Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car, hieing hundreds of miles south to an island deserted by all but a few servants, and living there a full week under such rigid secrecy that the name of not one of them was once mentioned lest the servitors learn their identity and disclose to the world this historic episode in American finance.
TO CONVINCE THE AMERICAN PEOPLE of the need for a new central bank, the pilgrims, under J. P. Morgan, staged the Panic of 1907. Stories were circulated in the newspapers under Morgan’s control that the Knickerbocker Trust Company, one of America’s leading financial institutions, was on the brink of insolvency. The stories prompted the customers of the bank en masse to withdraw their savings. Knickerbocker crashed, causing the hundreds of banks linked to it to fall like dominoes. Depositors were left with no means of recovering their savings; Wall Street brokers could not obtain the loans required for their daily transactions; the stock market declined by 50 percent; and no central agency existed to clean up the mess.1
After creating the crisis, Morgan came to the rescue. He dispatched an army of clerks to troubled banks to look into their vaults and verify their assets. If the banks were solvent, he sent more clerks with satchels of gold coins, which he imported from Europe, to the banks to place them on display, so that depositors would be assured of the safety of their money. On Wall Street, Morgan convinced several of his fellow bankers, including Rockefeller and Schiff, to offer $25 million in loans to brokers in order to keep the stock market afloat.2 He also met with U.S. Treasury Secretary George Cortelyou, who placed $25 million of Treasury funds in national banks and provided $36 million in small bills to meet the bank runs. By the middle of November, the working capital of the U.S. Treasury had dwindled down to $5 million.3
To convince the American people of the need for a new central bank, the pilgrims, under J. P. Morgan, staged the Panic of 1907. Stories were circulated in the newspapers under Morgan’s control that the Knickerbocker Trust Company, one of America’s leading financial institutions, was on the brink of insolvency.
Morgan’s “rescue” measures resulted not only in averting a financial meltdown but also in producing sizable interest payments on all the loans the House of Morgan provided to the nation’s banks and to Wall Street. The measures also served to solidify Morgan’s position as the leader of the American money trust and the driving force behind the emergence of the shadow government. As Morgan biographer Frederick Lewis Allen pointed out: “Where there had been many principalities, there was now one kingdom, and it was Morgan’s.”4
Schiff now appeared before the Chamber of Commerce in Washington, D.C., to say: “Unless we have a central bank with control of credit resources, this country is going to undergo the most severe and far reaching panic in its history.”5 One year later, President Theodore Roosevelt brought into being the National Monetary Commission to study the cause of the economic disaster and to suggest remedies. This, too, was a result of orchestration. Senator Nelson Aldrich, who received the appointment to head the Commission, was “J. P. Morgan’s floor broker in the Senate.”6 For two years, Aldrich and his entourage visited Europe’s central banks, most of which were run by the Rothschilds, at the cost of $300,000 to U.S. taxpayers. It was all a ruse to cause Congress to believe that the commission was engaged in a massive study to prevent a future financial crisis. The final report of the commission maintained that the United States must waste no time in creating a new central bank on the model of the Bank of England.7
In 1908, President Theodore Roosevelt brought into being the National Monetary Commission to study the cause of the economic disaster and to suggest remedies. This, too, was a result of orchestration.
On November 22, 1910, shortly after the return of the commission members to America, Davison, at Morgan’s command, invited Aldrich and a small group of Wall Street bankers to a “duck-shooting party” on Jekyll Island, off the coast of Georgia. The group included Frank A. Vanderlip, president of the National City Bank of New York, a Rockefeller firm in which Morgan was a principal shareholder; Abraham Platt Andrew, Assistant Secretary of the Treasury; Benjamin Strong, president of J. P. Morgan’s Bankers Trust Company; and Paul Warburg.8
Many of these men were founding fathers of the Pilgrim Society and in addition to their ties to Morgan, were also allied with John D. Rockefeller. Vanderlip, as noted, was the president of the National City Bank of New York, which oversaw the interests of Standard Oil.9 Benjamin Strong became closely associated with Rockefeller, since the oil tycoon had purchased a lion’s share of Baker’s Trust.10 Paul Warburg was a partner in Kuhn, Loeb & Company, along with Jacob Schiff, his brother-in-law and John D. Rockefeller’s financial advisor.11 Henry Davison, as Morgan’s partner, was instrumental in acquiring Rockefeller’s iron ore and steamship properties for U.S. Steel.12 Nelson Aldrich’s daughter, Abby, was married to John D. Rockefeller Jr. His grandson Nelson Aldrich Rockefeller would become the vice president under Gerald Ford in 1974, while his grandson David Rockefeller would serve as the chief executive officer of the Chase Manhattan Corporation and the founder of the Trilateral Commission.13
The meeting, G. Edward Griffin argues in The Creature from Jekyll Island, was “a classic example of cartel structure.” A cartel, he maintains, is a group of independent businesses who join together to create “a shared monopoly,” which forces the public to pay higher prices for their goods or services. Griffin writes: “Here were the representatives of the world’s leading banking consortia: Morgan, Rockefeller, Rothschild, Warburg, and Kuhn-Loeb…. They were driven together by one overriding desire to fight their common enemy. The enemy was competition.”14
Vanderlip described how the participants came together as follows:
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 Jersey 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,” and “Abe.” Davison and I adopted even deeper disguises, abandoning our own 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…. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted.15
The gathering was to serve the following purposes: (1) to ensure that the money trust would gain complete control over the nation’s financial resources; (2) to make the money supply elastic in order to reverse the trend of private capital formation and to recapture the industrial loan market; (3) to pool the resources of the nation’s banks into one reserve that would serve to protect a few of them from currency drains and bank runs; and (4) to shift inevitable financial losses from the money trust to the U.S. taxpayers.16 It had been instigated by the problem of competition. In 1910, the number of banks in America had doubled to over 20 thousand within a decade. Most of these banks were in the South and West, causing the New York banks to suffer a steady decline of market share. Forty percent of the institutions were national banks that had been chartered by the federal government. These banks, which were located in every major American city, were allowed to issue their own currency in the form of bank notes.17 This ability served as a safeguard to financial independence, since it prevented a single, centralized agency from gaining control of the nation’s economy.
