Chapter Seven: THE MONEY TRUST CREATES THE FED: The Federal Reserve
Conspiracy by Antony C. Sutton from archive.org
Chapter Seven: THE MONEY TRUST CREATES THE FED
How would you like to have the
Wall Street Journal one week ahead
of publication? Some people
do have this privilege, not advance issues of Wall Street Journal; but advance knowledge of Federal
Reserve policies... what they will be
tomorrow, next week, next month
and next year. From time to time the Fed makes
pronouncements and before the
pronouncement they have to decide what to pronounce. They get together, they discuss, they make plans and then
they issue statements. The meetings are always secret,
known only to the Fed Directors.
However, if we knew what Chairman Alan Greenspan was going to announce on monetary and credit policies, what
the discount rate will be, or what
the prime rate will be, we could
quickly make a fortune, because that knowledge has impact on Treasury bill rates, on metals markets,
on the stock market and on real
estate markets. The Federal
Reserve system is a private system owned by the banks and gives only banks this advance
information. The idea for
the Fed was conceived on a small island in the Atlantic Ocean off Glynn County, Georgia. Back in 1910
Jekyl Island was a private club
used by an elitist group of 61 The Federal Reserve Conspiracy _ Wall Street
financiers as a hideaway to discuss extra private business away from prying public ears. It was on
Jekyl Island that the money trust
designed its plan for Congressional approval of a private money monopoly. American public opinion at the turn of the century was
hostile to the idea of a central
bank and generally opposed any further power for Wall Street interests. Yet a central bank along European
lines offered vast secure profits
for any financial group that could persuade Congress to enact central bank legislation. An elastic fiat and
credit system offered power not
possible with gold and silver as rigid disciplines on the financial system. The clandestine Jekyl Island meeting was to design a
plan to bring a central bank to
the United States disguised as a regional banking system.... while the bankers publicly opposed what they
privately proposed. This dissimulation was so
successful that, according to private
secretary Joseph Tumulty, Woodrow Wilson, in signing the Federal Reserve Act actually believed he was
removing financial power from Wall
Street interests. President
Wilson when governor of New Jersey in 1911 had declared:
The greatest monopoly in this country is the money monopoly. So long as that exists, our old variety of freedom and individual
energy of development are
out of the question. A great
industrial nation is controlled by its system of credit. Our system of credit is concentrated.
The growth of the nation,
therefore, and all our activities are in the hands of a few men.... This is the greatest question of
all: and to this statesmen must
address themselves with earnest 62 The Money Trust Creates The Fed determination to serve the long
future and the true liberties of free
men. (1) Wilson may
actually have believed his own statement that the Federal Reserve System was "the keystone of the great
arch of the Democratic
Administration."® What then is the reality behind this financial power known 100 years ago as
the "money trust" or the
"money power" and today as an elite group that can profit from
a central bank? To answer this question we have
to go back in history and look at
the 19th century trusts and the financial tip of the trust pyramid as
it existed in the first decade of
the twentieth century.
