Eustace Mullins - Secrets Of The Federal Reserve.DOC

8/11/2019 Eustace Mullins - Secrets Of The Federal Reserve.DOC

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SECRETSOF THEFEDERAL RESERVE The London ConnectionByEustace MullinsDedicated to two of the finest scholars of the twentieth century

EOR E ST!M"SO#andE$RA "O%#Dwho &enerously &a'e of their 'ast (nowled&e to a youn& writer to &uide hi) in a fieldwhich he could not ha'e )ana&ed alone*AC+#O,LED EME#TS! wish to than( )y for)er fellow )e)-ers of the staff of the Li-rary of Con&ress whose

'ery (ind assistance. coo/eration and su&&estions )ade the early 'ersions of this -oo( /ossi-le* ! also wish to than( the staffs of the #ew-erry Li-rary. Chica&o. the #ew 0or(City "u-lic Li-rary. the Alder)an Li-rary of the %ni'ersity of Vir&inia. and theMcCor)ic( Li-rary of ,ashin&ton and Lee %ni'ersity. Le1in&ton. Vir&inia. for theirin'alua-le assistance in the co)/letion of thirty years of further research for thisdefiniti'e wor( on the Federal Reser'e Syste)*A-out the Author Eustace Mullins is a 'eteran of the %nited States Air Force. with thirty2ei&ht )onths ofacti'e ser'ice durin& ,orld ,ar !!* A nati'e Vir&inian. he was educated at ,ashin&tonand Lee %ni'ersity. #ew 0or( %ni'ersity. Ohio %ni'ersity. the %ni'ersity of #orth

Da(ota. the Escuelas des Bellas Artes. San Mi&uel de Allende. Me1ico. and the !nstituteof Conte)/orary Arts. ,ashin&ton. D*C*The ori&inal -oo(. /u-lished under the title Mullins On The Federal Reser'e. wasco))issioned -y the /oet E3ra "ound in 4567* E3ra "ound was a /olitical /risoner forthirteen and a half years at St* Eli3a-eth8s Hos/ital. ,ashin&ton. D*C* 9a Federalinstitution for the insane:* His release was acco)/lished lar&ely throu&h the efforts of Mr*Mullins*The research at the Li-rary of Con&ress was directed and re'iewed daily -y eor&eSti)/son. founder of the #ational "ress Clu- in ,ashin&ton. who) The #ew 0or( Ti)eson Se/te)-er ;7. 45


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#ew infor)ation &athered o'er the years fro) hundreds of news/a/ers. /eriodicals. and -oo(s &i'e corro-oratin& insi&ht into the connections of the international -an(in&houses*,hile researchin& this )aterial. Eustace Mullins was on the staff of the Li-rary ofCon&ress* Mullins later was a consultant on hi&hway finance for the A)erican "etroleu)!nstitute. consultant on hotel de'elo/)ent for !nstitutions Ma&a3ine. and editorialdirector for the Chica&o Motor Clu-8s four /u-lications*

The London Acce/tance Council is li)ited to se'enteen international -an(in& houses

authori3ed -y the Ban( of En&land to handle forei&n e1chan&e*ABO%T THE COVER The co'er re/roduces the outline of the ea&le fro) the red shield. the coat of ar)s of thecity of Fran(furt. er)any. ada/ted -y Mayer A)schel Bauer 94 662474;: who chan&edhis na)e fro) Bauer to Rothschild 9=Red Shield=:* Rothschild added fi'e &olden arrowsheld in the ea&le8s talons. si&nifyin& his fi'e sons who o/erated the fi'e -an(in& houses

of the international House of Rothschild Fran(furt. London. "aris. Vienna. and #a/les*Ta-le of ContentsCha/ter One ?e(yll !sland 4Cha/ter Two The Aldrich "lan 4@Cha/ter Three The Federal Reser'e Act 4Cha/ter Four The Federal Ad'isory Council 6@Cha/ter Fi'e The House of Rothschild 6Cha/ter Si1 The London Connection Cha/ter Se'en The Hitler Connection 5Cha/ter Ei&ht ,orld ,ar One 7;

Cha/ter #ine The A&ricultural De/ression 446Cha/ter Ten The Money Creators 445Cha/ter Ele'en Lord Monta&u #or)an 4 4Cha/ter Twel'e The reat De/ression 46Cha/ter Thirteen The 45 @Gs 4


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He then showed )e a ten dollar -ill )ar(ed =Federal Reser'e #ote= and as(ed )e if !would do so)e research at the Li-rary of Con&ress on the Federal Reser'e Syste) whichhad issued this -ill* "ound was una-le to &o to the Li-rary hi)self. as he was -ein& heldwithout trial as a /olitical /risoner -y the %nited States &o'ern)ent* After he was denied

-roadcastin& ti)e in the %*S*. Dr* "ound -roadcast fro) !taly in an effort to /ersuade /eo/le of the %nited States not to enter ,orld ,ar !!* Fran(lin D* Roose'elt had /ersonally ordered "ound8s indict)ent. s/urred -y the de)ands of his three /ersonalassistants. Harry De1ter ,hite. Lauchlin Currie. and Al&er Hiss. all of who) weresu-seIuently identified as -ein& connected with Co))unist es/iona&e*! had no interest in )oney or -an(in& as a su->ect. -ecause ! was wor(in& on a no'el*"ound offered to su//le)ent )y inco)e -y ten dollars a wee( for a few wee(s* Myinitial research re'ealed e'idence of an international -an(in& &rou/ which had secretly

/lanned the writin& of the Federal Reser'e Act and Con&ress8 enact)ent of the /lan intolaw* These findin&s confir)ed what "ound had lon& sus/ected* He said. =0ou )ust wor(on it as a detecti'e story*= ! was fortunate in ha'in& )y research at the Li-rary of

Con&ress directed -y a /ro)inent scholar. eor&e Sti)/son. founder of the #ational"ress Clu-. who was descri-ed -y The #ew 0or( Ti)es of Se/te)-er ;7. 45ect*=! did research four hours each day at the Li-rary of Con&ress. and went to St* Eli3a-eth8sHos/ital in the afternoon* "ound and ! went o'er the /re'ious day8s notes* ! then haddinner with eor&e Sti)/son at Scholl8s Cafeteria while he went o'er )y )aterial. and !then went -ac( to )y roo) to ty/e u/ the corrected notes* Both Sti)/son and "ound)ade )any su&&estions in &uidin& )e in a field in which ! had no /re'ious e1/erience*

,hen "ound8s resources ran low. ! a//lied to the u&&enhei) Foundation. Huntin&tonHartford Foundation. and other foundations to co)/lete )y research on the FederalReser'e* E'en thou&h )y foundation a//lications were s/onsored -y the three leadin&

/oets of A)erica. E3ra "ound. E*E* Cu))in&s. and Eli3a-eth Bisho/. all of thefoundations refused to s/onsor this research* ! then wrote u/ )y findin&s to date. and in45


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uido Roeder -rou&ht out a er)an edition in O-era))er&au. er)any* The -oo( wassei3ed and the entire edition of 4@.@@@ co/ies -urned -y &o'ern)ent a&ents led -y Dr*Otto ?ohn*The -urnin& of the -oo( was u/held A/ril ;4. 45 4 -y >ud&e !srael +at3 of the Ba'arianSu/re)e Court* The %*S* o'ern)ent refused to inter'ene. -ecause %*S* Hi&hCo))issioner to er)any. ?a)es B* Conant 9/resident of Har'ard %ni'ersity 45 to45< :. had a//ro'ed the initial -oo( -urnin& order* This is the only -oo( which has -een

-urned in er)any since ,orld ,ar !!* !n 45 7 a /irated edition of this -oo( a//eared inCalifornia* Both the FB! and the %*S* "ostal ins/ectors refused to act. des/ite nu)erousco)/laints fro) )e durin& the ne1t decade* !n 457@ a new er)an edition a//eared*Because the %*S* o'ern)ent a//arently no lon&er dictated the internal affairs of

er)any. the identical -oo( which had -een -urned in 45ust si&ned a contract to write the authori3ed -io&ra/hy of E3ra "ound. and the Federal Reser'e -oo( had to -e /ost/oned* Mr* Hunt /assed away -efore ! could &et -ac( to )y research. and once a&ain ! faced the /ro-le)of financin& research for the -oo(*My ori&inal -oo( had traced and na)ed the shadowy fi&ures in the %nited States who

/lanned the Federal Reser'e Act* ! now disco'ered that the )en who) ! e1/osed in 45


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that fro) the outset. E3ra "ound ur&ed )e to write it as a detecti'e story. a &enre whichwas in'ented -y )y fellow Vir&inian. Ed&ar Allan "oe* ! -elie'e that the continuouscirculation of this -oo( durin& the /ast forty years has not only e1onerated E3ra "oundfor his )uch conde)ned /olitical and )onetary state)ents. -ut also that it has -een. andwill continue to -e. the ulti)ate wea/on a&ainst the /owerful cons/irators whoco)/elled hi) to ser'e thirteen and a half years without trial. as a /olitical /risoner heldin an insane asylu) a la + B* His earliest 'indication ca)e when the &o'ern)ent a&entswho re/resented the cons/irators refused to allow hi) to testify in his own defense thesecond 'indication ca)e in 45


