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The Federal Reserve Scheme

J.V. Mitchell

In 1912, seven very powerful men, including Senator Nelson W. Aldrich, assembled on Jekyll Island, Georgia.

On Jekyll Island was a "cottage" which belonged to J.P. Morgan, one of the nation's major bankers. The nature of the meeting was so clandestine that the usual servants at the "cottage" had been given time off and had been replaced with a special group. The guests didn't use their last names, only their first, in conversations. This was meant to keep their identity secret. For what they planned to do could not stand the glaring light of publicity. During this period of time, big time businessmen, including bankers, were sometimes maligned by the newspapers as "robber barons". So the desire to avoid publicity was understandable.

Who were the gentlemen who accompanied Senator Aldrich to Jekyll Island? J.P. Morgan sent Henry Davison to represent his bank's interests. Charles Norton, of New York's 1st National Bank was there. Assistant Secretary of the U.S. treasury A. Piatt Andrew was in the crowd. Frank Vanderlip, the president of Mr. Rockefeller's Bank, came along. Benjamin Strong, head of Bankers Trust was in the group, and Paul Warburg was there to see to the interests of the Rothschild banking family. Interestingly, The Warburgs and the Rothschilds were both major European bank groups. The banks which these men represented are said to have controlled one sixth of the world's total wealth.

The scheme the bankers worked out was simply to persuade congress to turn over the management of the nation’s money supply to a syndicate of their choosing. The persuasion they used had a bit of truth in it. At that time there were a large number of banks in business. The number was growing, and it was taking business away from the powerful money center banks. A goodly number of the new banks were poorly managed and succeeded in going bankrupt. These bankruptcies were the lever the Jekyll Island group needed to swing the plan with the congress. And Senator Aldrich was just the man to put it over.

In addition to stabilizing the banks financially, the group would be able to control the whole banking business in the United States, to their benefit, of course. And who knows, perhaps a tidy profit could be made in the process. It would be interesting to see an audit of the group, if one exists.

In addition to persuading congress to turn the nation's money supply over to them, the group needed a name which would inspire the confidence of the populace. They settled on the name, "Federal Reserve Bank". Such a name would imply that the bank was a branch of the U.S. Government. The bank wouldn't need any reserves, as it is able to create money, as needed, out of thin air.

Just before the Christmas recess, Congress passed the Federal Reserve Act, thus abdicating its Constitutional authority by granting control of the national currency to the new central bank.  President Wilson signed the bill before the ink was dry.

How well has the plan worked? We don't have the problem of unsound banks going bust, thanks to the management of the Fed. On the other hand, we have suffered 1,000% inflation since the Fed took over our money supply. It now costs about $10,000 to buy what could have been bought for $1,000 in 1913. A large percent of our tax money now goes to pay the interest on the money which the Fed created and loaned to the government. And, of course, the Federal Reserve Bank certainly didn't "manage" the depression of the 1930s. In fact, some economists say that the actions of the Fed, in raising then lowering interest rates, contributed to the great depression. And, that's just what they have been doing the last few years, tightening then loosening credit.

We'll see how well they are able to control the economy in the coming year or two.

Here's an interesting footnote to history:

"Some of the biggest men in the U.S., in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when the speak in condemnation of it."--- Woodrow Wilson, 1912

Or, how about this thought regarding central banks?

"I believe that banking institutions are more dangerous to our liberties than standing armies ... If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] ... will deprive the people of all property until their children wake up homeless on the continent [that] their fathers conquered ... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson in the debate over the re-charter of The Bank Bill, (1809)

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