Jean Monnet

The EU Godfather’s Wall Street roots

Adam LeBor traces the American influences behind Jean Monnet, the man who reshaped Europe


This article is taken from the October issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering three issue for just £5.

Is there any historical figure more immortalised than Jean Monnet, the French cognac salesman, financier and fixer who invented the European Union? The man dubbed by his admirers the “Father of Europe” died in 1979, but his name lives on in university faculties, schools, research centres, public buildings, prizes, even a bridge over the river Moselle in Metz.

Monnet’s compendious thoughts and life’s work are immortalised in a global academic industry: European Union studies. So far the EU has approved 879 chairs around the world, and 165 Jean Monnet European Centres of Excellence, including ten in the United States, which bring together “high-level” experts.

The Jean Monnet Working Papers series, hosted by the Jean Monnet Center for International and Regional Economic Law and Justice at New York University, give a good sense of the discipline’s vital heft. One probes “Public Epistemic Authority: An Epistemic Framework for the Institutional Legitimacy of International Adjudication”, another “IR at 100: Centenary Reflections on the Theoretical and Meta-Theoretical Challenges for the field of International Relations”.

So far, so familiar. But all of these academics and their students are missing the real story. For all the EU’s emphasis on democracy — and its undoubted contribution to rebuilding democracy in the post-Soviet states — Monnet was never elected to public office. He worked behind the scenes, networking, scheming and manoeuvring among the great and good. He was a technocrat and an elitist through and through. His vision of a united Europe, he believed, was to be imposed from the top down.

It was on Wall Street that Monnet found a like-minded group of elitists with a disdain for democracy

He played a long game over decades, through two world wars and economic upheavals. Monnet’s formative years were spent not in Europe, but on Wall Street. It was there, in the 1920s and 30s, that he became rich and close to a small group of powerful American lawyers, including John Foster Dulles and John McCloy. Dulles later served as Secretary of State, McCloy as US High Commissioner for Germany. It was on Wall Street that Monnet found a like-minded group of elitists with a disdain for democracy, who after 1945 were determined to ram the postwar continent into a framework of their making — one which endures today.

Jean Monnet was born in 1888 to a family of cognac merchants in the French town of the same name. He did not attend university and went straight into the family business. The house was often busy with visitors, merchants and tradesmen, he recalled in his memoirs. “I learned more about men, and about international affairs, than I could have learned from a specialised education. I only had to listen and watch.” Monnet became a technocrat at an early age. “Quite early in life, events taught me that human nature is weak and unpredictable without rules and institutions.” In later years, he would be more than ready to provide them.

Monnet moved to London at the age of 16, and was soon on the road around the world as an agent for the family business, including trips to Egypt, Canada and the United States. His precocious business skills were noticed. Convinced that Britain and France needed to pool their resources and coordinate their war effort, he managed to meet René Viviani, the French prime minister. He helped to set up the Allied Maritime Transport Council, which coordinated shipping and vital supplies.

John Foster Dulles: Lifelong friend

By the end of the war, horrified by the carnage, like many Monnet was a fervent internationalist. He attended the Paris Peace Conference in 1919 as an aide to the French minister of commerce. It was there that he met a kindred spirit and forged one of the two most important friendships of his life: with John Foster Dulles. As a partner in the law firm of Sullivan and Cromwell, Dulles would soon become one of the most powerful men in the US. “The Dulles I knew and loved was like many other men, but greater and more upright than most,” wrote Monnet. Dulles was many things. Upright was not among them.

Monnet’s strong internationalist — and increasingly supranationalist — beliefs made him a natural appointment for the League of Nations when it was created in 1920. He was appointed deputy secretary-general. Three years later, disillusioned by the League’s bureaucracy and lack of power, he resigned and returned to the family business. In 1926 he set up the French branch of Blair & Co., an American finance house. Blair & Co was represented by the Cravath law firm, where John McCloy was a partner. The world of the Wall Street elite was small and close-knit. McCloy and Monnet both came from modest backgrounds and the two men soon bonded.