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and ?a/an found the)sel'es in 456


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his na)e to a//ear on the -oo( -ecause of additional re/risals a&ainst hi)* #either couldhe allow the -oo( to -e dedicated to hi). althou&h he had co))issioned its writin&* Theauthor is &ratified to -e a-le to re)edy these necessary o)issions. thirty2three years afterthe e'ents*:?EFFERSO#8S O"!#!O# O# THECO#ST!T%T!O#AL!T0 OF THE BA#+ Fe-ruary 4ust watched a dele&ation of thenation8s leadin& financiers lea'e the station on a secret )ission* !t would -e years -eforethey disco'ered what that )ission was. and e'en then they would not understand that thehistory of the %nited States underwent a drastic chan&e after that ni&ht in Ho-o(en*The dele&ation had left in a sealed railway car. with -linds drawn. for an undiscloseddestination* They were led -y Senator #elson Aldrich. head of the #ational Monetary


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Co))ission* "resident Theodore Roose'elt had si&ned into law the -ill creatin& the #ational Monetary Co))ission in 45@7. after the tra&ic "anic of 45@ had resulted in a /u-lic outcry that the nation8s )onetary syste) -e sta-ili3ed* Aldrich had led the)e)-ers of the Co))ission on a two2year tour of Euro/e. s/endin& so)e three hundredthousand dollars of /u-lic )oney* He had not yet )ade a re/ort on the results of this tri/.nor had he offered any /lan for -an(in& refor)*Acco)/anyin& Senator Aldrich at the Ho-o(en station were his /ri'ate secretary.Shelton A* "iatt Andrew. Assistant Secretary of the Treasury. and S/ecial Assistant of the

#ational Monetary Co))ission Fran( Vanderli/. /resident of the #ational City Ban( of #ew 0or(. Henry "* Da'ison. senior /artner of ?*"* Mor&an Co)/any. and &enerallyre&arded as Mor&an8s /ersonal e)issary and Charles D* #orton. /resident of theMor&an2do)inated First #ational Ban( of #ew 0or(* ?oinin& the &rou/ >ust -efore thetrain left the station were Ben>a)in Stron&. also (nown as a lieutenant of ?*"* Mor&anand "aul ,ar-ur&. a recent i))i&rant fro) er)any who had >oined the -an(in& houseof +uhn. Loe-

4 "rof* #athaniel ,ri&ht Ste/henson. "aul ,ar-ur&8s Me)orandu). #elson Aldrich ALeader in A)erican "olitics. Scri-ners. #*0* 45 @4and Co)/any. #ew 0or( as a /artner earnin& fi'e hundred thousand dollars a year*Si1 years later. a financial writer na)ed Bertie Charles For-es 9who later founded theFor-es Ma&a3ine the /resent editor. Malco) For-es. is his son:. wrote="icture a /arty of the nation8s &reatest -an(ers stealin& out of #ew 0or( on a /ri'aterailroad car under co'er of dar(ness. stealthily hiein& hundred of )iles South. e)-ar(in&on a )ysterious

launch. snea(in& onto an island deserted -y all -ut a few ser'ants. li'in& there a full wee( under such ri&id secrecy that the na)es of not one of the) was once )entioned lest the ser'antslearnthe identity and disclose to the world this stran&est. )ost secret e1/edition in the historyof A)erican finance* ! a) not ro)ancin& ! a) &i'in& to the world. for the first ti)e. thereal storyof how the fa)ous Aldrich currency re/ort. the foundation of our new currency syste).waswritten * * * * The ut)ost secrecy was en>oined u/on all* The /u-lic )ust not &lean a hintof whatwas to -e done* Senator Aldrich notified each one to &o Iuietly into a /ri'ate car of whichtherailroad had recei'ed orders to draw u/ on an unfreIuented /latfor)* Off the /arty set*

#ew0or(8s u-iIuitous re/orters had -een foiled * * * #elson 9Aldrich: had confided to Henry.Fran(.


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"aul and "iatt that he was to (ee/ the) loc(ed u/ at ?e(yll !sland. out of the rest of theworld.until they had e'ol'ed and co)/iled a scientific currency syste) for the %nited States.the real

-irth of the /resent Federal Reser'e Syste). the /lan done on ?e(yll !sland in theconference with"aul. Fran( and Henry * * * * ,ar-ur& is the lin( that -inds the Aldrich syste) and the

/resentsyste) to&ether* He )ore than any one )an has )ade the syste) /ossi-le as a wor(in&reality*=;The official -io&ra/hy of Senator #elson Aldrich states=!n the autu)n of 454@. si1 )en went out to shoot duc(s. Aldrich. his secretary Shelton.Andrews. Da'ison. Vanderli/ and ,ar-ur&* Re/orters were waitin& at the Brunswic(9 eor&ia: station* Mr* Da'ison went out and tal(ed to the)* The re/orters dis/ersed andthe secret of the stran&e >ourney was not di'ul&ed* Mr* Aldrich as(ed hi) how he had

)ana&ed it and he did not 'olunteer the infor)ation*=Da'ison had an e1cellent re/utation as the /erson who could conciliate warrin& factions.a role he had /erfor)ed for ?*"* Mor&an durin& the settlin& of the Money "anic of 45@ *Another Mor&an /artner. T*,* La)ont. says=Henry "* Da'ison ser'ed as ar-itrator of the ?e(yll !sland e1/edition*=6

; =C%RRE#T O"!#!O#=. Dece)-er. 454 . /* 7;*

#athaniel ,ri&ht Ste/henson. #elson ,* Aldrich. A Leader in A)erican "olitics.Scri-ners. #*0* 45 @. Cha/* NN!V =?e(yll !sland=6 T*,* La)ont. Henry "* Da'ison. Har/er. 45

;Fro) these references. it is /ossi-le to /iece to&ether the story* Aldrich8s /ri'ate car.which had left Ho-o(en station with its shades drawn. had ta(en the financiers to ?e(yll!sland. eor&ia* So)e years earlier. a 'ery e1clusi'e &rou/ of )illionaires. led -y ?*"*Mor&an. had /urchased the island as a winter retreat* They called the)sel'es the ?e(yll!sland Hunt Clu-. and. at first. the island was used only for huntin& e1/editions. until the)illionaires reali3ed that its /leasant cli)ate offered a war) retreat fro) the ri&ors ofwinters in #ew 0or(. and -e&an to -uild s/lendid )ansions. which they called =cotta&es=.for their fa)ilies8 winter 'acations* The clu- -uildin& itself. -ein& Iuite isolated. wasso)eti)es in de)and for sta& /arties and other /ursuits unrelated to huntin&* On suchoccasions. the clu- )e)-ers who were not in'ited to these s/ecific outin&s were as(ednot to a//ear there for a certain nu)-er of days* Before #elson Aldrich8s /arty had left

#ew 0or(. the clu-8s )e)-ers had -een notified that the clu- would -e occu/ied for thene1t two wee(s*The ?e(yll !sland Clu- was chosen as the /lace to draft the /lan for control of the )oneyand credit of the /eo/le of the %nited States. not only -ecause of its isolation. -ut also

-ecause it was the /ri'ate /reser'e of the /eo/le who were draftin& the /lan* The #ew0or( Ti)es later noted. on May . 45 4. in co))entin& on the death of eor&e F* Ba(er.


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one of ?*"* Mor&an8s closest associates. that =?e(yll !sland Clu- has lost one of its )ostdistin&uished )e)-ers* One2si1th of the total wealth of the world was re/resented -y the)e)-ers of the ?e(yll !sland Clu-*= Me)-ershi/ was -y inheritance only*The Aldrich &rou/ had no interest in huntin&* ?e(yll !sland was chosen for the site of the

/re/aration of the central -an( -ecause it offered co)/lete /ri'acy. and -ecause therewas not a >ournalist within fifty )iles* Such was the need for secrecy that the )e)-ers of the /arty a&reed. -efore arri'in& at ?e(yll !sland. that no last na)es would -e used at anyti)e durin& their two wee( stay* The &rou/ later referred to the)sel'es as the First #a)eClu-. as the last na)es of ,ar-ur&. Stron&. Vanderli/ and the others were /rohi-iteddurin& their stay* The custo)ary attendants had -een &i'en two wee( 'acations fro) theclu-. and new ser'ants -rou&ht in fro) the )ainland for this occasion who did not (nowthe na)es of any of those /resent* E'en if they had -een interro&ated after the Aldrich

/arty went -ac( to #ew 0or(. they could not ha'e &i'en the na)es* This arran&e)ent /ro'ed to -e so satisfactory that the )e)-ers. li)ited to those who had actually -een /resent at ?e(yll !sland. later had a nu)-er of infor)al &et2to&ethers in #ew 0or(*

,hy all this secrecy ,hy this thousand )ile tri/ in a closed railway car to a re)otehuntin& clu- Ostensi-ly. it was to carry out a /ro&ra) of /u-lic ser'ice. to /re/are

-an(in& refor) which would -e a -oon to the /eo/le of the %nited States. which had -een ordered -y the #ational

Monetary Co))ission* The /artici/ants were no stran&ers to /u-lic -enefactions*%sually. their na)es were inscri-ed on -rass /laIues. or on the e1teriors of -uildin&swhich they had donated* This was not the /rocedure which they followed at ?e(yll !sland*

