they mentioned no such link with the Bank of United States and Alesia dope cargo. Still, the news article announcing US READY TO ASK BIDS FOR 11 WAR VESSELS could hardly have been reassuring.(link) Experienced observers had to realize their current fix had grown out of China's bid for U.S. assistance enforcing prohibition worldwide after witnessing the way Teddy Roosevelt's gendarmes struggled to dry up Filipino dope dens and saloons. But where was the gratitude the Filipinos owed Uncle Sam for striking off the come-alongs after th' crool hand iv Spain forged man'cles f'r their limbs? American prohibition violence had after 32 years only outraged the locals. This much was clear from reading the papers:

STONES HURLED AT AMERICANS--Filipinos Attack Soldiers As Manila Stages Independence Demonstration, hollered the headlines! Two U.S. Senators busily making speeches in favor of Filipino independence were spared the indignity of dodging brickbats.(link) Yet on that same page Miss Minnie Fox swears by the Natex nostrum she got from her local drug dealer.(link) When the 1905 China boycott hit These Sovereign States, President Teddy and his partisans went into high gear. Magazines cranked out Yellow Peril opium gangs and patent medicine advertiser intrigues. As a warning to Americans counterfeiting Bayer drug labels, he proclaimed the USA would stoutly defend German patent rights... IN CHINA! (link) Treaties established tariffs and restricted a laundry list of drugs and liquor strengths in European colonies scattered across Africa. Then came a law poisoning industrial alcohol, followed by the 1906 Food & Drugs law that caused a Panic and recession as of 1907. The list of  examples of how violent prohibition laws had only led to crime, crashes and banking panics was, by 1931, growing uncomfortably long. To Germany, the League's lust for lawmaking demands was by now looking pretty insatiable.(link) 

In the past couple of years Germany had, by way of appeasement:
Passed the Law on Traffic in Narcotics of 10DEC1929, two months after Harry Anslinger was made assistant prohibition commissioner. 
Decreed addition of a long list of "narcotics" nine days later, 
Added two more drug enforcement decrees 01APR1930, 
Added yet another raft of drug enforcement measures 14APR1930,
Imposed a voucher tax on suppliers of "narcotics" 10DEC1930--three months after elevating Harry Anslinger to head the brand new Bureau of Narcotics.(link) 
Issued strict drugstore regulations limiting prescriptions and sales of anything containing "narcotics," a characterization Americans appeared bound to apply to beer, wine, schnapps and cigarettes any day now!

That year, irritated German voters made Hitler's anti-Versailles Treaty nationalsocialist party the second-largest in the land--and still there was no letup in U.S. and League of Nations pressure for added restrictions on comparatively harmless hemp.  Worst of all, the same coalition of prohibitionists was now, in July 1931, threatening to demand strict regulation and reporting on codeine--an actual addictive narcotic 
opiate made from morphine. But after looking at the rest of the list, Germans refused to believe even that. So here it was, July 12, the economy crumbling, and Herbert Hoover was baiting a trap with a King's-X moratorium that might postpone the $15 million reparations installment falling due three days hence. Something was abut to give...

Good reading: The Book of Why, The New Science of Cause and Effect, by Judea Pearl.(link) One of the characters appearing as a sort of villain is Francis Galton(link) who also appears in my translation of Monteiro Lobato's classic novel of racial clashes.(See below) Causality, it turns out, has only recently begun to obtrude upon the notice of ivy-covered professors in ivy-covered halls. Prohibitionists found in statisticians a horde of allies eager to elide under oath in furtherance of murder and robbery under color of law. Their mantra, "correlation is not causality" is the smokescreen intellectuals of the looter persuasion obligingly generate by way of licking the hand that feeds them. Behind it, Republicans and Democrats airily dismiss all evidence of your senses by waving toward mystical and imaginary "business cycles." Those cycles, they explain, make crashes, banking panics, hyperinflation, recessions and unemployment, inevitable, natural manifestations of the inscrutable will of God. All financial ruin and poverty that has invariably sprung up in the wake of officially sanctioned licenses to kill over plant leaves and corn squeezings since the invention of sumptuary laws is, by their lights, mathematically proven to be sheer coincidence. Any misapprehension on your part is a mistake that could land you in the poorhouse, in jail, languishing in purgatory or regretting forever in the lambent flames of Hell, say the pundits of prohibition. If you like curve-fitting and Bayesean approaches to probabilistic inference--or if you occasionally feel the temptation to question ad baculum authority--this book's for you!
 

Get the big picture in Prohibition and The Crash on Amazon Kindle in two languages. After this you’ll be able to explain to economists exactly how fanaticism and loss of freedom wrecked the U.S. economy.

