Chapter Eight: THE JEKYL ISLAND CONSPIRACY In 1910 six prominent Wall Street financial men met on Jekyl Island to map plans for a central banking system in the United States. The Federal Reserve System originated in a conspiracy. A "conspiracy" is defined legally as a secret meeting for an illegal purpose. The meeting was secret, it involved six persons and it was illegal.. .as we shall show later. The six conspirators were: Senator Nelson Aldrich, father-in-law of John D. Rockefeller, Jr. German banker Paul Warburg, of the German bankers MM Warburg of Hamburg and Kuhn Loeb in the United States; Henry P. Davison, partner in J. P. Morgan and Chairman of Bankers Trust Company; Benjamin Strong, Vice President of Bankers Trust; Frank Vanderlip, Chairman of National City Bank; Charles D. Norton, President of First National Bank. The last three banks were in the Morgan group; Warburg represented Kuhn-Loeb and Aldrich represented Rockefeller interests and the "Standard Oil crowd." The Harriman interest in Guaranty Trust had been absorbed into the Morgan group after the death of Harriman. 75 The Federal Reserve Conspiracy These six dominated wealth and financial power and had considerable political influence. The secret Jekyl Island meeting was actually described in conspiratorial terms by one of the participants: 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. None of us who participated felt that we were conspirators; on the contrary we felt we were engaged in a patriotic work. We were trying to plan a mechanism that would correct the weaknesses of our banking system as revealed under the strains and pressures of the panic of 1907. I do not feel it is any exaggeration to speak of our secret expedition to Jekyl Island as the occasion of the actual conception of what eventually became the Federal Reserve System. (1) After the 1907 panic plans were formulated to convince the public of a "need" for a central bank. The key at this point was Senator Nelson Aldrich, a wealthy businessman linked to the Rockefeller family through marriage of his daughter Abby to John D. Rockefeller Jr. Former Vice President Nelson Rockefeller was a direct descendent of this branch of the Rockefeller family. In the post-1907 panic era, Senator Aldrich headed a Senate Monetary Commission which toured Europe to discuss and study European central banks and especially the German Reichsbank system. From this junket Aldrich emerged as the Congressional expert on bank planning. Few spotted his close links with the banking interests. (2) Herbert L. Satterlee was Morgan's son-in-law and, from the inside, comments on Aldrich's close relations with the Money Trust 76 The Jekyl Island Conspiracy and planning for the Federal Reserve System. Aldrich, according to Satterlee, ...turned to Mr. Morgan for advice and then during the next two years they were to spend many hours together working out an orderly pattern for the banking world of this country from coast to coastP Again, according to Satterlee, J. P. Morgan "lent him (Aldrich) Harry Davison (Morgan partner) to help with details while Paul M. Warburg, the Kuhn Loeb partner, also "put his service at Senator Aldrich's disposal. " (4) This triad -Morgan- Aldrich-Warburg - was the focal point for planning the introduction of central banking to the United States. The remaining Jekyl Island conspirators came on the scene later. Frank Vanderlip (whom we have already quoted) of National City Bank was linked to the Rockefeller family by marriage and came into the group in early 1910 after receiving a letter from Stillman, founder and chairman of National City Bank. This letter referred to a meeting between Stillman and Aldrich in Europe on the central bank question. From this letter we learn that the conspirators used a code and that Aldrich's code name was "Zivil." In his book, Vanderlip states: Mr. Stillman wrote me that I should make everything else subservient to giving my whole time and thought to a thorough consideration of the subject (i.e., the currency plan) and to draft a bill for the new Congress without a Wall Street tag. (5) Above all the conspirators knew they had to maintain absolute secrecy. If any Wall Street name ever became attached to a central banking Federal Reserve bill it would be the kiss of death. Not only were code names adopted but individuals went to great lengths to avoid public knowledge of their meetings and discussions. 77 The Federal Reserve Conspiracy Without any question if the public in 1913 had known what we know today the Federal Reserve Act would have no possibility at all of becoming law. On the question of public suspicions of the close family links in the group, for which the group claimed disinterested impartiality, Vanderlip noted: But would the electorate have believed that? I question their ability to do so. Just to give you a faint idea: Senator Aldrich was the father-in-law of John D. Rockefeller, Jr., and himself a very rich man.Once I had written to Woodrow Wilson at Princeton, inviting him to speak at a dinner. Wishing to impress him with the importance of the occasion, I had mentioned that Senator Aldrich also had been invited to speak. My friend Dr. Wilson had astonished me by replying that he could not bring himself to speak on the same platform