#o -rass /laIue was e'er erected to )ar( the selfless actions of those who )et at their /ri'ate hunt clu- in 454@ to i)/ro'e the lot of e'ery citi3en of the %nited States*

!n fact. no -enefaction too( /lace at ?e(yll !sland* The Aldrich &rou/ >ourneyed there in /ri'ate to write the -an(in& and currency le&islation which the #ational MonetaryCo))ission had -een ordered to /re/are in /u-lic* At sta(e was the future control of the)oney and credit of the %nited States* !f any &enuine )onetary refor) had -een /re/aredand /resented to Con&ress. it would ha'e ended the /ower of the elitist one world )oneycreators* ?e(yll !sland ensured that a central -an( would -e esta-lished in the %nitedStates which would &i'e these -an(ers e'erythin& they had always wanted*As the )ost technically /roficient of those /resent. "aul ,ar-ur& was char&ed with doin&)ost of the draftin& of the /lan* His wor( would then -e discussed and &one o'er -y therest of the &rou/* Senator #elson Aldrich was there to see that the co)/leted /lan wouldco)e out in a for) which he could &et /assed -y Con&ress. and the other -an(ers werethere to include whate'er details would -e needed to -e certain that they &ot e'erythin&they wanted. in a finished draft co)/osed durin& a oneti)e stay* After they returned to

#ew 0or(. there could -e no second &et to&ether to rewor( their /lan* They could notho/e to o-tain such secrecy for their wor( on a second >ourney*The ?e(yll !sland &rou/ re)ained at the clu- for nine days. wor(in& furiously to co)/letetheir tas(* Des/ite the co))on interests of those /resent. the wor( did not /roceedwithout friction* Senator Aldrich. always a do)ineerin& /erson. considered hi)self the


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chosen leader of the &rou/. and could not hel/ orderin& e'eryone else a-out* Aldrich alsofelt so)ewhat out of /lace as the only )e)-er who was not a /rofessional -an(er* Hehad had su-stantial -an(in& interests throu&hout his career. -ut only as a /erson who

/rofited fro) his ownershi/ of -an( stoc(* He (new little a-out the technical as/ects offinancial o/erations* His o//osite nu)-er. "aul ,ar-ur&. -elie'ed that e'ery Iuestionraised -y the &rou/ de)anded. not )erely an answer. -ut a lecture* He rarely lost ano//ortunity to &i'e the )e)-ers a lon& discourse desi&ned to i)/ress the) with thee1tent of his (nowled&e of -an(in&* This was resented -y the others. and often drew

-ar-ed re)ar(s fro) Aldrich* The natural di/lo)acy of Henry "* Da'ison /ro'ed to -ethe catalyst which (e/t the) at their wor(* ,ar-ur&8s thic( alien accent &rated on the).and constantly re)inded the) that they had to acce/t his /resence if a central -an( /lanwas to -e de'ised which would &uarantee the) their future /ro26fits* ,ar-ur& )ade little effort to s)ooth o'er their /re>udices. and contested the) one'ery /ossi-le occasion on technical -an(in& Iuestions. which he considered his /ri'ate

/reser'e*=!n all cons/iracies there )ust -e &reat secrecy*=ority

< Clarendon. Hist* Re-* 4 6ority of the directors were to -e chosen.=directly or indirectly= -y the -an(s of the association* !n the final refine)ent of

,ar-ur&8s /lan. the Federal Reser'e Board of o'ernors would -e a//ointed -y the"resident of the %nited States. -ut the real wor( of the Board would -e controlled -y aFederal Ad'isory Council. )eetin& with the o'ernors* The Council would -e chosen -ythe directors of the twel'e Federal Reser'e Ban(s. and would re)ain un(nown to the

/u-lic*The ne1t consideration was to conceal the fact that the /ro/osed =Federal Reser'eSyste)= would -e do)inated -y the )asters of the #ew 0or( )oney )ar(et* TheCon&ress)en fro) the South and the ,est could not sur'i'e if they 'oted for a ,allStreet /lan* Far)ers and s)all -usiness)en in those areas had suffered )ost fro) the)oney /anics* There had -een &reat /o/ular resent)ent a&ainst the Eastern -an(ers.

which durin& the nineteenth century -eca)e a /olitical )o'e)ent (nown as =/o/ulis)=*The /ri'ate /a/ers of #icholas Biddle. not released until )ore than a century after hisdeath. show that Iuite early on the Eastern -an(ers were fully aware of the wides/read

/u-lic o//osition to the)*"aul ,ar-ur& ad'anced at ?e(yll !sland the /ri)ary dece/tion which would /re'ent theciti3ens fro) reco&ni3in& that his /lan set u/ a central -an(* This was the re&ionalreser'e syste)* He /ro/osed a syste) of four 9later twel'e: -ranch reser'e -an(s locatedin different sections of the country* Few /eo/le outside the -an(in& world would reali3ethat the e1istin& concentration of the nation8s )oney and credit structure in #ew 0or()ade the /ro/osal of a re&ional reser'e syste) a delusion*Another /ro/osal ad'anced -y "aul ,ar-ur& at ?e(yll !sland was the )anner of selectionof ad)inistrators for the /ro/osed re&ional reser'e syste)* Senator #elson Aldrich hadinsisted that the officials should -e a//ointi'e. not elected. and that Con&ress should ha'eno role in their selection* His Ca/itol Hill e1/erience had tau&ht hi) that con&ressionalo/inion would often -e ini)ical to the ,all Street interests. as Con&ress)en fro) the,est and South )i&ht wish to de)onstrate to their constituents that they were /rotectin&the) a&ainst the Eastern -an(ers*


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,ar-ur& res/onded that the ad)inistrators of the /ro/osed central -an(s should -esu->ect to e1ecuti'e a//ro'al -y the "resident* This /atent re)o'al of the syste) fro)Con&ressional control )eant that the

#athaniel ,ri&ht Ste/henson. #elson ,* Aldrich. A Leader in A)erican "olitics.

Scri-ners. #*0* 45 @. Cha/* NN!V =?e(yll !sland= /* 5

Federal Reser'e /ro/osal was unconstitutional fro) its ince/tion. -ecause the FederalReser'e Syste) was to -e a -an( of issue* Article 4. Sec* 7. "ar* < of the Constitutione1/ressly char&es Con&ress with =the /ower to coin )oney and re&ulate the 'aluethereof*=* ,ar-ur&8s /lan would de/ri'e Con&ress of its so'erei&nty. and the syste)s ofchec(s and -alances of /ower set u/ -y Tho)as ?efferson in the Constitution would now

-e destroyed* Ad)inistrators of the /ro/osed syste) would control the nation8s )oneyand credit. and would the)sel'es -e a//ro'ed -y the e1ecuti'e de/art)ent of the&o'ern)ent* The >udicial de/art)ent 9the Su/re)e Court. etc*: was already 'irtually

controlled -y the e1ecuti'e de/art)ent throu&h /residential a//oint)ent to the -ench*"aul ,ar-ur& later wrote a )assi'e e1/osition of his /lan. The Federal Reser'e Syste).!ts Ori&in and rowth of so)e 4


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so)e infor)ation fro) one of the re/orters* !t told in 'a&ue outline the ?e(yll !slandstory. -ut)ade no i)/ression and was &enerally re&arded as a )ere yarn*=The co'eru/ of the ?e(yll !sland conference /roceeded alon& two lines. -oth of whichwere successful* The first. as Ste/henson )entions. was to dis)iss the entire story as aro)antic concoction which ne'er actually too( /lace* Althou&h there were -riefreferences to ?e(yll !sland in later -oo(s concernin& the Federal Reser'e Syste). thesealso attracted little /u-lic attention* As we ha'e noted. ,ar-ur&8s )assi'e and su//osedlydefinite wor( on the Federal Reser'e Syste) does not )ention ?e(yll !sland at all.althou&h he does ad)it that a conference too( /lace* !n none of his 'olu)inous s/eechesor writin&s do the words =?e(yll !sland= a//ear. with a sin&le nota-le e1ce/tion* Hea&reed to "rofessor Ste/henson8s reIuest that he /re/are a -rief state)ent for the Aldrich

-io&ra/hy* This a//ears on /a&e 67< as /art of =The ,ar-ur& Me)orandu)=* !n thise1cer/t. ,ar-ur& writes. =The )atter of a unifor) discount rate was discussed and settledat ?e(yll !sland*=

Another )e)-er of the =First #a)e Clu-= was less reticent* Fran( Vanderli/ later /u-lished a few -rief references to the conference* !n the Saturday E'enin& "ost.Fe-ruary 5. 45