Monnet became “one of McCloy’s closest friends and collaborators”, records Kai Bird, McCloy’s biographer. During this time, Blair & Co, like many investment houses of the time, routinely carried out insider trading operations. Under Monnet’s leadership, it kept a preferred list of 58 clients who were brought in on profitable deals. As Robert Swaine, of Cravath, observed, “Leaders among America’s bankers and industrialists thought they had found the secret of perpetual prosperity.”

Dulles’s arguments for a federal Europe were rooted not in hazy idealism about a Europe living in peace

Later in the decade Monnet worked with Dulles and several American banks on the stabilisation of the Polish and Romanian economies. In Bucharest in 1929 Monnet met Ivar Kreuger, a Swedish industrialist who had built an immense fortune through a monopoly on safety matches. He was causing great excitement on Wall Street. The London branch of a venerable Boston investment house called Lee, Higginson was one of his most enthusiastic advocates. Monnet and Kreuger already knew each other. “He used to come and see me at the Blair office in Paris,” recalled Monnet. “He would sit in an armchair and talk aimlessly about this and that.” Unfortunately for Lee, Higginson, indeed for all of Kreuger’s investors, the Swede was running a massive Ponzi scheme. In 1931 one of the brokers at Lee, Higginson wrote to Kreuger asking him to explain what he meant by “loans secured by real-estate mortgages”, an eerie precursor of the 2008 crash. The following year Kreuger shot himself in his Paris apartment. His firm went bust. So did Lee, Higginson.

Dulles sent Monnet to Sweden to try and clear up the mess and protect the interests of Kreuger’s American creditors. Dulles also suggested that Monnet — whom he described as “one of the most brilliant men I know” and “an intimate friend” — went into business with another close friend of his, a banker called George Murnane.

In fact Monnet and Murnane had known each other since the First World War, when Murnane had worked for the American Red Cross in France. Murnane had also been a partner in Lee, Higginson. “I have long felt that they would make an ideal combination,” Dulles wrote of the two men. Monnet and Murnane agreed. They set up a new international finance house, Monnet, Murnane & Co., using Dulles’s legal services. At this time Sullivan and Cromwell was making so much money, especially from its German clients, that Dulles suggested the law firm invest in his friends’ new company.

When the Second World War broke out, Monnet put his contacts to good and productive use. He had long understood the importance of air supremacy in twentieth-century warfare. After the 1938 Munich conference he had met President Roosevelt to discuss boosting US aircraft production. Roosevelt too understood the importance of air power, and the carnage during the Spanish civil war, in which the Luftwaffe honed the techniques of blitzkrieg, left no room for doubt. In 1940 the British government sent Monnet to Washington DC. He became an adviser to Roosevelt and helped to persuade him to launch a massive arms and aircraft production programme, which hastened the eventual Allied victory.

But even then Monnet was already planning his vision of the postwar continent. He met his “intimate friend” Dulles whenever he could. The two men shared a common vision. There could be no return to the prewar system of nation-states, Dulles wrote in 1941:

We should seek the political reorganisation of continental Europe as a federated commonwealth. There must be a large measure of local self-government along ethnic lines. This can be assured through federal principles, which in this respect are very flexible. But the reestablishment of some twenty-five wholly independent sovereign states in Europe would be political folly.

Monnet strongly agreed. But even as Europe burned, transnational financial channels had to be kept open — and the financiers and lawyers were planning how to protect their assets during the war and for the eventual peace. Dulles was busy cloaking Nazi assets in the US, working with Enskilda Bank and the Wallenberg brothers, Marcus and Jacob. The siblings were the most powerful financiers in neutral Sweden, making massive profits by playing off the Allies and the Nazis against each other and laying the groundwork for Sweden’s postwar prosperity.

In May 1940 the German firm Bosch sold its shares in its subsidiary, the American Bosch Corporation, to Swedish entities controlled by Enskilda to avoid the firm being sequestered when America eventually went to war. The chairman of American Bosch was George Murnane. But Bosch retained a secret buy-back option for two years after the end of the war and a right to accumulated dividends.

