We almost got a chance to find out on November 14, 1979, when Iran announced that it was pulling all its funds — something between $6 billion and $12 billion, depending on whose word you wanted to take — from U.S. banks. When President Carter got word of the move at 6:00 A.M, he climbed right out of bed and declared a national emergency (“an extraordinary threat to the national security and foreign policy of the U.S.”), and by 8:00 AM. he had seized Iran’s bank deposits. He was justified in being jumpy, for in 197 4 the Franklin National Bank of New York had gone out of business in a fiasco involving only $1. 7 billion.
The seizure of the Iranian deposits to protect our banks was the second half of the act. The first half had found the United States shaping its foreign policy to meet the needs of Chase Manhattan Bank.
This is the background for that costly act of monetary mercy. In 1953 Iranian rebels temporarily deposed the shah and replaced him with a fierce nationalist named Mossadegh. The CIA promptly overthrew Mossadegh and reinstalled the shah, who was forced to show his gratitude by permitting several of our oil companies to obtain concessions there for the first time. Three of the largest concessions went to companies controlled by the Rockefeller family.
“The profits of OPEC have become so great that they threaten to… touch off a world depression so complete that not even the oil-banking complex will escape.”
It was the beginning of a great romance between the shah and David Rockefeller of Chase Manhattan. From the early 1960s until the shah was overthrown in 1979, Chase was the dominant bank in Iran. Whenever the shah wanted to borrow money for his government, he always specified that Chase be the manager of the lending consortium. Together they worked to develop Iran’s oil into a great fortune that would be mutually beneficial. It was Secretary of State Henry Kissinger, a Rockefeller protege, who, at least tacitly, encouraged the shah to push for higher oil prices. (Since leaving office, Kissinger has returned to Rockefeller’s bank as an “adviser.”) The more money the shah took in, the more he would have to deposit with Chase.
And that’s exactly how it worked out. Toward the end of the shah’s reign, the government of Iran had nearly $3 billion on deposit with Chase-almost 8 percent of the bank’s total deposits, or quite enough to keep Mr. Rockefeller on a very short leash. But the $3 billion was, in fact, only a fraction of the sum by which the shah controlled Mr. Rockefeller’s affections. Over the years the shah and his family stole billions from his country’s treasury and deposited much of it with Chase. (Estimates range up to $25 billion, but that’s probably extravagant.)
After the shah fled Iran, the new government, knowing of Rockefeller’s alliance with the shah and hating him for it, began pulling its money from Chase and depositing it in the foreign branches of other banks: Bankers Trust, Bank of America, etc. When that happened, Rockefeller had no reason to try to maintain friendly relations with Iran. But he had all the more reason to keep the shah’s friendship, lest the exiled dictator pull his stolen fortune from Chase. So when the shah asked to come to America, Rockefeller and Kissinger put enough pressure on President Carter to bring it about, under the pretense that he was being let in for health reasons. Thus was triggered the long, debilitating tug-of-war over the embassy hostages.
Carter’s decision to admit the shah was disastrous to this nation’s peace of mind, but it was a fine decision for Chase Manhattan Bank and the whole banking system. If Rockefeller and Kissinger had failed to persuade Carter, and if that had prompted the sulking shah to pull his billions from Chase’s vaults, what would have happened? As one Swiss economist explained with a shrug, “If you pull five billion dollars from Chase Manhattan, they will lock the door.”
There is no possible way that the government can prepare a strategic defense against financial blackmail by the Arabs unless it knows how much of their money the various oil-producing nations have on deposit and in which banks. It must know, further, whether the money is on deposit in this country or in the bank’s foreign branches. But when Congress has tried, feebly, to get answers to these questions, the bankers have simply refused to tell — and they have gotten away with it. Their reasoning is simple: profits should come before patriotism. The Arabs want secrecy, and the bankers are all too willing to oblige — for a price. As Hans Angermueller, vice-president and general counsel of National City Bank, the nation’s largest, once told a Senate committee that was trying to pry the truth out of him: “We wonder if in a balance of risk against reward it is worth subjecting the major U.S. international banks to losing their OPEC customer relationships in order to glean some knowledge of where… the world’s petrodollars ended up. We think the balance should run against running that risk.”
This attitude should come as no surprise. Twenty years ago three-fourths of the largest banks in the world were right here in this country. Today, only 4 of the largest 20 are U. S. — based banks, and these are the most influential in the oil-banking complex. The United States no longer dominates world banking the way it once did, and it has a difficult time trying to hold the allegiance of its largest banks. Their attitude is global, multinational. They think of themselves as being part of the world banking community, not as representatives of the United States in that community. Their allegiance, in short, is elsewhere.
The General Accounting Office, Congress’s investigating agency, estimates that as of the middle of last year (the latest count made public) OPEC nations had $32 billion deposited in the largest U. S. banks, but most nongovernment experts feel that this is a ridiculously low estimate. For one thing, the government is counting only deposits that OPEC has its name on. But there is nothing to prevent the oil producers from concealing deposits under bogus names.