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Vanderli/ later wrote in his auto-io&ra/hy. Fro) Far)-oy to Financier 4@=Our secret e1/edition to ?e(yll !sland was the occasion of the actual conce/tion of whate'entually -eca)e the Federal Reser'e Syste)* The essential /oints of the Aldrich "lanwereall contained in the Federal Reser'e Act as it was /assed*="rofessor E*R*A* Seli&)an. a )e)-er of the international -an(in& fa)ily of ?* Q ,*Seli&)an. and head of the De/art)ent of Econo)ics at Colu)-ia %ni'ersity. wrote in anessay /u-lished -y the Acade)y of "olitical Science. "roceedin&s. '* 6. #o* 6. /* 7 25@=!t is (nown to a 'ery few how &reat is the inde-tedness of the %nited States to Mr*,ar-ur&* For it )ay -e said without fear of contradiction that in its funda)ental features the FederalReser'eAct is the wor( of Mr* ,ar-ur& )ore than any other )an in the country* The e1istence ofaFederal Reser'e Board creates. in e'erythin& -ut in na)e. a real central -an(* !n the two

funda)entals of co))and of reser'es and of a discount /olicy. the Federal Reser'e Acthasfran(ly acce/ted the /rinci/le of the Aldrich Bill. and these /rinci/les. as has -een stated.were the creation of Mr* ,ar-ur& and Mr* ,ar-ur& alone* !t )ust not -e for&otten thatMr* ,ar-ur& had a /ractical o->ect in 'iew* !n for)ulatin& his /lans and in ad'ancin& inthe) sli&htly 'aryin&su&&estions fro) ti)e to ti)e. it was incu)-ent on hi) to re)e)-er that the educationof thecountry )ust -e &radual and that a lar&e /art of the tas( was to -rea( down /re>udicesand re)o'e sus/icion* His /lans therefore contained all sorts of ela-orate su&&estions

desi&ned to &uard the /u-lic a&ainst fancied dan&ers and to /ersuade the country that the&eneral sche)e was at all /ractica-le* !t was the ho/e of Mr* ,ar-ur& that with the la/seof ti)e it )i&ht -e /ossi-le to eli)inate fro) the law a few clauses which were insertedlar&ely at his su&&estion for educational /ur/oses*=

#ow that the /u-lic de-t of the %nited States has /assed a trillion dollars. we )ay indeedad)it =how &reat is the inde-tedness of the %nited States to Mr* ,ar-ur&*= At the ti)e hewrote the Federal Reser'e Act. the /u-lic de-t was al)ost none1istent*"rofessor Seli&)an /oints out ,ar-ur&8s re)ar(a-le /rescience that the real tas( of the)e)-ers of the ?e(yll !sland conference was to /re/are a -an(in& /lan which would&radually =educate the country= and =-rea( down /re>udices and re)o'e sus/icion=* Theca)/ai&n to enact the /lan into law succeeded in doin& >ust that*

4@ Fran( Vanderli/. Fro) Far)-oy to Financier 5CHA"TER T,OThe Aldrich "lan=Finance and the tariff are reser'ed -y #elson Aldrich as fallin& within his sole /ur'iewand >urisdiction* Mr* Aldrich is endea'orin& to de'ise. throu&h the #ational Monetary


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Co))ission. a -an(in& and currency law* A &reat )any hundred thousand /ersons arefir)ly of the o/inion that Mr* Aldrich su)s u/ in his /ersonality the &reatest and )ostsinister )enace to the /o/ular welfare of the %nited States* Ernest #ew)an recently said.J,hat the South 'isits on the #e&ro in a /olitical way. Aldrich would )ete out to the)udsills of the #orth. if he could de'ise a safe and /ractical way to acco)/lish it*8=22Har/er8s ,ee(ly. May . 454@*=The /artici/ants in the ?e(yll !sland conference returned to #ew 0or( to direct anationwide /ro/a&anda ca)/ai&n in fa'or of the =Aldrich "lan=* Three of the leadin&uni'ersities. "rinceton. Har'ard. and the %ni'ersity of Chica&o. were used as the rallyin&

/oints for this /ro/a&anda. and national -an(s had to contri-ute to a fund of fi'e )illiondollars to /ersuade the A)erican /u-lic that this central -an( /lan should -e enacted intolaw -y Con&ress*,oodrow ,ilson. &o'ernor of #ew ?ersey and for)er /resident of "rinceton %ni'ersity.was enlisted as a s/o(es)an for the Aldrich "lan* Durin& the "anic of 45@ . ,ilson haddeclared. =All this trou-le could -e a'erted if we a//ointed a co))ittee of si1 or se'en

/u-lic2s/irited )en li(e ?*"* Mor&an to handle the affairs of our country*=!n his -io&ra/hy of #elson Aldrich in 45 @. Ste/henson says=A /a)/hlet was issued ?anuary 4 . 4544. JSu&&ested "lan for Monetary Le&islation8. -yHon* #elson Aldrich. -ased on ?e(yll !sland conclusions*= Ste/henson says on /a&e 77.=An or&ani3ation for financial /ro&ress has -een for)ed* Mr* ,ar-ur& introduced aresolution authori3in& the esta-lish)ent of the Citi3ens8 Lea&ue. later the #ationalCiti3ens Lea&ue * * * "rofessor Lau&hlin of the %ni'ersity of Chica&o was &i'en char&e of the Lea&ue8s /ro/a&anda*=44!t is nota-le that Ste/henson characteri3es the wor( of the #ational Citi3ens Lea&ue as=/ro/a&anda=. in line with Seli&)an8s e1/osition of

44 #athaniel ,ri&ht Ste/henson. #elson ,* Aldrich. A Leader in A)erican "olitics.Scri-ners. #*0* 45 @4@,ar-ur&8s wor( as =the education of the country= and =to -rea( down /re>udices=*Much of the fi'e )illion dollars of the -an(ers slush fund was s/ent under the aus/ices of the #ational Citi3ens8 Lea&ue. which was )ade u/ of colle&e /rofessors* The two )osttireless /ro/a&andists for the Aldrich "lan were "rofessor O*M* S/ra&ue of Har'ard. and?* Laurence Lau&hlin of the %ni'ersity of Chica&o*Con&ress)an Charles A* Lind-er&h. Sr*. notes=?* Laurence Lau&hlin. Chair)an of the E1ecuti'e Co))ittee of the #ational Citi3ens8Lea&ue since its or&ani3ation. has returned to his /osition as /rofessor of /oliticalecono)ics in the %ni'ersity of Chica&o* !n ?une. 4544. "rofessor Lau&hlin was &i'en ayear8s lea'e fro) the uni'ersity. that he )i&ht &i'e all of his ti)e to the ca)/ai&n ofeducation underta(en -y the Lea&ue * * * He has wor(ed indefati&a-ly. and it is lar&elydue to his efforts and his /ersistence that the ca)/ai&n enters the final sta&e withflatterin& /ros/ects of a successful outco)e * * * The reader (nows that the %ni'ersity of


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Chica&o is an institution endowed -y ?ohn D* Roc(efeller. with nearly fifty )illiondollars*=4;!n his -io&ra/hy of #elson Aldrich. Ste/henson re'eals that the Citi3ens8 Lea&ue wasalso a ?e(yll !sland /roduct* !n cha/ter ;6 we find that The Aldrich "lan was re/resentedto Con&ress as the result of three years of wor(. study and tra'el -y )e)-ers of the

#ational Monetary Co))ission. with e1/enditures of )ore than three hundred thousanddollars*Testifyin& -efore the Co))ittee on Rules. Dece)-er 4


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Vreeland8s fantastic clai)s were ty/ical of the /ro/a&anda flood unleashed to /ass theAldrich "lan* Mono/olies would disa//ear. the o'ern)ent would disa//ear fro) the

-an(in& -usiness* "ie in the s(y* #ation Ma&a3ine. ?anuary 45. 4544. noted. =The na)e of Central Ban( is carefullya'oided. -ut the JFederal Reser'e Association8. the na)e &i'en to the /ro/osed centralor&ani3ation. is endowed with the usual /owers and res/onsi-ilities of a Euro/eanCentral Ban(*=After the #ational Monetary Co))ission had returned fro) Euro/e. it held no official)eetin&s for nearly two years* #o records or )inutes were e'er /resented showin& whohad authored the Aldrich "lan* Since they held no official )eetin&s. the )e)-ers of theco))ission could hardly clai) the "lan as their own* The sole tan&i-le result of theCo))ission8s three hundred thousand dollar e1/enditure was a li-rary of thirty )assi'e'olu)es on Euro/ean -an(in&* Ty/ical of these wor(s is a thousand /a&e history of theReichs-an(. the central -an( which controlled )oney and credit in er)any. and whose

/rinci/al stoc(holders. were the Rothschilds and "aul ,ar-ur&8s fa)ily -an(in& house of

