The secret meeting on Jekyll Island in Georgia at which the Federal
Reserve was conceived; the birth of a banking cartel to protect its
members from competition; the strategy of how to convince Congress and the
public that this cartel was an agency of the United States
government.--...were seven men who represented an estimated one-forth of
the total wealth of the entire world.
1. Nelson W. Aldrich,
Republican "whip" in the Senate, Chairman of the National Monetary
Commission, business associate of J.P. Morgan, father-in-law to John D.
Rockefeller, Jr.;
2. Abraham Piatt Andrew, Assistant Secretary of
the United States Treasury;
3. Frank A. Vanderlip, president of
the National City Bank of New York, the most powerful of the banks at that
time,representing William Rockefeller and the international investment
banking house of Kuhn, Loeb & Company;
4. Henry P. Davison,
senior partner of the J.P Morgan Company;
5. Charles D. Norton,
president of J.P. Morgan's First National Bank ofNew York;
6.
Benjamin Strong, head of J.P. Morgan's Bankers Trust Company;and
7. Paul M. Warburg, a partner in Kuhn, Loeb & Company, a
representative of the Rothschild banking dynasty in England and France,
and brother to Max Warburg who was head of the Warburg banking consortium
in Germany and the Netherlands.
In 1913, the same year that the
Federal Reserve Act was passed into law, a subcommittee of the House
Committee on Currency and Banking, under the chairmanship of Arsene Pujo
of Louisiana, completed its investigation into the concentration of
financial power in the United States. Pujo was considered to be a
spokesman for the oil interests, part of the very group under
investigation, and did everything possible to sabotage the hearings. In
spite of his efforts, however, the final report of the committee at large
was devastating. It stated: Your committee is satisfied from the
proofs submitted, even in the absence of data from the banks, that there
is an established and well defined identity and community of interest
between a few leaders of finance...which has resulted in great and rapidly
growing concentration of the control of money and credit in the hands of
these few men...
When we consider, also, in this connection that
into these reservoirs of money and credit there flow a large part of the
reserves of the banks of the country, that they are also the agents and
correspondents of the out-of-town banks in the loaning of their surplus
funds in the only public money market of the country, and that a small
group of men and their partners and associates have now further
strengthened their hold upon the resources of these institutions by
acquiring large stock holdings therein, by representation on their boards
and through valuable patronage, we begin to realize something of the
extent to which this practical and effective domination and control over
our greatest financial, railroad and industrial corporations has
developed, largely within the past five years, and that it is fraught with
peril to the welfare of the country.
The purpose of this meeting
on Jekyll Island was...to come to an agreement on the structure and
operation of a banking cartel. The goal of the cartel, as is true with all
of them, was to maximize profits by minimizing competition between
members, to make it difficult for new competitors to enter the field, and
to utilize the police power of government to enforce the cartel agreement.
In more specific terms, the purpose and, indeed, the actual
outcome of this meeting was to create the blueprint for the Federal
Reserve System.--
The first leak regarding this meeting found its
way into print in 1916. It appeared in Leslie's Weekly and was written by
a young financial reporter by the name of B.C. Forbes, who later founded
Forbes Magazine. The article was primarily in praise of Paul Warburg, and
it is likely that Warburg let the story out during conversations with the
writer. At any rate, the opening paragraph contained a dramatic but highly
accurate summary of both the nature and purpose of the meeting:
Picture a party of the nation's greatest bankers stealing out of
New York on a private railroad car under cover of darkness, stealthily
hieing hundreds of miles South, embarking on a mysterious launch, sneaking
on to an island deserted by all but a few servants, living there a full
week under such rigid secrecy that the names of not one of them was once
mentioned lest the servants learn the identity and disclose to the world
this strangest, most secret expedition in the history of American finance.