with Senator Aldrich. He did come and make a speech, however, after I had reported that Mr. Aldrich 's health would prevent him from appearing. Now then, fancy what sort of head-lines might have appeared over a story that Aldrich was conferring about new money legislation with a Morgan partner (Davison) and the president of the biggest bank (Vanderlip). (6) The National City Bank founded by Stillman is significant because one of its directors was Cleveland Dodge, the financial powerhouse and influence behind Woodrow Wilson. Woodrow Wilson, who was to sign the Federal Reserve Act into law, was a deliberate creation of the Money Power, who was approved in the spring of 1912 at a weekend meeting at Beechwood, the Vanderlip estate at Scarborough on Hudson. According to one observer, Wilson passed the test because Vanderlip and William Rockefeller discussed the 78 The Jekyl Island Conspiracy role of American capital abroad in front of Wilson. (7) This we shall describe in more detail later. The central intellectual figure in the creation of the Federal Reserve System was not an American but a German banker - Paul Moritz Warburg, a banker born in 1868 into the Hamburg Oppenheim family. Warburg's father was a partner in the M. M. Warburg banking house founded in 1798. Warburg's early career was with Samuel Montagu & Co. in London and the Banque Russe Pour he Commerce Etranger in Paris. In 1891 Warburg went to work at the family bank in Hamburg and became a partner in 1895. In 1902 he came to the United States as a partner in Kuhn Loeb, and in spite of defective English, began a campaign for a Federal Reserve System. The plan may be found in his pamphlets, "Defects and Needs of our Banking System since 1907" and "A plan for a modified central bank" (1907). In 1910 Warburg proposed a plan for a United Reserve Bank and much of this plan was embodied in the Federal Reserve System. These were the men who met in secret on Jekyl Island to put together the initial draft of the Federal Reserve Act. The secret meeting was recorded by Frank Vanderlip: Since it would be fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his report and bill, precautions were taken that would have delighted the heart of James Stillman. We were told to leave our last names behind us. ..that we should avoid dining together on the night of our departure to come one at a time and as unobtru- sively 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. 79 The Federal Reserve Conspiracy When I came to that car the blinds were down and only slender threads of amber light showed the shape of the windows. Once aboard the private car we began to observe the taboo that had been fixed on last names. We addressed each other 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. The servants and the 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 gotten together and written a banking bill, that bill would have no chance whatever of passage by Congress. (8) The last sentence says it all from the vantage point of an insider - this was a planned conspiracy. The American public would never hand over a monopoly of the money supply to a small group. After all, the Sherman Antitrust Act had just made monopoly in restraint of trade illegal and a money monopoly was even less acceptable. To avoid public knowledge, these bankers went skulking off to a remote island in the dead of night using code names and disguises! Vanderlip goes on to describe the secret meeting itself and that Vanderlip and Strong actually wrote the so-called Aldrich report and the bill presented to the Senate. What is interesting is the utter assurance on the part of Vanderlip 80 The Jekyl Island Conspiracy that the bankers were acting in the interests of the country as a whole rather than in their own selfish interests. What this group proposed to do - and actually did do in 1913 - was replace gold and silver with a paper factory which they controlled. How this could be presented as a public-spirited act is probably beyond most readers. We were taken by boat from the mainland to Jekyl Island and for a week or ten days were completely secluded, without any contact by telephone or telegraph with the outside. We had disappeared from the world onto a deserted island. There were plenty of colored servants but they had no idea who Ben and Paul and Nelson were; even Vanderlip, or Davison, or Andrew, would have meant less than nothing to them. There we worked in the club-house - We returned to the North as secretly as we had gone South. It was agreed that Senator Aldrich would present the bill we had drafted to the Senate. It became known to the country as the Aldrich Plan. Aldrich and Andrew left us at Washington,and Warburg, Davison, Strong, and I returned to New York. Congress was about to meet; but on a Saturday we got word in New York that Senator Aldrich was ill, too ill to write an appropriate document to accompany his plan. Ben Strong and I went on to Washington and together we prepared that report. If what we had done then had been made known publicly, the effort would have been denounced as a piece of Wall Street chicanery, which it certainly was not. Aldrich never was a man to be a mere servant of the so-called money-interests. He was a con- 81 The Federal Reserve Conspiracy _ scientious, public -spirited man. He had called on the four of us who had Wall Street addresses because he knew that we had for years been studying aspects of the problem with which it was his public duty to deal. The Aldrich plan written by Vanderlip and Strong did not get through Congress. It was shot down. An ailing Senator Aldrich retired and the Money Trust was forced to look elsewhere to get its plans through Congress. National City Bank director Cleveland Dodge was a classmate (1879, Princeton) of Woodrow Wilson. McCormick of the Harvester Trust was in the same Princeton Class. By the early 1900s, Wilson, with help from Cleveland Dodge, had become President of Princeton University and Dodge let it be known that Wall Street considered Wilson "presidential material." A flattered Woodrow Wilson wrote journalist George Harvey in December, 1906 to identify "the influential men who considered him as presidential material." Harvey replied, "naming some of the most influential bankers, utility executives and conservative journalists in the country."' 9 ' Wilson, for all his public image of a teetering, owlish professor, had one lesson down by heart, that to get along, one has to go along. In March, 1907 George Harvey introduced Wilson to Thomas Fortune Ryan, member of the copper trust and a prominent financier. After this meeting, Wilson wrote a brief for the Wall Street establishment in which he provided academic support for the Trusts -incidentally, in total contradiction to his public statements. This Wall Street cabal, with the aid of New Jersey political bosses, pushed for Woodrow Wilson to become Governor of New Jersey in November, 1910. Within a few months, Cleveland Dodge opened a bank account in New York and an office at 42 Broadway to boom 82 The Jekyl Island Conspiracy Wilson into the Presidency. The campaign bank account was opened with a check for $1,000 from Cleveland Dodge. Dodge then provided funds to mail out the True American of Trenton, New Jersey to 40,000 subscribers throughout the United States, followed by a regular two pages a week of promotional material on Wilson For President. Two-thirds of Wilson's campaign funds for the presidency came from just seven individuals, all Wall Streeters and linked to the very trusts Wilson was publicly denouncing. Wilson's election slogans promoted him as a man of peace and against trusts and monopoly. These were the very sources financing his campaign: (10) Cleveland H. Dodge $51,300 (Director: National City Bank, etc.); Henry Morgenthau (financier) $20,000 Cyrus PL McCormick (Harvester Trust) $12,500 Abram I. Elkus (Wall Street lawyer) $12,500 Frederick C. Penfield $12,000 (Philadelphia real estate) William F. McCombs $11,000 Charles R. Crane (Crane Co., Chicago) $10,000 Wilson received the nomination and wrote to "dear Cleve" (Dodge) to exult, "I am so happy I can hardly think! " (11) Wilson's acceptance speech was written on board the Corona, Dodge's yacht, while they planned strategy for the coming campaign. (12) In brief, Woodrow Wilson was in the hands of the Money Trust, had lied to the American public about his true position on the trusts and Wall Street and betrayed the Jef-fersonian-Jacksonian tradition of the Democratic Party. Wilson was elected President. And the ballots had hardly been counted when Wall Street bustled about to arrange "currency reform." By early December, 1912, Colonel House had already talked with key members of Congress to 83 The Federal Reserve Conspiracy get them behind Wilson, and when Paul Warburg telephoned House on December 12, 1912, the Colonel told him that the plan was ready. Added House in his memoirs: "I knew the President-elect thought straight concerning the issue. " (13) In March, Frank Vanderlip talked with House, and two weeks later a group of bankers arrived at the White House with a printed "currency reform" bill for Wilson to present to Congress. House suggested that it would not be wise to flaunt the power of the House of Morgan with a pre-printed reform bill - so the Federal Reserve Act was taken back to Wall Street and a typewritten copy made from the printed plan. (14) It now only remained to get the Federal Reserve Bill through Congress. 84 The Jekyl Island Conspiracy Endnotes to Chapter Eight (1) Frank A. Vanderlip, President, First National City Bank, From Farm Boy to Financier (New York: Appleton, 1935), p. 210. (2) See Ferdinand Lundberg, America's 60 Families (New York: Vanguard Press, 1937). (3) Herbert L. Satterlee, J. Pierpont Morgan: An Intimate Portrait (New York: Macmillan, 1939), p. 493. (4) Ibid., p. 550. (5) Frank Vanderlip, op. cit., p. 211. (6) Ibid., p. 212. (7) John K. Winkler, The First Billion, (New York: Vanguard Press, 1934), pp. 209-211. (8) Frank Vanderlip, op. cit., p. 213. (9) Ray Baker, Woodrow Wilson: Life and Letters (New York, Doubleday, Page & Co., 1927-39) vol 3, p. 365. (10) Louise Overacker, Money in Elections (New York: Macmillan, 1932). (11) Ray Baker, Ibid. (12) op cit. p. 372. 85 The Federal Reserve Conspiracy (13) Charles Seymour, The Intimate Papers of Colonel House (Boston, New York: Houghton Mifflin Co., 1926-28), vol. I, p. 161. (14) Seymour, op cit. p. 161. 86 Chapter Nine THE MONEY TRUST CONS CONGRESS
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