M*M* ,ar-ur& Co)/any* The Co))ission8s records show that it ne'er functioned as adeli-erati'e -ody* !ndeed. its only =)eetin&= was the secret conference held at ?e(yll!sland. and this conference is not )entioned in any /u-lication of the Co))ission*Senator Cu))ins /assed a resolution in Con&ress orderin& the Co))ission to re/ort on?anuary 7. 454;. and show so)e constructi'e results of its three years8 wor(* !n the faceof this challen&e. the #ational Monetary Co))ission ceased to e1ist*4;,ith their fi'e )illion dollars as a war chest. the Aldrich "lan /ro/a&andists wa&ed a no2holds -arred war a&ainst their o//osition* Andrew Fra)e testified -efore the HouseBan(in& and Currency Co))ittee of the A)erican Ban(ers Association* He re/resented

a &rou/ of ,estern -an(ers who o//osed the Aldrich "lanCHA!RMA# CARTER LASS =,hy didn8t the ,estern -an(ers )a(e the)sel'esheard when the A)erican Ban(ers Association &a'e its unIualified and. we are assured.unani)ous a//ro'al of the sche)e /ro/osed -y the #ational Monetary Co))ission =A#DRE, FRAME =!8) &lad you called )y attention to that* ,hen that )onetary -illwas &i'en to the country. it was -ut a few days /re'ious to the )eetin& of the A)ericanBan(ers Association in #ew Orleans in 4544* There was not one -an(er in a hundred whohad read that -ill* ,e had twel'e addresses in fa'or of it* eneral Ha)-y of Austin.Te1as. wrote a letter to "resident ,atts as(in& for a hearin& a&ainst the -ill* He did not&et a 'ery courteous answer* ! refused to 'ote on it. and a &reat )any other -an(ers didli(ewise*=MR* B%L+LE0 =Do you )ean that no )e)-er of the Association could -e heard ino//osition to the -ill =A#DRE, FRAME =They throttled all ar&u)ent*=MR* +!#DRED =But the re/ort was &i'en out that it was /ractically unani)ous*=A#DRE, FRAME =The -ill had already -een /re/ared -y Senator Aldrich and

/resented to the e1ecuti'e council of the A)erican Ban(ers Association in May. 4544* As


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a )e)-er of that council. ! recei'ed a co/y the day -efore they acted u/on it* ,hen the -ill ca)e in at #ew Orleans. the -an(ers of the %nited States had not read it*=MR* +!#DRED =Did the /residin& officer si)/ly rule out those who wanted to discussit ne&ati'ely =A#DRE, FRAME =They would not allow anyone on the /ro&ra) who was not in fa'or of the -ill*=CHA!RMA# LASS =,hat si&nificance has the fact that at the ne1t annual )eetin& ofthe A)erican Ban(ers Association held at Detroit in 454;. the Association did notreiterate its endorse)ent of the /lan of the #ational Monetary Co))ission. (nown as theAldrich sche)e =A#DRE, FRAME =!t did not reiterate the endorse)ent for the si)/le fact that the

-ac(ers of the Aldrich "lan (new that the Association would not endorse it* ,e wereready for the). -ut they did not -rin& it u/*=4Andrew Fra)e e1/osed the collusion which in 4544 /rocured an endorse)ent of the

Aldrich "lan fro) the A)erican Ban(ers Association -ut which in 454; did not e'en dareto re/eat its endorse)ent. for fear of an honest and o/en discussion of the )erits of the

/lan*Chair)an lass then called as witness one of the ten )ost /owerful -an(ers in the %nitedStates. eor&e Blu)enthal. /artner of the international -an(in& house of La3ard Freresand -rother2in2law of Eu&ene Meyer. ?r* Carter lass effusi'ely welco)ed Blu)enthal.statin& that =Senator O8 or)an of #ew 0or( was (ind enou&h to su&&est your na)e tous*= A year later. O8 or)an /re'ented a Senate Co))ittee fro) as(in& his )aster. "aul,ar-ur&. any e)-arrassin& Iuestions -efore a//ro'in& his no)ination as the first

o'ernor of the Federal Reser'e Board*

eor&e Blu)enthal stated. =Since 475 )y fir) of La3ard Freres has -een fore)ost ini)/ortations and e1/ortations of &old and has there-y co)e into contact with e'ery-odywho had anythin& to do with it*=Con&ress)an Taylor as(ed. =Ha'e you a state)ent there as to the /art you ha'e had inthe i)/ortation of &old into the %nited States = Taylor as(ed this -ecause the "anic of475 is (nown to econo)ists as a classic e1a)/le of a )oney /anic caused -y &old)o'e)ents*=#o.= re/lied eor&e Blu)enthal. =! ha'e nothin& at all on that. -ecause it is not -earin&on the Iuestion*=A -an(er fro) "hiladel/hia. Leslie Shaw. dissented with other witnesses at thesehearin&s. critici3in& the )uch 'aunted =decentrali3ation= of the Syste)* He said. =%nderthe Aldrich "lan the -an(ers are to ha'e local associations and district associations. andwhen you ha'e a local or&ani3ation. the centered control is assured* Su//ose we ha'e alocal association in !ndiana/olis can you not na)e the three )en who will do)inate thatassociation And then can you not na)e the one )an e'erywhere else* ,hen you ha'ehoo(ed the -an(s to&ether. they can ha'e the -i&&est influence of anythin& in thiscountry. with the e1ce/tion of the news/a/ers*=


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To /ro)ote the De)ocratic currency -ill. Carter lass )ade /u-lic the sorry record ofthe Re/u-lican efforts of Senator Aldrich8s #ational Monetary Co))ission* His HouseRe/ort in 454 said. =Senator MacVea&h fi1es the cost of the #ational MonetaryCo))ission to May 4;. 4544 at ;@ .4 @* They ha'e since s/ent another hundredthousand dollars of the ta1/ayer8s )oney* The wor( done at such cost cannot -e i&nored.

-ut. ha'in& e1a)ined the e1tensi'e literature /u-lished -y the Co))ission. the Ban(in&and Currency Co))ittee finds little that -ears u/on the /resent state of the credit )ar(etof the %nited States* ,e o->ect to the Aldrich Bill on the followin& /oints46!ts entire lac( of adeIuate &o'ern)ent or /u-lic control of the -an(in& )echanis) it setsu/*!ts tendency to throw 'otin& control into the hands of the lar&e -an(s of the syste)*The e1tre)e dan&er of inflation of currency inherent in the syste)*The insincerity of the -ond2fundin& /lan /ro'ided for -y the )easure. there -ein& a

-arefaced /retense that this syste) was to cost the &o'ern)ent nothin&*

The dan&erous )ono/olistic as/ects of the -ill*Our Co))ittee at the outset of its wor( was )et -y a well2defined senti)ent in fa'or ofa central -an( which was the )anifest out&rowth of the wor( that had -een done -y the

#ational Monetary Co))ission*=lass8s denunciation of the Aldrich Bill as a central -an( /lan i&nored the fact that his

own Federal Reser'e Act would fulfill all the functions of a central -an(* !ts stoc( would -e owned -y /ri'ate stoc(holders who could use the credit of the o'ern)ent for theirown /rofit it would ha'e control of the nation8s )oney and credit resources and it would

-e a -an( of issue which would finance the &o'ern)ent -y =)o-ili3in&= credit in ti)e ofwar* !n =The Rationale of Central Ban(in&.= Vera C* S)ith 9Co))ittee for Monetary

Research and Education. ?une. 4574: writes. =The /ri)ary definition of a central -an( isa -an(in& syste) in which a sin&le -an( has either a co)/lete or residuary )ono/oly inthe note issue* A central -an( is not a natural /roduct of -an(in& de'elo/)ent* !t isi)/osed fro) outside or co)es into -ein& as the result of o'ern)ent fa'ors*=Thus a central -an( attains its co))andin& /osition fro) its &o'ern)ent &ranted)ono/oly of the note issue* This is the (ey to its /ower* Also. the act of esta-lishin& acentral -an( has a direct inflationary i)/act -ecause of the fractional reser'e syste).which allows the creation of -oo(2entry loans and there-y. )oney. a nu)-er of ti)es theactual =)oney= which the -an( has in its de/osits or reser'es*The Aldrich "lan ne'er ca)e to a 'ote in Con&ress. -ecause the Re/u-licans lost controlof the House in 454@. and su-seIuently lost the Senate and the "residency in 454;*4

wishes to enact as dictator* A)on& the) are an old a&e /ension law. la-orers insuranceco)/ensation. coo/erati'e )ar(ets. a federal reser'e -an(in& syste). coo/erati'e loans.national e)/loy)ent -ureaus. and other =social le&islation=. so)e of which was enacteddurin& ,ilson8s ad)inistration. and others durin& the Fran(lin D* Roose'elt8sad)inistration* The latter was actually a continuation of the ,ilson Ad)inistration.

The /resent writer was with Vierec( in his suite at the Hotel Belleclaire when "e&ler

called and as(ed for the -oo(* Vierec( sent it o'er -y his secretary* He &rinned and said"e&ler see)ed 'ery e1cited* =He ou&ht to &et a &ood colu)n out of that.= Vierec( told)e* !ndeed "e&ler did &et a &ood colu)n out of it* %nfortunately for hi). he had &one

too far in )entionin& the ,ar-ur&s* As lon& as he confined his attac(s to La randBouche 9Eleanor Roose'elt:. and her s/ouse. he had -een /er)itted to continue. -ut nowthat he had e1/osed the ,ar-ur& connection with the Co))unist s/y rin& in ,ashin&ton.his colu)n was i))ediately dro//ed -y the -i& city dailies. and "e&ler8s lon& run waso'er*4< Col* Edward M* House. "hili/ Dru. Ad)inistrator. B* ,* Heu-sch. #ew 0or(. 454;*

This Iuotation fro) "hili/ Dru. Ad)inistrator. written -y Col* House in 454;. isincluded here to show his totalitarian Mar1ist /hiloso/hy* House was to -eco)e for 7years with ,ilson. the "resident8s closest ad'isor* Later he continued his influence in theFran(lin D* Roose'elt ad)inistration* Fro) his ho)e in Ma&nolia. Mass*. House ad'isedFDR throu&h freIuent tri/s of Feli1 Fran(furter to the ,hite House* Fran(furter was later a//ointed to the Su/re)e Court -y F*D*R*;6with )any of the sa)e /ersonnel. and with House &uidin& the ad)inistration fro) -ehindthe scenes*Li(e )ost of the -ehind2the2scenes o/erators in this -oo(. Col* Edward Mandell Househad the o-li&atory =London connection=* Ori&inally a Dutch fa)ily. =Huis=. his ancestorshad li'ed in En&land for three hundred years. after which his father settled in Te1as.