At the Jekyll Island Hunt Club—a property owned by Morgan and William Rockefeller—Warburg told the group that the bill they would compose for Congress must avoid any reference to a “central bank,” since several American presidents, including Thomas Jefferson and Andrew Jackson, had railed against the establishment of such an entity.18 It was sound advice. In 1910, America was the only major economic power without a central bank. Throughout its history, the country had deep suspicion against the very idea of central banking. East Coast bankers with ties to the House of Rothschild pressed the case for centralizing control over the nation’s monetary system in a single overarching bank. Their efforts met with resistance from average citizens, who maintained, in the spirit of Jackson, that granting such power to one institution was blatantly un-American. The commoners had prevailed for 77 years.19
At the Jekyll Island Hunt Club—a property owned by Morgan and William Rockefeller—Warburg told the group that the bill they would compose for Congress must avoid any reference to a “central bank,” since several American presidents, including Thomas Jefferson and Andrew Jackson, had railed against the establishment of such an entity. “Jekyll Island Historic Club Resort, Jekyll Island, Glynn County, Georgia” by Farrargirl is licensed under CC BY-SA 4.0
Warburg further advised the group that legislation for a central bank must create an illusion that control of the system would reside with the government, since the chairman of the Federal Reserve in Washington, D.C., would be appointed by the president and would remain answerable to Congress. For further camouflage, Warburg insisted that the legislation must be presented as a regional system, with the 15 branches responsible for overseeing the financial conditions within their jurisdiction.20 Such measures were necessary since the cabal of millionaires at Jekyll Island were plotting the greatest financial and political coup d’état in American history: the usurpation of Congress’s authority, as provided in the Constitution, to create and control the country’s money supply.
After spending 10 days on the island, the final draft for the new banking system was written by Vanderlip from Warburg’s notes. Aldrich, upon returning to Washington, inserted the draft within the pages of the report, a work of 23 volumes replete with copious analytical data, which was being prepared for Congress by the National Monetary Commission.21 In 1911, when asked by his fellow Republicans to prepare a bill for financial and monetary reform, Aldrich merely plucked the draft from the voluminous report and presented it to Congress as though the legislation had sprung from three years of travel, study, and work by diligent members of the Commission and was not the product of a clandestine meeting on Jekyll Island.22
1 Finra Staff, “Born of Panic: The Federal Reserve and the Panic of 1907,” Part 2, The Alert Investor, April 8, 2016, https://www.finra.org/investors/born-panic-federal-reserve-and-panic-1907-part-2, accessed February 6, 2019.
2 Ibid.
3 Jon Moen, “The Panic of 1907,” Economic History Association, August 4, 2001, https://eh.net/encyclopedia/the-panic-of-1907/, accessed January 17, 2019.
4 Frederick Allen Lewis, The Lords of Creation (New York: Harper and Brothers, 1935), p. 142.
5 Jacob Schiff, quoted in T. D. Madmin, “The Panic of 1907 & the History of the Banking System,” Global Movement, December 3, 2013, http://www.theglobalmovement.info/wp/the-panic-of-1907-the-history-of-the-banking-system, accessed January 17, 2019.
6 Ferdinand Lundberg, America’s Sixty Families (New York: Vanguard Press, 1938), p. 69.
7 Murray N. Rothbard, “Origins of the Federal Reserve,” Mises Institute (Australia), November 13, 2009, https://mises.org/library/origins-federal-reserve, accessed January 17, 2019.
8 G. Edward Griffin, The Creature from Jekyll Island (New York: American Media, 2008), p. 5.
9 Priscilla Roberts, “Frank A. Vanderlip and the National City Bank during the First World War,” Essays in Economic & Business History, University of Hong Kong, 2002.
10 Henry H. Klein, Dynastic America and Those Who Own It (New York: Henry Klein, 1921), p. 106.
11 “Paul Warburg,” National Cyclopaedia of American Biography (New York: James T. White and Company, 1937), pp. 151–52.
12 Ron Chernow, “The Deal of the Century,” American Heritage, July/August 1998.
13 “Biography: Nelson A. Rockefeller,” American Experience, Public Broadcasting System, n.d., https://www.pbs.org/wgbh/americanexperience/features/rockefellers-nelson/, accessed January 17, 2019.
14 Griffin, The Creature from Jekyll Island, pp. 11–12.
15 Frank Vanderlip, “U.S. Farm Boy to Financier,” Saturday Evening Post, February 9, 1936.
16 Griffin, The Creature from Jekyll Island, p. 437.
17 Ibid., p. 12.
18 G. Vance Smith and Tom Gow, Masters of Deception: The Rise of the Council on Foreign Relations (Colorado Springs: Freedom First Society, 2012), p. 20.
19 Liaquat Ahamed, Lords of Finance: The Bankers Who Broke the World (New York: Penguin Books, 2009), p. 52.
20 Ibid.
21 N. A. Weston, “Studies of the National Monetary Commission,” Annals of the American Academy of Political and Social Science 99 (January 1922), https://www.jstor.org/stable/1014505?seq=1#page_scan_tab_contents, accessed January 17, 2019.
22 Nathaniel Wright Stephenson, Nelson W. Aldrich: A Leader in American Politics (Port Washington, NY: Kennikat Press, 1971), pp. 129–30.