Between 1870 and the onset of World War One, American industry was concentrated under the
control or influence of a handful of
financiers, mostly in New York. John Moody, editor of the standard reference, Moody's Manual of
Corporation Securities, recorded the
trustification of American industry in a monumental volume of
statistics and evidence.® Moody
was a sympathetic observer and like Clarence Barron® another acute observer, considered trusts to be both
useful and inevitable. Criticism of the industrial
trusts was widespread. John Moody's
The Truth About Trusts with its wealth of detail demonstrated the pervasive money powers dominating the
steel, non-ferrous metals, oil,
tobacco, shipping, sugar and railroad industries - specifically the
power of J. P. Morgan, the
Rockefeller brothers, Edward Harriman, John McCormick, Henry Havemeyer and Thomas F. Ryan. In tracing the early history of
the drive for an American central
bank by the "money power," two historical episodes stand out: (1) the 1907 financial panic used
by the bankers and their allies to
urge the necessity for a central bank (although 63 The Federal Reserve
Conspiracy the
panic was precipitated by Wall Street, this was not proven until many years later.) (2) the meteoric rise of German
banker Paul Warburg with his
missionary zeal to promote a carbon copy of the German Reichsbank
in the United States. In 1907 there were still a few
capitalists willing to challenge Wall
Street and dispute its iron grip on financial power. Among these outsiders was Montana copper
millionaire Frederick Augustus Heinze,
who was selected as the key target for the 1907 panic. Heinze
brought his copper fortune to New
York and joined with C. W. Morse of the Ice Trust. Jointly they acquired control of Mercantile National
Bank, using the assets of the Bank
of North America already dominated by Morse. Heinze and Morse then acquired control of the
Knickerbocker Trust Company,
allied with the Trust Company of America and Lincoln Trust. They then incorporated a speculative vehicle, the
United Copper Company. It was
stock market games with United Copper that precipitated the 1907 crisis. Banks under control of the
"money trust" called
their loans to United Copper and began a run on the Heinze- Morse Mercantile National Bank. It is
now generally agreed "that the
1907 panic was precipitated by the struggle to get rid of Heinze. "
(5) In 1913 the money trust
and the 1907 panic were investigated by
the Pujo Committee, which recorded the enormous power of the J. P. Morgan firm. (6) During the years 1900 to 1920 the
money trust was effectively
controlled by the banking firm of J. P. Morgan, comprising Morgan himself until his death in 1913, then
his son, J. P. Morgan, Jr. and the
firm's dozen to 15 partners in association with their Rockefeller, Harriman and Kuhn Loeb allies. After an
extended documented inquiry, the
1912 Pujo Committee concluded that the "money trust" was 64 The Money Trust
Creates The Fed Far more
dangerous than all that has happened to us in the past in the way of elimination of competition in industry,
is the control of credit through
the domination of these groups over
banks and industries.
It is impossible that there should be competition with all the facilities for raising money or selling
large issues of bonds in the hands
of these few bankers and their partners and allies, who together dominate the financial
policies of most of the existing
systems.... The acts
of this inner group, as here described, have, nevertheless, been more destructive of competition than
anything accomplished by the
trusts, for they strike at the very vitals of potential competition in every industry that is under
their protection, a condition
which if permitted to continue, will render impossible all attempts to restore normal competitive
conditions in the industrial
world. (7) In the public
debate over creation of a Federal Reserve System in the United States, the 1907 crash was repeatedly used as the
reason to install a central bank
in the United States. The Fed was put forward as a way to stop financial panics. However, the 1907 panic was
deliberately created by the
"Standard Oil crowd" and the Morgan firm. In other words, the same group that stood to benefit
from a central bank created the
panic used to persuade the electorate that a central bank was vital.
How well this private monopoly has maintained its power over the intervening decades since 1913 is the
conclusion of a 1976 Congressional
staff report. After identifying the closed shop directors of the Federal Reserve 65 The Federal Reserve
Conspiracy System in the
mid-1970s this Congressional investigation concludes: In summary the Federal Reserve directors are
apparently representative of a
small elite group which dominates much of the economic life of this nation. (8) What is important to note is that the Federal Reserve
is a private system with private
stockholders. The money trust of the 19th century has been granted a legal monopoly while almost all other
industry is subject to the Sherman
Antitrust Act. It is monopoly, and monopoly requires political power to keep in place. It is also
noteworthy that writing on the
Federal Reserve glosses over the private ownership, yet the very aspect of the Federal Reserve
that needs to be publicly
discussed is its private nature, who owns what and what advantages accrue to ownership. Where J. P. Morgan sat on the
councils of New York City finance
in 1907, David Rockefeller sat in the 1970s and Alan Greenspan sits today. Wall Street Journal in 1977
showed how these insiders used
privileged Fed information for personal advantage. In 1907 it was J.