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where he )ade a fortune in -loc(ade2runnin& durin& the Ci'il ,ar. shi//in& cotton andother contra-and to his British connections. includin& the Rothschilds. and -rin&in& -ac(su//lies for the -elea&uered Te1ans* The senior House. not trustin& the 'olatile Te1assituation. /rudently de/osited all his /rofits fro) his -loc(ade2runnin& in &old withBarin& -an(in& house in London * At the close of the Ci'il ,ar. he was one of thewealthiest )en in Te1as* He na)ed his son =Mandell= after one of his )erchantassociates* Accordin& to Arthur Howden S)ith. when House8s father died in 477@. hisestate was distri-uted a)on& his sons as follows Tho)as ,illia) &ot the -an(in&

-usiness ?ohn. the su&ar /lantation and Edward M* the cotton /lantations. which -rou&ht hi) an inco)e of ;@.@@@ a year*4At the a&e of twel'e. the youn& Edward Mandell House had -rain fe'er. and was laterfurther cri//led -y sunstro(e* He was a se)i2in'alid. and his ail)ents &a'e hi) an oddOriental a//earance* He ne'er entered any /rofession. -ut used his father8s )oney to

-eco)e the (in&)a(er of Te1as /olitics. successi'ely electin& fi'e &o'ernors fro) 475to 4544* !n 4544 he -e&an to su//ort ,ilson for /resident. and threw the crucial Te1as

dele&ation to hi) which ensured his no)ination* House )et ,ilson for the first ti)e atthe Hotel otha). May 4. 454;*!n The Stran&est Friendshi/ !n History. ,oodrow ,ilson and Col* House. -y eor&eSyl'ester Vierec(. Vierec( writes=,hat.= ! as(ed House. =ce)ented your friendshi/ = =The identity of our te)/era)entsand our

/u-lic /olicies.= answered House* =,hat was your /ur/ose and his = =To translate intole&islation certain li-eral and /ro&ressi'e ideas*=4House told Vierec( that when he went to ,ilson at the ,hite

Do/e. !nc*. identifies Barin&s as follows =Barin& Brothers. the /re)ier )erchant -an(of the o/iu) trade fro) 4 7 to the /resent day. also )aintained close contact with theBoston fa)ilies * * * The &rou/8s leadin& -an(er -eca)e. at the close of the 45th century.the House of Mor&an22which also too( its cut in Eastern o/iu) traffic * * * Mor&an8s FarEastern o/erations were the officially conducted British o/iu) traffic * * * Mor&an8s casedeser'es s/ecial scrutiny fro) A)erican /olice and re&ulatory a&encies. for the inti)ateassociations of Mor&an uaranty Trust with the identified leadershi/ of the British do/e

-an(s*=4 Arthur Howden S)ith. The Real Col* House. Doran Co)/any. #ew 0or(. 45474 eor&e Syl'ester Vierec(. The Stran&est Friendshi/ in History. ,oodrow ,ilson andCol* House. Li'eri&ht. #ew 0or(. 45 ;;or HenryHi&&inson with what care the -ill had -een fra)ed* ?ust -efore he arri'ed. ! had finisheda re'iew -y "rofessor S/ra&ue of Har'ard of "aul ,ar-ur&8s criticis) of the lass2Owen

Bill. and will trans)it it to ,ashin&ton to)orrow* E'ery -an(er (nown to ,ar-ur&. who(nows the su->ect /ractically. has -een called u/ a-out the )a(in& of the -ill*Octo-er 4 . 454 * "aul ,ar-ur& was )y first caller today* He ca)e to discuss thecurrency )easure* There are )any features of the Owen2 lass Bill that he does nota//ro'e* ! /ro)ised to /ut hi) in touch with McAdoo and Senator Owen so that he)i&ht discuss it with the)*

#o'e)-er 4 . 454 * "aul ,ar-ur& tele/honed a-out his tri/ to ,ashin&ton* Later. he andMr* ?aco- Schiff ca)e o'er for a few )inutes*

47 Col* Edward Mandell House. The !nti)ate "a/ers of Col* House. edited -y CharlesSey)our. Hou&hton Mifflin Co*. 45; 2;7. Vol* 4. /* 4ected to the /ro'isions for the selection of Class B* Directors* ,illia) L*,hite relates in his -io&ra/hy of Bernard Baruch that Baruch. a /rinci/al contri-utor to,ilson8s ca)/ai&n fund. was stunned when he was infor)ed that ,ilson refused to si&nthe -ill* He hurried;7to the ,hite House and assured ,ilson that this was a )inor )atter. which could -efi1ed u/ later throu&h =ad)inistrati'e /rocesses=* The i)/ortant thin& was to &et theFederal Reser'e Act si&ned into law at once* ,ith this reassurance. ,ilson si&ned theFederal Reser'e Act on Dece)-er ; . 454 * History /ro'ed that on that day. the


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Constitution ceased to -e the &o'ernin& co'enant of the A)erican /eo/le. and ourli-erties were handed o'er to a s)all &rou/ of international -an(ers*The Dece)-er ;6. 454 #ew 0or( Ti)es carried a front /a&e headline =,!LSO#S! #S THE C%RRE#C0 B!LL = Below it. also in ca/ital letters. were two furtherheadlines. ="ROS"ER!T0 TO BE FREE= and =,!LL HEL" EVER0 CLASS=* ,hocould o->ect to any law which /ro'ided -enefits to e'eryone The Ti)es descri-ed thefesti'e at)os/here while ,ilson8s fa)ily and &o'ern)ent officials watched hi) si&n the

-ill* =The Christ)as s/irit /er'aded the &atherin&.= e1ulted The Ti)es*!n his -io&ra/hy of Carter lass. Ri1ey S)ith states that those /resent at the si&nin& ofthe -ill included Vice "resident Marshall. Secretary Bryan. Carter lass. Senator Owen.Secretary McAdoo. S/ea(er Cha)/ Clar(. and other Treasury officials* #one of the realwriters of the -ill. the draftees of ?e(yll !sland. were /resent* They had /rudentlya-sented the)sel'es fro) the scene of their 'ictory* Ri1ey S)ith also wrote. =!t was asthou&h Christ)as had co)e two days early*= On Dece)-er ;6. 454 . ?aco- Schiff wroteto Col* House.

=My dear Col* House* ! want to say a word to you for the silent. -ut no dou-t effecti'ewor( youha'e done in the interest of currency le&islation and to con&ratulate you that the )easurehas finally -een enacted into law* ! a) with &ood wishes. faithfully yours. ?ACOBSCH!FF*=Re/resentati'e Moore of +ansas. in co))entin& on the /assa&e of the Act. said to theHouse of Re/resentati'es=The "resident of the %nited States now -eco)es the a-solute dictator of all the financesof thecountry* He a//oints a controllin& -oard of se'en )en. all of who) -elon& to his

/olitical /arty.e'en thou&h it is a )inority* The Secretary of the Treasury is to rule su/re)e whene'erthere isa difference of o/inion -etween hi)self and the Federal Reser'e Board* A#D. only one)e)-er of the Board is to /ass out of office while the "resident is in office*=The ten year ter)s of office of the )e)-ers of the Board were len&thened -y theBan(in& Act of 45 < to fourteen years. which )eant that these directors of the nation8sfinances. althou&h not elected -y the /eo/le. held office lon&er than three /residents*

,hile Col* House. ?aco- Schiff and "aul ,ar-ur& -as(ed in the &low of a >o- well done.the other actors in this dra)a were su->ect to later afterthou&hts* ,oodrow ,ilson wrotein 454 . #ational Econo)y and the Ban(in& Syste). Sen* Doc* #o* . #o* ;; . thCon&ress. 4st session. 45 5 =Our syste) of credit is concentrated 9in the Federal Reser'e;5Syste):* The &rowth of the nation. therefore. and all our acti'ities. are in the hands of afew )en*=


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,hen he was as(ed -y Clarence ,* Barron whether he a//ro'ed of the -ill as it wasfinally /assed* ,ar-ur& re)ar(ed. =,ell. it hasn8t &ot Iuite e'erythin& we want. -ut thelac( can -e ad>usted later -y ad)inistrati'e /rocesses*=,oodrow ,ilson and Carter lass are &i'en credit for the Act -y )ost conte)/oraryhistorians. -ut of all those concerned. ,ilson had least to do with Con&ressional actionon the -ill* eor&e Creel. a 'eteran ,ashin&ton corres/ondent. wrote in Har/er8s ,ee(ly.?une ; . 454ect to a//ro'al -y the "resident of the %nited States*= This was chan&ed -y the Senate to read =Tosus/end or re)o'e any officer or director of any Federal Reser'e Ban(. the cause of suchre)o'al to -e forthwith co))unicated in writin& -y the Federal Reser'e Board to there)o'ed officer or director and to said -an(*= This co)/letely altered the conditionsunder which an officer or director )i&ht -e re)o'ed* ,e no lon&er (now what theconditions for re)o'al are. or the cause* A//arently inco)/etency. dereliction of duty.fraud or deceit do not )atter to the Federal Reser'e Board* Also. the re)o'ed officerdoes not ha'e the o//ortunity of a//eal to the "resident* !n answer to written inIuiry. theAssistant Secretary of the Federal Reser'e Board re/lied that only one officer has -eenre)o'ed =for cause= in the thirty2si1 years. the na)e and details of this )atter -ein& a=/ri'ate concern= -etween the indi'idual. the Reser'e Ban( concerned. and the FederalReser'e Board*

