The History of the Federal Reserve
"The financial elites of this country, notably the Morgan, Rockefeller, and Kuhn, Loeb interests, were responsible for putting through the Federal Reserve System as a governmentally created and sanctioned cartel device to enable the nation's banks to inflate the money supply in a coordinated fashion, without suffering quick retribution from depositors or noteholders demanding cash." - Murray Rothbard
Money, Banking, and the Federal Reserve
Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, the extraordinary video below (courtesy of the Mises Institute) may be the clearest, most compelling explanation ever offered of the Fed and the monetary history of the US. This is worth 42 minutes of your time today!
Origins of the Federal Reserve - an article by economist Murray Rothbard [This article originally appeared in Quarterly Journal of Austrian Economics, Vol. 2, No. 3 (Fall 1999), pp. 3–51. It is also reprinted in A History of Money and Banking in the United States and as a monograph.]
A Brief Overview of the Creation of the Federal Reserve System
In 1910 the Federal Reserve System was conceived during a highly secretive nine day meeting in Jekyll Island, GA. Today in that same clubhouse in that private club on Jekyll Island there is a brass plaque that reads: “In this room, the Federal Reserve System was created.” This meeting, held secret for many years, was publicized once the Federal Reserve was firmly established. All the men that were involved in the meeting have since written articles and books about those fateful days on Jekyll. But, at the time, it was a great secret and remained a secret for several years until the Federal Reserve was firmly rooted as the controlling force of our monetary system.
The story starts when Senator Nelson Aldrich instructed six other well known men to join him on his private train car in New Jersey in November of 1910. They were instructed to come separately. They were told to act like they did not know one another and to avoid all reporters. One man went so far as to carry a shot gun - not for defense, he planned to use the excuse he was going on a duck hunting trip if questioned. It later came out in this man's biography that he never fired a gun in his life.
These men were told once on board the train to use only their first names because they didn’t want the servants and wait staff to recognize them together. Two of the men even adopted code names.
Once on Jekyll Island, for nine days these men hammered out the details of the Federal Reserve System. For years after, these men firmly denied any such meeting had ever taken place. It wasn’t until the Fed was established did they openly talk about it. They later wrote magazine articles, agreed to interviews, and even wrote books about the secret meeting. So who was involved in the meeting to design our banking and monetary system?
The following men devised the Federal Reserve System:
- Senator Nelson Aldrich – Republican whip and Chairman of the National Monetary Commission. He was a business associate of JP Morgan. He was the father-in-law to John D. Rockefeller, Jr. and was grandfather of Nelson Aldrich Rockefeller who served as Vice President under former President Gerald Ford.
- Abraham Piatt Andrew – Assistant Secretary of the Treasury.
- Frank Vanderlip – President of the National City Bank of New York (largest bank in the country at the time). He represented the financial assets of Rockefeller.
- Henry Davison – Senior partner of the J.P. Morgan Company.
- Charles D. Norton – President of the First National Bank of New York.
- Benjamin Strong – Known as the “Lieutenant of JP Morgan”, he was head of the J.P. Morgan Banker’s Trust Company. Incidentally, Strong became the first head of the Federal Reserve.
- Paul Warburg- One of the wealthiest men in the world. He was a recent immigrant from Germany. He was a partner of the Kuhn, Loeb Company and represented the Rothschild banking dynasty in England and France. He had extensive knowledge of the banking system in Europe.
The bill written to break the money trust was written by the money trust! These are the men that created the creature we now know as the Federal Reserve System.
The Plan Devised on Jekyll Island
What's in a name?
On Jekyll Island, the bankers discussed the type of system they wanted and how they would sell it to the public. They thought the name of the system was very important and decided to call it the Federal Reserve System. According to the later writings of the men who were in the meeting. This was their reasoning for the name:
- Federal – make it sound like a part of the government.
- Reserve – Make it seem like there are reserves.
- System – Make it sound like it was a diffusion of power. At the time the public was very concerned about a concentration of power in NY.
The objectives discussed in the 1910 meeting:
Why were these powerful bankers meeting in such secrecy? These men, representing the biggest banks in the world, wanted to reverse the trend of the erosion of power away from NY as the US economy was expanding to the South and to the West as our country grew. Established banks were experiencing heightened competition from new banks and wanted to control the competition before things progressed to a point where they could no longer maintain power.