ProhicrashAmazon

Prohibition and The Crash, on Amazon Kindle (link)

ASYLUM APPLICATION FORM i589 INSTRUCTIONS IN PORTUGUESE: INSTRUÇÕES PARA O FORMULÁRIO DE ASILO i589. What we did was make the Political Asylum instructions accessible to and understandable by people accustomed to thinking in Portuguese. This costs one dollar ($1) and you can read it on a cellphone with the Kindle app.(link)

Comment at LIBtranslator, my political economy blog at https://libertrans.blogspot.com/

Brazilian Sci-fi from 1926 featuring the adventures of a Rio de Janeiro man-about-town and the beautiful daughter of an elderly scientist–touting alcohol prohibition, eugenics and racial collectivism–in America’s Black President 2228 by Monteiro Lobato, translated by J Henry Phillips (link)

Three dollars on Amazon Kindle

I also produce books and articles in Portuguese, using Brazilian historical sources at http://www.expatriotas.blogspot.com or www.amigra.us

My financial history blog, http://www.Libertrans.us, is LIBtranslator, readable at libertrans.blogspot.com

Go ahead and comment. 


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Background and context for the U.S.-caused 1931 Panic that raised Hitler to power in Germany




Wednesday, October 1, 2025

1931 Drugs, Banks and Crashes

 

April 19, 1931, a shipment of drug-laden German woolens aboard the USS Milwaukee docked at NY. Six days later papers reported it contained 3 tons of narcotics shipped in woolens from Hamburg in northern Germany. The situation mirrored the Bank of United States failure as 5 tons of morphine sat on the docks in a stakeout at the French liner Alesia. The graph shows German gold reserves and Young Plan reparations payments bonds crashing in value following the news. Bank of United States trials were all over the news that week as well. 

Peter Temin, whose graph is above, is the same economist who pointed out the U.S. stock market began crashing the first week of September 1929. This was the week the League of Nations received planetary dope prohibition marching orders from its Opium Advisory Committee. In the above chart, failing bets on Germans paying war reparations coincide with the Nordwolle woolens bust, recover momentarily with the Moratorium on Brains and continue downward. As agents neared the ship, this cartoon appeared in a Rochester paper. (Link) to page. 


Even the Bank of America, reeling from involvement in financing the Atlantic Highlands dope and rum syndicate, was still in the news. Milton Friedman made much of the BUS being under Jewish management. But in the 1931 cascade of German bank failures a Canadian paper revealed that one Jacob Goldstein chaired Danat Bank plus another 392 companies.(link) Soon, Nationalsocialist press headlines demanded to know when Goldschmidt would be arrested. It was NOT the best of times... 

Then again, in that same Canadian paper there was a lighter note in a conversation under doctor-patient confidentiality...

Doctor: You're in an enfeebled condition. It would be best for you to lay off of strenuous activity for awhile. What sort of work do you do? 

Patient: I'm an anarchist. 

Doctor: Then perhaps it might be best for you to lay off of bomb-throwing for a while.(link) 

Get the big picture in Prohibition and The Crash on Amazon Kindle in two languages. After this you’ll be able to explain to economists exactly how fanaticism and loss of freedom wrecked the U.S. economy.

ProhicrashAmazon

Prohibition and The Crash, on Amazon Kindle (link)

ASYLUM APPLICATION FORM i589 INSTRUCTIONS IN PORTUGUESE: INSTRUÇÕES PARA O FORMULÁRIO DE ASILO i589. What we did was make the Political Asylum instructions accessible to and understandable by people accustomed to thinking in Portuguese. This costs one dollar ($1) and you can read it on a cellphone with the Kindle app.(link)

Comment at LIBtranslator, my political economy blog at https://libertrans.blogspot.com/

Brazilian Sci-fi from 1926 featuring the adventures of a Rio de Janeiro man-about-town and the beautiful daughter of an elderly scientist–touting alcohol prohibition, eugenics and racial collectivism–in America’s Black President 2228 by Monteiro Lobato, translated by J Henry Phillips (link)

Three dollars on Amazon Kindle

I also produce books and articles in Portuguese, using Brazilian historical sources at http://www.expatriotas.blogspot.com or www.amigra.us

My financial history blog, http://www.Libertrans.us, is LIBtranslator, readable at libertrans.blogspot.com



Do you need to contact a certified Translator or Interpreter?

Está procurando tradutor ou intérprete credenciado?

Background and context for the U.S.-caused 1931 Panic that raised Hitler to power in Germany





Sunday, September 7, 2025

Germany's Gathering Storm, 1931

 

American papers and politicians made the Moratorium an anchor to draw attention away from the cocaine, marijuana, hashish, coca leaves and newfangled opiates limitation convention. Few suspected the USA produced more cocaine than its commercial rival Germany  


Newspaper headlines for 03JULY1931 painted a grim picture of Germany.(link) One-third of the workforce was jobless, clashes among police, communist and nationalsocialist agitators were breaking out everywhere. (link). France was making trouble, large banks were failing and German officials were again begging for a moratorium on loan and reparations payments, just as they had in March of 1922. Back then it was the looming Jones-Miller Act to ban all importation of heroin into the US. Government agencies and VA hospitals had already stopped buying the painkiller of which Germany was the leading producer.  The following year hyperinflation completely wrecked Germany's economy.(link) But the 1931 situation looked even worse. 