; E*M* House. "hili/ Dru. Ad)inistrator. B* ,* Heu-sch. #*0*. 454;;6 Col* E*M* House. The !nti)ate "a/ers of Col* House. 6 '* 45; 245;7. Hou&htonMifflin Co*

4


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The Federal Reser'e Syste) -e&an its o/erations in 4546 with the acti'ity of theOr&ani3ation Co))ittee. a//ointed -y ,oodrow ,ilson. and co)/osed of Secretary ofthe Treasury ,illia) McAdoo. who was his son2in2law. Secretary of A&riculture Houstonand Co)/troller of the Currency ?ohn S(elton ,illia)s*On ?anuary . 4546* ?*"* Mor&an )et with the Or&ani3in& Co))ittee in #ew 0or(* Heinfor)ed the) that there should not -e )ore than se'en re&ional districts in the newsyste)*This co))ittee was to select the locations of the =decentrali3ed= reser'e -an(s* Theywere e)/owered to select fro) ei&ht to twel'e reser'e -an(s. althou&h ?*"* Mor&an hadtestified he thou&ht that not )ore than four should -e selected* Much /olitic(in& wentinto the selection of these sites. as the twel'e cities thus fa'ored would -eco)eenor)ously i)/ortant as centers of finance* #ew 0or(. of course. was a fore&oneconclusion* Rich)ond was the ne1t selection. as a /ayoff to Carter lass and ,oodrow,ilson. the two Vir&inians who had -een &i'en /olitical credit for the Federal Reser'eAct* The other selections of the Co))ittee were Boston. "hiladel/hia. Cle'eland.

Chica&o. St* Louis. Atlanta. Dallas. Minnea/olis. +ansas City. and San Francisco* All ofthese cities later de'elo/ed i)/ortant =financial districts= as the result of this selection*These local -attles. howe'er. /aled in 'iew of the co)/lete do)inance of the FederalReser'e -an( of #ew 0or( in the syste)* Ferdinand Lund-er& /ointed out. in A)erica8sSi1ty Fa)ilies. that. =!n /ractice. the Federal Reser'e Ban( of #ew 0or( -eca)e thefountainhead of the syste) of twel'e re&ional -an(s. for #ew 0or( was the )oney)ar(et of the nation* The other ele'en -an(s were so )any e1/ensi'e )ausoleu)serected to sal'e the local /ride and Iuell the ?ac(sonian fears of the hinterland* Ben>a)inStron&. /resident of the Ban(ers Trust 9?*"* Mor&an: was selected as the first o'ernor ofthe #ew 0or( Federal Reser'e Ban(* Ade/t in hi&h finance. Stron& for )any years

)ani/ulated the country8s )onetary syste) at the discretion of directors re/resentin& theleadin& #ew 0or( -an(s* %nder Stron&. the Reser'e Syste) was -rou&ht intointerloc(in& relations with the Ban( of En&land and the Ban( of France* Ben>a)in Stron&held his /osition as o'ernor of the Federal Reser'e Ban( of #ew 0or( until his suddendeath in 45;7. durin& a Con&ressional in'esti&ation of the secret )eetin&s -etweenReser'e o'ernors and

;heads of Euro/ean central -an(s which -rou&ht on the reat De/ression of 45;52 4*=;ect surrender. a&reed that Mr* ,ar-ur& would -e &i'en a list of Iuestions in ad'ance of

his a//earance so that he could &o o'er the). and that he could -e e1cused fro)answerin& any Iuestions which )i&ht tend to i)/air his ser'ice on the Board of

o'ernors* The #ation re/orted on ?uly ; . 4546 that =Mr* ,ar-ur& finally had aconference with Senator O8 or)an and a&reed to )eet the )e)-ers of the SenateSu-co))ittee infor)ally. with a 'iew to co)in& to an understandin&. and to &i'in& the)any reasona-le infor)ation they )i&ht desire* The o/inion in ,ashin&ton is that Mr*,ar-ur&8s confir)ation is assured*= The #ation

The #ew 0or( Ti)es A/ril @. 4546. re/orted that the 4; districts had su-scri/tions of

6. [email protected]@@ and that the su-scri-in& -an(s would /ay one2half of this su) in si1 )onths*

;5 Clarence ,* Barron. More They Told Barron. Arno "ress. #ew 0or( Ti)es. 45 .?une 4;. 4546* /* ;@6

was correct* Mr* ,ar-ur& was confir)ed. the way ha'in& -een s)oothed -y his =fi1er=.Senator O8 or)an of #ew 0or(. )ore fa)iliarly (nown as =the Senator fro) ,allStreet=* Senator Ro-ert L* Owen had /re'iously char&ed that ,ar-ur& was the A)ericanre/resentati'e of the Rothschild fa)ily. -ut Iuestionin& hi) a-out this would indeedha'e s)ac(ed of the )ediae'al =!nIuisition=. and his fellow Senators were too ci'ili3edto indul&e in such -ar-arity *Durin& the Senate Hearin&s on "aul ,ar-ur& -efore the Senate Ban(in& and CurrencyCo))ittee. Au&ust 4. 4546. Senator Bristow as(ed. =How )any of these /artners 9of+uhn. Loe- Co)/any: are A)erican citi3ens = ,ARB%R =They are all A)ericanciti3ens e1ce/t Mr* +ahn* He is a British su->ect*= BR!STO, =He was at one ti)e acandidate for "arlia)ent. was he not = ,ARB%R =There was tal( a-out it. it had -eensu&&ested and he had it in his )ind*="aul ,ar-ur& also stated to the Co))ittee. =! went to En&land. where ! stayed for twoyears. first in the -an(in& and discount fir) of Sa)uel Monta&ue Q Co)/any* After that! went to France. where ! stayed in a French -an(*=


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CHA!RMA# =,hat French -an( was that = ,ARB%R =!t is the Russian -an( forforei&n trade which has an a&ency in "aris*=BR!STO, =! understand you to say that you were a Re/u-lican. -ut when Mr* TheodoreRoose'elt ca)e around. you then -eca)e a sy)/athi3er with Mr* ,ilson and su//ortedhi) = ,ARB%R =0es*= BR!STO, =,hile your -rother 9Feli1 ,ar-ur&: wassu//ortin& Taft = ,ARB%R =0es*= Thus three /artners of +uhn. Loe- Co)/any weresu//ortin& three different candidates for "resident of the %nited States* "aul ,ar-ur& wassu//ortin& ,ilson. Feli1 ,ar-ur& was su//ortin& Taft. and Otto +ahn was su//ortin&Theodore Roose'elt* "aul ,ar-ur& e1/lained this curious situation -y tellin& theCo))ittee that they had no influence o'er each other8s /olitical -eliefs. =as finance and

/olitics don8t )i1*=uestions a-out ,ar-ur&8s a//oint)ent 'anished in a hue and cry with ,ilson8s sole

a//oint)ent to the Board of o'ernors. Tho)as B* ?ones* Re/orters had disco'ered that?ones. at the ti)e of his a//oint)ent. was under indict)ent -y the Attorney eneral ofthe %nited States* ,ilson lea/ed to the defense of his choice. tellin& re/orters that =The

)a>ority of the )en connected with what we ha'e co)e to call J-i& -usiness8 are honest.incorru/ti-le and /atriotic*= Des/ite ,ilson8s /rotestations. the Senate Ban(in& andCurrency Co))ittee scheduled

,ar-ur& was confir)ed Au&ust 7. 4546. 7244. and /rinci/ally o//osed -y Sen*

Bristow of +ansas. who was denounced -y The #ew 0or( Ti)es as a =radicalRe/u-lican=. and whose e1cellent li-rary of rare -oo(s on -an(in& were acIuired -y the

/resent writer in 457 for research on this wor(*7

hearin&s on the fitness of Tho)as D* ?ones to -e a )e)-er of the Board of o'ernors*

,ilson then wrote a letter to Senator Ro-ert L* Owen. Chair)an of that Co))ittee,hite House?une 47. 4546Dear Senator OwenMr* ?ones has always stood for the ri&hts of the /eo/le a&ainst theri&hts of /ri'ile&e* His connection with the Har'ester Co)/any was a

