Here’s part two.
It ran on Gold World on September 29, 2006
Federal Reserve Bank History
A Midnight Train to Georgia and the Creation of Free Prosperity
Author’s Note: This story is the second in a series of articles about the creation, the workings, and the ramifications of the Federal Reserve Bank- one of the least understood but most powerful institutions ever created. We hang on its every word and our financial markets rise and fall on its every decision. Even the very value of the dollar itself is in its hands. Yet about it we know so little…
“The matter of a uniform discount rate was discussed and settled at Jekyll Island.”–Paul M. Warburg
BALTIMORE, MD – Looking back over history it is fascinating to see the degree by which the plans of very powerful men alter the course of nations. But as interesting as it is, it is even more stunning to realize that these ideas are rarely, if ever, the product of middle class thinking.
The creation of the Federal Reserve was no different. It all began in a New Jersey train station on a night in November 1910.
Leaving from a Hoboken Railway station were a group of the nation’s leading financiers and a powerful Congressmen and his staff. And although few of them knew it at time they were headed for Georgia, 1000 miles away.
Their mission was a secret and in the end it would change the nation forever.
And while a few reporters suspiciously witnessed the gathering of the powerful, none of them bothered to report on the exodus. The men, they were told, were simply going duck hunting.
But to be sure this was no ordinary hunting trip. The railcars themselves were sealed and the blinds were drawn. And each member of “the hunting party” was instructed to at no time to use his own last name or to use that of any of the others.
And while they stopped short of outright disguises, their intentions were clear-their identities were to remain secret.
Leading the ultra secret trip to Georgia was Senator Nelson Aldrich, head of the National Monetary Commission. Joining the Senator was A. Piatt Andrew, Assistant Secretary of the Treasury, Frank Vanderlip, President of National City Bank of New York, Henry P. Davison, senior partner of J.P. Morgan Company, and generally regarded as Morgan’s personal emissary; Charles D. Norton, president of the Morgan-dominated First National Bank of New York, Benjamin Strong, also known as a lieutenant of J.P. Morgan; and Paul Warburg, a recent immigrant from Germany who had joined the banking house of Kuhn, Loeb and Company of New York as a partner.
And while these names may be hardly recognizable today, in their day these were powerful and well known men indeed. And as amazing as it seems they represented approximately ¼ of world’s wealth.
In fact, Paul Warburg himself was one of the richest men in the world and even served as the basis of the character Daddy Warbucks portrayed in “Little Orphan Annie.”
Heading south that day, this famous entourage finally reached its destination, Jekyll Island, Georgia. And it was here, on an island off the coast of Georgia that our nation was changed forever.
Now owned by the state, the island was once the private playground of the rich and famous. Its members included names like Astor, Vanderbilt, Morgan and Pulitzer.
Needless to say the club was both incredibly ritzy and quite exclusive.
Unbelievably, even Winston Churchill himself was once refused admission to the haven.
And once ensconced in their private and discreet playground, the rich and the powerful went to work. And when they were finished some seven days later they had created the plan that would become the Federal Reserve Bank.
And a simple plan it was because essentially it created a national central bank comprised of 12 regional banking systems.
Not surprisingly it was modeled after the central banks of Europe. Paul Warburg knew them well and was its main architect.
But, of course, they were very careful not to call it that since the public was rightfully wary of central banks themselves. In fact, its very name was the topic of much discussion.
And after much debate it was named in such a way as to give the public the idea that the bank was just another government agency.
In truth, of course, it was not because the bank that they created was a private corporation. And while this fact is not widely known it was a notion that was affirmed by the Supreme Court in 1982.
In Lewis v. United States680 F.2d 1239 (9th Cir. 1982) , for instance, the United States Court of Appeals for the Ninth Circuit stated that “the Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations.”
So it was out of these secret meetings that the control of the nation’s money supply was handed over to the very bankers and private corporations that earlier generations of Americans, including Thomas Jefferson and Andrew Jackson found to be so onerous.
Because some three years after the secret meeting, the plan conceived on Jekyll island became law.
That’s because, on December 22, 1913, while many members of Congress were home for Christmas, the Federal Reserve Act was rammed through Congress and was later signed into law by President Wilson.
And a few days later the December 24, 1913 New York Times carried a front page headline that read “WILSON SIGNS THE CURRENCY BILL!” Below it, also in capital letters, were two further gems, “PROSPERITY TO BE FREE” and “WILL HELP EVERY CLASS.”
Prosperity to Be Free? Think about that one.
And nearly a year later the bank was open for business and first Federal Reserve Notes began to roll off the presses. Our modern dollars were born.
And we have been at the mercy of their printing presses ever since. Ideas after all have consequences.
Even President Wilson, who some say owed his presidency to the very men that met so secretly in Georgia some 96 years ago, came to realize that.
Because at a later date, Wilson himself admitted with remorse, when referring to the Fed that, “I have unwittingly ruined my country.”
And going even further Woodrow Wilson wrote this in 1916:
“Our system of credit is concentrated (in the Federal Reserve System). The growth of the nation, therefore, and all our activities, are in the hands of a few men.”
Wilson, of course, was right.
And you wondered why the Fed is so important.
And to think it all began on Jekyll Island– which is both fitting and ironic at the same time.
You’ll be happy to know that the island has since been purchased by the state of Georgia and converted into a state park. The clubhouse has been restored and you can visit it.
I think you’d be very impressed by it.
As you walk through the downstairs corridors you’ll come to a door… and on the door there is a brass plaque and it says: “In this room the Federal Reserve System was created.”
The secret, it seems, is out. Or is it?