July headlines told of the Atlantic Highlands smuggling syndicate prosecutions, trials of Russian-born failed Bank of United States/BUS officials, Al Capone trials for income tax evasion--thanks to the 1927 U.S. v. Sullivan decision making smugglers liable for taxes on illegal profits--and War Department Military planes shifting from parades over major cities to Gulf Coast patrols. Hoover Administration narcotics agents as of May 1931 became smugly confident Germany would sign any drug limitation "agreement" slid in front of them. The newspaper articles were interlinked. The BUS failed after agents grabbed half a ton of morphine off the S.S. Alesia, and the Atlantic Highlands trial involved smuggled drugs in addition to liquor. All of these proceedings involved tax liability. Agents could now invoke huge fines and forfeitures for narcotics smuggling thanks to the 1930 Tariff Act. Also as of 1930, Germans could be extradited to the United States for violating drug laws. None of these events or new laws are mentioned in books or articles purporting to "explain" ubiquitous Banking Panics, Crashes and Recession events. Yet every one of these prosecutorial liabilities now encircled the large load of drugs and woolens seized aboard the Hamburg-American liner Milwaukee the third week of April. Hoover and Anslinger fancied they had the Germans right where they wanted them.

Herbert Hoover had three billion dollars on the table, said the papers.(link) Backers warned France would suffer if the Hoover Moratorium failed; skeptics warned that Germany would never pay another pfennig on reparations or loans if it did pass.(link) By July 3, the Reichsbank had used up the entire $100,800,000 credit just gotten. Small wonder. The Nordwolle bankruptcy was costing DM 200 million, nearly 4x the earlier estimate, and the largest German state bank--the Landesbank der Rheinprovinz--was, like the Austrian Danat Bank, turning up insolvent.(link) Violence was breaking out all over Europe, dry America and Latin America,(link); not even cops were safe in Germany (link) with 1/3 of industrial workers jobless.(link)

Germany began making noises about defaulting on loans and reparations if the Moratorium did not give them some relief. Italy had already done much the same back in June. On Saturday, July 4, Reichsbank president Luther warned the German Chancellor that at this rate, there would not be money enough to pay the reparations installment due July 15. U.S. politicians and papers cut out all mention of drug prohibitionism and sweated to make the Moratorium on Brains look as though that was the panacea for restoring confidence. It was not the best of times, and worsening daily. 

RCA switched to non-replaceable cheap NiCAD batteries on its mp3 players. I used a short USB extension to hook the player to a cellphone recharging battery pack. Once the charging settles down, you can turn the player on and use it for many hours. 

Good reading and listening: The Autobiography of Calvin Coolidge.(link)  I read the book years ago and was delighted when a fellow blogger steered us to this elegant Librivox recording. The book is short and Cal's writing style was clear and simple. His training was in banking, so Coolidge had an unusually clear perspective on the way prohibition laws were damaging the U.S. and global economies, steering us toward Panics, Crashes and War. The high-quality mp3 version is divided into chapter files, easy to listen to on any cheap mp3 player. 

The picture shows RCA players capable of playing audiobook files several hours long, connected to recharging battery packs made for cellphones. The player's cheap batteries are not replaceable but the work-around adds battery capacity so the player can run for many hours without pause, then start back up the next day right where you left off. Philips and RCA both made really nice players that let you swap rechargeable batteries in the middle of a book without losing your place. None of the many Chinese models I've tested offer this useful feature, and nobody seems to be making players that don't lose their place AND let you replace the battery. The hack is clunky and ugly, but effective. 

Get the big picture in Prohibition and The Crash on Amazon Kindle in two languages. After this you’ll be able to explain to economists exactly how fanaticism and loss of freedom wrecked the U.S. economy.

ProhicrashAmazon

Prohibition and The Crash, on Amazon Kindle (link)

ASYLUM APPLICATION FORM i589 INSTRUCTIONS IN PORTUGUESE: INSTRUÇÕES PARA O FORMULÁRIO DE ASILO i589. What we did was make the Political Asylum instructions accessible to and understandable by people accustomed to thinking in Portuguese. This costs one dollar ($1) and you can read it on a cellphone with the Kindle app.(link)

Comment at LIBtranslator, my political economy blog at https://libertrans.blogspot.com/

Brazilian Sci-fi from 1926 featuring the adventures of a Rio de Janeiro man-about-town and the beautiful daughter of an elderly scientist–touting alcohol prohibition, eugenics and racial collectivism–in America’s Black President 2228 by Monteiro Lobato, translated by J Henry Phillips (link)

Three dollars on Amazon Kindle

I also produce books and articles in Portuguese, using Brazilian historical sources at http://www.expatriotas.blogspot.com or www.amigra.us

My financial history blog, http://www.Libertrans.us, is LIBtranslator, readable at libertrans.blogspot.com



Do you need to contact a certified Translator or Interpreter?

Está procurando tradutor ou intérprete credenciado?

Background and context for the U.S.-caused 1931 Panic that raised Hitler to power in Germany



1929 League Opium Meeting 9

Mussolini's 1927 message to Italians in the USA, at 12min ( link ) The September 22 Opium meeting in Geneva opened with boring analyses...