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Thus, on a wintery day in November 1910, seven men retreated
to JP Morgan’s private Jekyll Island resort to plan a system of banking that
would address all of these problems, while simultaneously expanding their power
and influence over the US banking system.
G. Edward Griffin, in The
Creature From Jekyll Island, puts their primary goals as the following:
1)
To stop the growing influence of smaller banks and
increase the Anglo-American banking giants’ grip on the US financial system
2)
To shift US banking to a more “loan heavy” structure
thereby expanding the monetary base more dramatically (making money more
“elastic”)
3)
To pool all national banks reserves and set nation-wide
standards for loans to reserves ratios, thereby minimizing the risks of bank
runs and failure
4)
To establish a means of shifting the losses from bank
failures away from the banks and onto the public
And finally…
5)
To develop a PR campaign that would result in the US
populace accepting the implementation of a full-scale private banking cartel
I do not have time to detail the precise proceedings of the
meetings these men held over their nine day stay at Jekyll Island, nor is there
room to explain precisely how they infiltrated the US political system and
managed to introduce a banking plan that was written by Frank Vanderlip and
Benjamin Strong (who represented the Rockefeller and Morgan families,
respectively) as if it were a bill produced by
members of Congress.
However, a brief overview is as follows:
Initially Senator Aldrich proposed something quite similar
to the Bank of England, in which there would be one single large bank. However,
the Rockefeller interests (who had ample experience with the US populace’s
reaction to monopolies) thought this would be too much for Americans to
stomach. Instead, they proposed the creation of 12 regional banks largely to
maintain the illusion that the Fed would be a union, not a single central bank.
This is where the expertise of Paul Warburg, who had the
most experience with European-style central banking cartels, came in. Warburg
proposed creating a banking structure that would be more conservative at first
so that the general public would be more willing to accept it, then stripping
away the conservative props once the system was in place.
For instance, Warburg proposed the Federal Reserve Board of
Governors, a group of semi-elected officials who would meet and decide Fed
policy on interest rates and the like. This created the illusion that the Fed
would resemble a normal banking corporation with a board of directors. However,
in point of fact the Fed Board was a means to keep all the key decision making
centralized at one bank in Washington DC (close to New York where the Bank
Oligarchs were headquartered).
Warburg also came up with the name “Federal Reserve” which
evoked the sense that the organization was aligned with the Government and was
secure. His view was that the words “central” and “bank” must be avoided at all
costs.
However, the most daring and provocative of all Warburg’s
proposals was that the Fed would take over the issuance of ALL money in the US.
For the first time in US history, money would be produced by privately held
banks, NOT the US Government.
From then on, US Federal Reserve notes would be legal tender
for settling all debts public or private. Thus, if someone was owed money and
refused to accept Federal Reserve Notes (Dollars) as payment, he or she could
go to jail. The Dollar even says this in the top left corner of its face.
Obviously, getting the public to swallow this proposal
wasn’t going to be easy. The bankers put together a special committee to
investigate the plan. However, the Pujo Committee was largely a farce in which
various members of Congress (all bought out by the banks) questioned the
bankers on the more innocuous portions of the proposal.
As part of their PR campaign, the bankers also donated some
$5 million to Harvard, Princeton, and the University of Chicago (the last of
which was founded using contributions from John D Rockefeller) all of which
began turning out studies and academic papers promoting the virtues of the
proposed system.
However, the bill remained a tough pill to swallow
especially given Senator Aldrich’s close affiliation with Wall Street
(remember, he was an associate of JP Morgan). The “Aldrich Bill” as it was
known never even made it to vote in the Senate.
Splitting the Vote… and
Backing All Three Candidates
Bruised, but not defeated, the bankers knew that in order to
get their plan put into action they needed support from the very TOP of the US
Government: the President of the United States. Consequently, they engaged in
one of the most sophisticated lobbying efforts in history, backing all THREE
candidates (Taft, Wilson, and Roosevelt) in the 1912 election.
In fact, it was JP Morgan’s associates who pushed Roosevelt
to run in the first place (giving him the monetary backing to do so) in order
to pull voters from Taft who was publicly recognized as pro-Wall Street and so
would not have been as effective at getting the bankers plan implemented
without public outcry.
Thus the 1912 election consisted of three pro-Wall Street
candidates, though only one of them (Taft) was publicly recognized as such.
Roosevelt and Wilson were both backed by private banking money, though their
backers urged them to sound out an “anti Wall Street” bank campaign (which they
did with great success).
The results worked as hoped. Roosevelt served as the
“anti-bank” foil to Taft’s pro-Wall Street/ Big Business status, splitting the
vote and allowing Wilson to win with just 42% of votes (the other 58% were
split between Taft and Roosevelt). The bankers now had a supporter in the White
House, most importantly, one who was thought by the public to be against the
banks and their “Aldrich Plan” plan as it had come to be known.
Officially Backed and Bailed
Out By Uncle Sam
Ready to make a second attempt at implementing their plan,
the bankers enlisted the Democratic Chairman of the House Banking and Currency
Committee, Carter Glass, to draft a new banking bill. Glass, who by his own
admission knew nothing about banking, was merely a front, a figurehead who
denounced the Aldrich Plan, pointed out its biggest flaws to the public, and
the proposed an identical plan with the very same flaws included.
The Glass-Owen bill (it was co-sponsored by Senator Robert
Owen) moved along towards becoming law much more quickly than the Aldrich Plan,
largely due to the fact that the Wall Street banks engaged in a massive PR
campaign in whch they publicly decried it as wrong and evil and against their
interests (despite the fact they themselves wrote it).
The final coup was accomplished when William Jennings Bryan,
the most powerful Democrat in Congress, met with Glass and said he would pass
the bill provided that the money issued by the Federal Reserve was backed by
the US Government and that the Governor of the Federal Reserve would be
appointed by the President and approved by the Senate: two clauses that the
Wall Street bankers wanted but had intentionally left out of the draft so that
they could be used as “bargaining chips” to make it appear as though
compromises were made.
G. Edward Griffin, repeats a quote Fed mastermind Paul
Warburg regarding their success:
While
technically and legally the Federal Reserve note is an obligation of the United
States Government, in reality it is an obligation, the sole responsibility for
which rests on the reserve banks… The
Government could only be called to take them up after the reserve banks failed.
Here lies the ultimate triumph of the cartel, not only would
the Federal Reserve issue money (collecting interest on the loans since the
money was technically being leant to the US), but should the system ever go
bust, the US Government would be
required to step in and bailout the Federal Reserve’s losses.
It had taken three years and countless strategies and
deceptions, but on December 23 1913 the Federal Reserve Act was passed into
law. From then on, the US monetary system would be controlled by private
interests in a government-backed cartel.
The above account is a very condensed version of the history
of the Federal Reserve’s creation. The actual story is even more rife with
twists and power struggles. For those of you who are interested in knowing more
about it, I highly recommend reading The
Creature From Jekyll Island by G. Edward Griffin. It’s a stunning book and
full of revelations that range from shocking to outright infuriating.
Best Regards,
Graham Summers
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