I am not romancing. I am giving to the world, for the first time,
the real story of how the famous Aldrich currency report, the foundation
of our new currency system, was written.--
In 1930, Paul Warburg
wrote a massive book - 1750 pages in all - entitled "The Federal Reserve
System, Its Origin and Growth". In this tome, he described the meeting and
its purpose but did not mention either its location or the names of those
who attended. But he did say: "The results of the conference were entirely
confidential. Even the fact there had been a meeting was not permitted to
become public." Then in a footnote he added: "Though eighteen years have
since gone by, I do not feel free to give a description of this most
interesting conference concerning which Senator Aldrich pledged all
participants to secrecy."--
In the February 9, 1935, issue of the
Saturday Evening Post, an article appeared written by Frank Vanderlip. In
it he said: "Despite my views about the value to society of greater
publicity for the affairs of corporations, there was an occasion, near the
close of 1910, when I was as secretive - indeed, as furtive - as any
conspirator....I do not feel it is any exaggeration to speak of our secret
expedition to Jekyll Island as the occasion of the actual conception of
what eventually became the Federal Reserve System....We were told to leave
our last names behind us. We were told, further, that we should avoid
dining together on the night of our departure. We were instructed to come
one at a time and as unobtrusively as possible to the railroad terminal on
the New Jersy littoral of the Hudson, where Senator Aldrich's private car
would be in readiness, attached to the rear end of a train for the
South....
Once aboard the private car we began to observe the
taboo that had been fixed on last names. We addressed one another as
"Ben," "Paul," "Nelson," "Abe" - it is Abraham Piatt Andrew. Davison and I
adopted even deeper disguises, abandoning our first names. On the theory
that we were always right, he became Wilbur and I became Orville, after
those two aviation pioneers, the Wright brothers....The servants and train
crew may have known the identities of one or two of us, but they did not
know all, and it was the names of all printed together that would have
made our mysterious journey significant in Washington, in Wall Street,
even in London. Discovery, we knew, simply must not happen, or else all
our time and effort would be wasted.
If it were to be exposed
publicly that our particular group had got together and written a banking
bill, that bill would have no chance whatever of passage by Congress.--
As with all cartels, it had to be created by legislation and
sustained by the power of goverment under the deception of protecting the
consumer.--
As John Kenneth Galbraith explained it:
"It
was his [Aldrich's] thought to outflank the opposition by having not one
central bank but many. And the word bank would itself be
avoided."--Galbraith says "...Warburg has, with some justice, been called
the father of the system."
Professor Edwin Seligman, a member of
the international banking family of J. & W. Seligman, and head of the
Department of Economics at Columbia University, writes that "...in its
fundamental features, the Federal Reserve Act is the work of Mr. Warburg
more than any other man in the country."--
Another brother, Max
Warburg, was the financial adviser of the Kaiser and became Director of
the Reichsbank in Germany. This was, of course, a central bank, and it was
one of the cartel models used in the construction of the Federal Reserve
System. The Reichsbank, incidentally, a few years later would create the
massive hyperinflation that occured in Germany, wiping out the middle
class and the entire German economy as well.--
...A. Barton
Hepburn of Chase National Bank was even more candid. He said:
"The
measure recognizes and adopts the principles of a central bank. Indeed, if
all works out as the sponsers of the law hope, it will make all
incorporated banks together joint owners of a central dominating power."
And that is about as good a definition of a cartel as one is likely to
find.--
...it is incapable of achieving its stated objectives.--
...why is the System incapable of achieving its stated objectives?
The painful answer is: those were never its true
objectives.--
Anthony Sutton, former Research Fellow at the
Hoover Institution for War, Revolution and Peace, and also Professor of
Economics at California State University, Los Angeles, provides a somewhat
deeper analysis. He writes:
"Warburg's revolutionary plan to get
American Society to go to work for Wall Street was astonishingly simple.
Even today,...academic theoreticians cover their blackboards with
meaningless equations, and the general public struggles in bewildered
confusion with inflation and the coming credit collapse, while the quite
simple explanation of the problem goes undiscussed and almost entirely
uncomprehended. The Federal Reserve System is a legal private monopoly of
the money supply operated for the benefit of the few under the guise of
protecting and promoting the public interest.--"
The real
significance of the journey to Jekyll Island and the creature that was
hatched there was inadvertantly summarized by the words of Paul Warburg's
admiring biographer, Harold Kellock:
"Paul M. Warburg is probably
the mildest-mannered man that ever personally conducted a revolution. It
was a bloodless revolution: he did not attempt to rouse the populace to
arms. He stepped forth armed simply with an idea. And he conquered. That's
the amazing thing. A shy, sensitive man, he imposed his idea on a nation
of a hundred million people.--"