They wanted to reverse the trend of private capital formation. People and corporations were beginning to use their own savings instead of going to banks. These bankers had to decide how they could get people to come back and start relying on banks for loans again. Their answer was to create a means to artificially suppress interest rates below market levels:
- Under a sound money system, interest rates are a product of supply and demand. But, the bankers wanted a way to artificially suppress interest rates so people depend on them for loans. The banks needed a flexible currency. One that was elastic. One where they could control interest rates and bring them down to levels below the market rate. Besides, if you are creating money out of nothing, you don’t have to charge much interest to make a profit.
The bankers wanted a way to pass on losses in the banking system to the taxpayer without them knowing about it. These bankers were talking about “operation bailout” long before the current round of bailouts. During the meeting they discussed the prospects of not letting a bank or preferred firms fail.
Passing the Federal Reserve Act
Senator Aldrich came back to Washington and tried to pass the bill his banker buddies had drafted down on Jekyll Island. Against the urging of the bankers, Aldrich attached his name to the bill. He wanted to go down in history. However, since Senator Aldrich was a republican with ties to the big banks, the bill was the only thing that became history. It was easily shot down.
However, Aldrich and the bankers did not give up. They were able to get two Democratic Senators Glass and Owen to sponsor a similar bill and added a few provisions (like one that said the Fed couldn’t print money at will). The big bankers wanted the Federal Reserve bill passed, even with a few unfavorable provisions. They understood that once the system was established they would be able to change it over time and get it how they wanted.
Here's where things get particularly interesting. Aldrich and Vanderlip both came out and gave speeches and wrote newspaper articles condemning the new Glass/Owen bill. They said this bill would ruin the big banks. This strategy worked to perfection.
Naturally, the average person fueled by populist rhetoric thought that if big banks didn’t like the new bill, then it had to be pretty good. BUT, at same time these bankers were publicly condemning the bill, they were privately financing the support of it. Talk about professional deception! Please see Eustace Mullins's Secrets of the Federal Reserve for more information.
The Glass/Owen bill (the Federal Reserve Act) was passed December, 22 of 1913 and Woodrow Wilson signed the bill into law the next day.
The bankers have been able to get the Federal Reserve system how they want it. Since the Federal Reserve Act has passed, it has been amended almost 200 times and hardly a person has given it any notice. They have greatly expanded the power of the Federal Reserve. They can now create money out of US Debt, Foreign Debt, Corporate Debt, and Mortgage Securities.
Since then , the Act has been amended 195 times, expanding the power and scope of the System to the point where, today, it would be almost unrecognizable to the Congressmen and Senators who voted for it. - G. Edward Griffin; The Creature From Jekyll Island
So what is the Fed?
The Federal Reserve Act formed a private banking cartel. This cartel is in partnership with the government. The Federal Reserve is:
- A corporation, chartered by Congress.
- A mechanism where Congress has been able to raise unlimited amounts of taxes through inflation without the people even knowing it.
- A method for the banks to earn perpetual interests on nothing.
The story of the Federal Reserve is the story of one of the biggest scams in the history of the world. This scam has been legitimized by law. The two partners of the Federal Reserve System are the Big Banks and the US Government – both are ripping off the citizens of America and the world.
The Federal Reserve is not Federal. It is not part of the government. It is a private banking cartel in partnership with the government to rip off the American people.
There are no reserves backing the federal reserve notes (our money). Our money is a fiat currency backed only by the confidence of the people.
It is not a system. The creation of the Federal Reserve System concentrated power in New York more than ever and solidified the old order. The reforms of 1913 halted the diffusion of power and concentrated it in Wall Street.
The Creature from Jekyll Island
The Creature from Jekyll Island: A Second Look at the Federal Reserve by G.Edward Griffin examines the creation of the Federal Reserve system that was devised during a secret nine day meeting on Jekyll Island in Georgia in 1910.
In November of 1910, under the disguise of a duck-hunting trip, six men met at an exclusive private club on Jekyll Island here in Georgia, to write a Central Banking Act. The men who wrote the act were two Rockefeller men, two Morgan men, a Kuhn-Loeb partner; and Assistant Treasury Secretary. All Big Bankers!