The Wallenbergs needed a structure in the US for the Bosch arrangement. In November 1940, Marcus Wallenberg travelled to New York to meet Dulles. They set up a voting trust to control the Bosch shares now supposedly owned by Enskilda — overseen by George Murnane. In the end the elaborate edifice crumbled. When Germany declared war on the US in 1941, Dulles warned the Wallenbergs that the American Bosch shares were likely to be seized by the Alien Property Custodian. They were.

Dissolution of statehood would be a more accurate term — and Monnet would agree

Dulles’s arguments for a federal Europe were rooted not in hazy idealism about a Europe living in peace and security for its own sake, but hard-headed realism: the preservation of American military and geopolitical interests, building a bulwark against the Soviets, and the preservation of the links between the prewar transnational financial elites in Wall Street. A united, federal Europe was simply the best means to achieve these ends.

Monnet’s agenda was different: dissolving national sovereignty was an aim in itself. A postwar Europe of sovereign nation states could never be allowed. Supranationalism, the dissolution of sovereignty, was the only way to stop future wars. In 1943, at a meeting of the French government-in-exile, Monnet declared: “There will be no peace in Europe if the states are reconstituted on the basis of national sovereignty . . . The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development.”

The war against the Nazis and the Axis powers was fought for freedom and democracy. But after 1945 the peoples of Europe’s newly liberated nations had little, if any, knowledge of Monnet’s plans for them, and even less say in their implementation.

After the war’s end, Monnet returned to Paris and began to plan the supranational project. The key first step was to take control of steel and coal production, which in effect meant power over all European industry. In April 1951 France, West Germany, Italy and the three Benelux states signed the Treaty of Paris, which established the European Coal and Steel Community (ECSC), creating a common market for coal and steel.

This was the start of the project which eventually evolved into today’s European Union. The dry-sounding construct was in fact a profoundly significant development, the birth of the supranational process by which Monnetist institutions could slice away sovereignty from nation-states. The ECSC had regulatory powers over its members, through the office of its “High Authority”. Its president, naturally, was Jean Monnet.

The ECSC also ensured the continuing dominance of the wartime German steel cartels. At this time John McCloy, Monnet’s close friend, was US High Commissioner for West Germany. By the time the Treaty of Paris was signed in 1951, McCloy had already released Alfried Krupp, and eight directors of his company who had been convicted of war crimes, from prison. McCloy also restored Krupp’s confiscated property. Krupp, like the newly-freed directors of I.G. Farben, was quickly welcomed back into Germany’s business community.

Stored in the archives of the EU is a lengthy and revealing 1989 interview with a Dutch politician called Jelle Zijlstra. After briefly serving as prime minister during the 1960s, Zijlstra was appointed president and chairman of the board of the Bank for International Settlements. He retired in 1981.

The idea of a nation-state with sovereignty over its own borders has proved surprisingly resilient

For most of the 1950s Zijlstra had served as Dutch economics minister. After a few months in office he went to visit one of Holland’s largest coal and steel traders. His host warned him that the German coal and steel barons were so powerful that they were virtually a state within a state. Do not, he advised Zijlstra, upset them. Two months later, Zijlstra received an invitation to the Ruhr, Germany’s industrial heartland, to meet the coal and steel barons himself. He was wined and dined and received the same warning, this time directly.

The Germans “without any doubt” regarded the ECSC as a dachorganisation (umbrella organisation) for their steel and coal cartels, said Zijlstra. The Dutch politician saw the ECSC for what it was: a cartel for the German producers that fixed prices in their favour while removing its members states’ power to run two crucial strategic industries. Ziljstra soon clashed with Ludwig Erhard, Germany’s economics minister. Erhard’s commitment to free trade was less arduous when the country’s own interests and those of the coal and steel barons were involved. Zijlstra berated Erhard and told him, “You are not true to your own faith.” Erhard did not deny the accusation. He shrugged and told Zijlstra, “Lieber Kollege, wir sind doch alle Sünder!” (Dear colleague, we are all sinners).

