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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