P. Morgan who summoned the
Treasury Secretary for an interview. In
1980 David Rockefeller summons Henry Kissinger for a meeting. How did the Money Trust pull off
this coup -establishment of a
central bank under their control in a country that strongly opposed
the idea? Justice Brandeis
describes the process as follows:
The development of our financial oligarchy, ...with which the history of political despotism
has familiarized us - usurpation
proceeding by gradual encroachment rather than by violent acts; and by "subtle and often
long concealed concentration. " It was by processes such as these that Caesar
Augustus became master of Rome.
The makers of
66 The Money Trust Creates The
Fed our Constitution had in
mind like dangers to our political liberty, when they provided so carefully for the separation of governmental powersS 10) The J. P. Morgan firm which
dominated the Money Trust
understood this process of "subtle" and "gradual
encroachment" to perfection.
The firm even publicly opposed the Federal Reserve bill which they had privately put
together. The Morgan
partners understood this process and were carefully chosen. In exchange for absolute loyalty they received
guaranteed opportunities to make
personal fortunes from the political and financial power of the monopoly. While Morgan was nominally only
senior partner he held final and
absolute powers within the firm.
Few Morgan partners entered politics. Most partners preferred to work quietly behind the scenes. In the
period 1900 - 1930, four partners
were exceptions to this rule and by tracing their political moves we
can today identify how they used
duplicity to bring about objectives. These four partners were E. P. Davison, Dwight Whitney
Morrow, Edward R. Stettinius and
George W. Perkins. In an earlier book we
described how the firm of Morgan manipulated the Bolshevik Revolution so the Morgan firm would
profit whoever won in Russia.
Morgan partner Davison was head of the Red Cross War Council in 1917-1919 and worked with W. Boyd
Thompson, another Morgan ally who
aided the Bolshevik side of the Revolution with funds. Dwight W. Morrow used his influence to get
arms and diplomatic support for
the Bolsheviks (we reprinted a Morrow memorandum on this in Bolshevik Revolution). Thomas Lamont
used his influence in London to
soften the British position against the Bolsheviks. 67 The Federal Reserve
Conspiracy_ Yet
the Morgan firm and other partners gave help to the White Russians fighting the Bolsheviks and
was prominent in the Siberian
intervention. Morrow
retired from his Morgan partnership in the 1920s and after a year as Chairman of the Aircraft Board became U.S. Ambassador to Mexico (1927-1930) and a
United States Senator in 1931.
Stettinius supervised all war purchases for the United States in World War One - to the considerable
advantage of Morgan-dominated
firms. George Perkins
was a founder in 1912 and then Chairman of the Executive Committee of the Progressive Party - a Morgan
political vehicle to split the
Republican Party and ease Woodrow Wilson into the White House. David Rockefeller used the same tactic with
John Anderson in the 1980 election. The device used by the Morgan
firm to control American finance
and industry was the voting trust. The handful of directors, usually
three in a voting trust, was
selected by J. P. Morgan personally. These directors, members of the Morgan inner group, and the voting
directors in turn selected
directors of banks and firms.
Thus the voting trust for Guaranty Trust had two Morgan partners: Thomas W. Lamont and William H. Porter,
plus George F. Baker, who was
president of Morgan-controlled First National Bank. This group selected other outside Guaranty Trust
directors, and Guaranty Trust in
turn controlled numerous firms, lesser banks and financial institutions. This Morgan complex was, in 1912,
able to dominate Wall Street
banks, and so the "Money Trust." Morgan control was simplicity
itself, based on a pyramid of
power principle. Morgan partners selected
directors of major financial institutions, and in return for the
privileges of directorship, the
loyalty of these outside directors to the Morgan firm was guaranteed. In turn these financial 68 The Money Trust
Creates The Fed institutions
controlled industrial and railroad trusts and combinations. The system worked well in the late 19th
century and the early 20th
century. This is how Woodrow Wilson and
Colonel House saw this "Money Trust": I think Woodrow Wilson's remark
that the "money trust"
was the most pernicious of all trusts is eminently correct. .a few individuals and their satellites
control the leading banks and
trust companies in America... they also control the leading corporations..} 12 ^ The Money Trust was legalized in 1913 as the Federal Reserve System, a suitably innocuous
name that disguises the fact that
it is a private central bank.