Cartel in the making: Monnet speaks at the first meeting of the European Coal and Steel Community

“In that debate,” recalled Zijlstra, “the coal and steel industrialists, the people from the Ruhr, saw the community as a possibility of extending their structures to the European system. And they were not, and they never have been free traders.” Zijlstra also knew Monnet well. The French technocrat was an unelected bureaucrat, but he still had the power to instruct governments, including the West German government, said Zijlstra. If a problem arose, “Monnet went to see the governments and told them what they had to do. Monnet had an enormous authority over the national governments . . . he certainly visited from time to time the ministers of foreign affairs and even prime ministers. He was very powerful.”

Strobe Talbott, US deputy secretary of state during the Clinton era, once observed: “Monnet has been hailed as a statesman. In fact, he was something far rarer and more consequential — a key figure in the transformation of statehood itself.” For Talbott this counted as high praise.

Dissolution of statehood would be a more accurate term — and Monnet would agree. He was always open about his strategic aim. What was, and is, more surprising is how the supposed need to erode, then eventually dismantle sovereign nation-states, the building blocks of modern European history, so quickly became accepted wisdom among so many politicians and intellectuals. In part this was a natural reaction to the carnage and destruction of two world wars.

But a deeper seismic psychological change was also unfolding, as though errant statesmen suddenly needed a benevolent father figure to guide them. Monnet was always ready to step in. “I have never met a man like Monnet, before or after, who had that single-mindedness,” recalled Zijlstra. “He had at any specific period one thing he wanted to achieve. Exceptionally two — but never three. And then with all his powers of persuasion, of personal magnetism, he forced a solution … If you asked me to try and define it, it’s the unique combination of intellectual power and willpower. And that unique sense of history.”

Britain said thanks but no thanks in 2016. Monnet would have been horrified

In our secular age, as belief in traditional religions wither, for many, especially among highly-educated urban liberals, Monnet’s creed is now the dogma of choice. Like all popular faiths Monnetism offers a simple dualism: in its case European Union good, sovereign nation-state bad. Monnetism has a priestly cast, dedicated to spreading the creed; one offering easy salvation and membership of the elect.

At its apex are the panjandrums of the European Commission, dispensing largesse to favoured institutions and researchers. Monnetism’s churches are think-tanks and most of all, universities, all peddling the doctrine of Euro-salvation to their students, the future political, business and thought leaders of our time. In Britain the abuse and hysteria heaped upon Leavers by many Remainers is the outrage of the righteous excommunicating heretics.

Yet Monnetism has a problem. Almost every time voters — everyday people — have been asked to endorse his project, they have declined. Despite Monnet’s best efforts, and that of the European Commission and its pliant universities, media and think-tanks, the idea of a nation-state with sovereignty over its own borders has proved surprisingly resilient, even among the founding members of the union.

When 12 states signed the Maastricht Treaty in 1992, so creating the EU out of the European Economic Community, only three trusted their voters sufficiently to hold a referendum. Denmark initially narrowly voted against, and French voters stunned their political leaders when only 51 per cent voted in favour. Only Ireland was enthusiastic with 68.7 per cent in favour.

Twelve years later, in 2004, 25 member states signed the draft EU constitution, the next step in Monnet’s long march towards a federal United States of Europe. Eight countries pledged to hold a referendum. Spain and Luxembourg ticked the yes box, but in France 55 per cent of voters said non — on a turnout of 69 per cent. Dutch voters also gave a resounding nee. These results, from two of the six founding members of the union, sent shockwaves through Paris and Brussels. There must be no more referendums, it was decided. Instead the constitution was repackaged as the Lisbon Treaty. As Lisbon merely amended previous treaties there was no need for further referenda, claimed the Eurocrats. Stubborn Ireland held a referendum anyway and voted no. Brussels and others read the country the riot act. In October 2009 Ireland voted again. This time it voted yes.

Britain said thanks but no thanks in 2016. Monnet would have been horrified, but the country has not yet collapsed and remains a sovereign nation-state. Somehow, despite Monnet’s best efforts, there is still life outside the European Union.

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