The history of the system can be traced through three stages: the original plan created secretly in
1910, the promotion of Woodrow
Wilson for President by the Money Power and then finally by what we can only describe as illegal passage of
the Federal Reserve bill through
the Congress. Representative
Lindbergh from Minnesota, father of the
world famous flier, was one of the most consistent and ardent critics of the Morgan group during his
ten years in the House of
Representatives. He is said to be the only man in Congress who read the entire 20 volumes of the
Aldrich Monetary Commission. Such
a Niagara of words poured over Congressmen raised the suspicion among reasonable people that those interests responsible for it are purposely making
it impossible for Congressmen to
digest it. Of the Aldrich Banking and Currency Plan, Lindbergh said: The Aldrich Banking and Currency Plan is a monstrous scheme to place under one control all
the finances of the country,
public and private. It would create one great central association with fifteen branches to
encompass all the states.. ..It
would admit of no membership except banks and trust 69 The Federal Reserve Conspiracy companies, and exclude the
smaller ones of these. The rest of the
world would not only be excluded from holding stock, but by the nature of the association, powers and
relations of finances to commerce,
it would dictate the terms on which business should be done. With that power centered in the
great city banks and these banks
controlled by the trusts and money powers, the politics as well as the business of the country
would be under its dictation. (13) 70 The Money Trust Creates The Fed Endnotes to Chapter
Seven: (1) Louis
D. Brandeis, Other People's Money; and How Bankers Use It, (New York: Frederick A. Stokes Co.)
p. 1. (2) Joseph P. Tumulty,
Woodrow Wilson as I Knew Him (New York:
Doubleday, 1921). (3)
John Moody, The Trust About The Trusts (New York: Moody Publishing Company, 1904). (4) Clarence W. Barron, They Told
Barron (New York: Harper &
Brothers, 1930). (5)
Dictionary of American Biography, Frederick Heinze. The Engineering and Mining Journal
commented, "This was the
beginning of the panic of 1907." (6) U.S. Congress, House of Representatives, Committee
on Banking and Currency. Money
Trust Investigation (Washington, D.C.,
1913) and Committee to Investigate the Concentration of Control of Money and Credit, Report. (62nd
Congress, 3rd session. House
Report No. 1593), known as the Pujo Committee Report. (7) The Story Of Our Money, p.
187. (8) U.S. Congress,
House of Representatives, Committee on Banking, Currency and Housing. Federal Reserve Directors: A Study
of Corporate and Banking
Influence. August, 1976. (94th Congress,
2nd session). Washington, U.S. Government Printing Office, 1976. (9) See Wall Street Journal, August 29, 1977. 71 The Federal Reserve
Conspiracy (10) The Story of
Our Money, op. cil, pp. 188-89.
(11) Antony Sutton, Wall Street and the Bolshevik Revolution (New Rochelle, New York: Arlington House,
1974). See particularly pages
89-100 and the chapter, "J. P. Morgan gives a little help to the other side." (12) Colonel E. M. House to
Senator Culbertson (July 26, 1911);
Charles Seymour, The Intimate Papers of Colonel House, (Boston and New York: Houghton Mifflin Co.,
1926-28), I. 159. (15) Cited
in The Story of Our Money, op. cil, p. 189. 72 The Money Trust Creates The Fed Chart 7-1:
STAGEONE:THEORIGINALPLANFDRAFEDERAL RESERVE SYSTEM Benjamin Strong CD. Norton Henry Davison' Frank Vanderlip Sen. Nelson Aldrich Loeb /(— ^ Paul Warburg I Kuhn- I 73 Chapter Eight: THE JEKYL ISLAND CONSPIRACY 
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