/u-lic ser'ice. not a /ri'ate interest* He is the one )an of the wholenu)-er who was in a /eculiar sense )y /ersonal choice*Sincerely.,oodrow ,ilson,oodrow ,ilson said. =There is no reason to -elie'e that the unfa'ora-le re/ortre/resents the attitude of the Senate itself*= After se'eral wee(s. Tho)as D* ?oneswithdrew his na)e. and the country had to do without his ser'ices*The other )e)-ers of the first Board of o'ernors were Secretary of the Treasury.,illia) McAdoo. ,ilson8s son2in2law. and "resident of the Hudson2Manhattan Railroad.a +uhn. Loe- Co)/any controlled enter/rise. and Co)/troller of the Currency ?ohnS(elton ,illia)s*


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,hen the Federal Reser'e Ban(s were o/ened for -usiness on #o'e)-er 4 . 4546. "aul,ar-ur& said. =This date )ay -e considered as the Fourth of ?uly in the econo)ic historyof the %nited States*=

5CHA"TER FO%R The Federal Ad'isory Council!n stea)rollin& the Federal Reser'e Act throu&h the House of Re/resentati'es.Con&ress)an Carter lass declared on Se/te)-er @. 454 on the floor of the House thatthe interests of the /u-lic would -e /rotected -y an ad'isory council of -an(ers* =Therecan -e nothin& sinister a-out its transactions* Meetin& with it at least four ti)es a yearwill -e a -an(ers8 ad'isory council re/resentin& e'ery re&ional reser'e district in thesyste)* How could we ha'e e1ercised &reater caution in safe&uardin& the /u-lic interestCarter lass neither then nor later &a'e any su-stantiation for his -elief that a &rou/ of

-an(ers would /rotect the interests of the /u-lic. nor is there any e'idence in the historyof the %nited States that any &rou/ of -an(ers has e'er done so* !n fact. the Federal

Ad'isory Council /ro'ed to -e the =ad)inistrati'e /rocess= which "aul ,ar-ur& hadinserted into the Federal Reser'e Act to /ro'ide >ust the ty/e of re)ote -ut unseencontrol o'er the Syste) which he desired* ,hen he was as(ed -y financial re/orter C*,*Barron. >ust after the Federal Reser'e Act was enacted into law -y Con&ress. whether hea//ro'ed of the -ill as it was finally /assed. ,ar-ur& re/lied. =,ell. it hasn8t &ot Iuitee'erythin& we want. -ut the lac( can -e ad>usted later -y ad)inistrati'e /rocesses*= Thecouncil /ro'ed to -e the ideal 'ehicle for ,ar-ur&8s /ur/oses. as it has functioned forse'enty years in al)ost co)/lete anony)ity. its )e)-ers and their -usiness associations.unnoticed -y the /u-lic*Senator Ro-ert Owen. chair)an of the Senate Ban(in& and Currency Co))ittee. had

said. as Iuoted in The #ew 0or( Ti)es. Au&ust . 454 -efore /assa&e of the act=The Federal Reser'e Act will furnish the -an( and industrial and co))ercial interestswith thediscount of Iualified co))ercial /a/er and thus sta-ili3e our co))ercial and industriallife* TheFederal Reser'e -an(s are not intended as )oney )a(in& -an(s. -ut to ser'e a &reatnational

/ur/ose of acco))odatin& co))erce and -usiness)en and -an(s. safe&uard a fi1ed)ar(et for)anufactured &oods. for a&ricultural /roducts and for la-or* There is no reason why the

-an(sshould -e in control of the Federal Reser'e syste)* Sta-ility will )a(e our co))ercee1/andhealthfully in e'ery direction*=6@Senator Owen8s o/ti)is) was doo)ed -y the do)ination of the ?e(yll !sland /ro)oterso'er the initial co)/osition of the Federal Reser'e Syste)* #ot only did the Mor&an2+uhn. Loe- alliance /urchase the do)inant control of stoc( in the Federal Reser'e Ban(


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of #ew 0or(. with al)ost half of the shares owned -y the fi'e #ew 0or( -an(s undertheir control. First #ational Ban(. #ational City Ban(. #ational Ban( of Co))erce.Chase #ational Ban( and Hano'er #ational Ban(. -ut they also /ersuaded "resident,oodrow ,ilson to a//oint one of the ?e(yll !sland &rou/. "aul ,ar-ur&. to the FederalReser'e Board of o'ernors*Each of the twel'e Federal Reser'e Ban(s was to elect a )e)-er of the Federal Ad'isoryCouncil. which would )eet with the Federal Reser'e Board of o'ernors four ti)es ayear in ,ashin&ton. in order to =ad'ise= the Board on future )onetary /olicy* Thissee)ed to assure a-solute de)ocracy. as each of the twel'e =ad'isors=. re/resentin& adifferent re&ion of the %nited States. would -e e1/ected to s/ea( u/ for the econo)icinterests of his area. and each of the twel'e )e)-ers would ha'e an eIual 'ote* Thetheory )ay ha'e -een ad)ira-le in its conce/t. -ut the hard facts of econo)ic liferesulted in a Iuite different /icture* The /resident of a s)all -an( in St* Louis orCincinnati. sittin& in conference with "aul ,ar-ur& and ?*"* Mor&an to =ad'ise= the) on)onetary /olicy. would -e unli(ely to contradict two of the )ost /owerful international

financiers in the world. as a scri--led note fro) either one of the) would -e sufficient to /lun&e his little -an( into -an(ru/tcy* !n fact. the s)all -an(s of the twel'e FederalReser'e districts e1isted only as satellites of the -i& #ew 0or( financial interests. andwere co)/letely at their )ercy* Martin Mayer. in The Ban(ers. /oints out that =?*"*Mor&an )aintained corres/ondent relationshi/s with )any s)all -an(s all o'er thecountry*= @ The -i& #ew 0or( -an(s did not confine the)sel'es to )ulti2)illion dollardeals with other &reat financial interests. -ut carried on )any s)aller and )ore routinedealin&s with their =corres/ondent= -an(s across the %nited States*A//arently secure in their -elief that their acti'ities would ne'er -e e1/osed to the

/u-lic. the Mor&an2+uhn. Loe- interests -oldly selected the )e)-ers of the Federal

Ad'isory Council fro) their corres/ondent -an(s and fro) -an(s in which they ownedstoc(* #o one in the financial co))unity see)ed to notice. as nothin& was said a-out itdurin& se'enty years of the Federal Reser'e Syste)8s o/eration*To a'oid any sus/icion that #ew 0or( interests )i&ht control the Federal Ad'isoryCouncil. its first /resident. elected in 4546 -y the other )e)-ers. was ?*B* For&an.

/resident of the First #ational Ban( of

@ Martin Mayer. The Ban(ers. ,ey-ri&ht and Talley. #ew 0or(. 45 6. /* ;@ *64Chica&o* Rand Mc#ally Ban(ers Directory for 4546 lists the /rinci/al corres/ondents ofthe lar&e -an(s* The /rinci/al corres/ondent -an( of the Ba(er2Mor&an controlled First

#ational Ban( of #ew 0or( is listed as the First #ational Ban( of Chica&o* The /rinci/alcorres/ondent listed -y the First #ational Ban( of Chica&o is the Ban( of Manhattan in

#ew 0or(. controlled -y ?aco- Schiff and "aul ,ar-ur& of +uhn. Loe- Co)/any* ?a)esB* For&an also was listed as a director of EIuita-le Life !nsurance Co)/any. alsocontrolled -y Mor&an* Howe'er. the relationshi/ -etween First #ational Ban( of Chica&oand these #ew 0or( -an(s was e'en closer than these listin&s indicate*


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On /a&e @4 of The rowth of Chica&o Ban(s -y F* Cyril ?a)es. we find )ention of =theFirst #ational Ban( of Chica&o8s /rofita-le connection with the Mor&an interests* A&oodwill a)-assador was hastily sent to #ew 0or( to in'ite eor&e F* Ba(er to -eco)e adirector of the First #ational Ban( of Chica&o*= 4 9?*B* For&an to Rea). ?anuary .45@ *: !n effect. Ba(er and Mor&an had /ersonally chosen the first /resident of theFederal Ad'isory Council*?a)es B* For&an 947


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#ational Ban(. the -an( of which Henry "* Da'ison had -een /resident when he wasta//ed to >oin the ?*"* Mor&an fir). and shares of #ew 0or( Trust. Atlantic Trust andBroo(lyn Trust* First Security concentrated on -an( stoc(s which ra/idly a//reciated in'alue. and /aid handso)e annual di'idends* !n 45; . it earned fi'e )illion dollars. -ut

/aid the shareholders ei&ht )illion. ta(in& the rest fro) its sur/lus*Another )e)-er of the initial Federal Ad'isory Council was E*F* Swinney. /resident ofthe First #ational Ban( of +ansas City* He was also a director of Southern Railway. andlists hi)self in ,ho8s ,ho as =inde/endent in /olitics=*Archi-ald +ains re/resented the San Francisco district on the Federal Ad'isory Council.althou&h he )aintained his office in #ew 0or(. as /resident of the A)erican Forei&nBan(in& Cor/oration*After ser'in& as a o'ernor of the Federal Reser'e Board fro) 454624547. "aul ,ar-ur&did not reIuest another ter)* Howe'er. he was not ready to se'er his connection with theFederal Reser'e Syste) which he had done so )uch to set u/ and /ut into o/eration* ?*"*Mor&an o-li&in&ly &a'e u/ his seat on the Federal Ad'isory Council. and for the ne1t ten

years. "aul ,ar-ur& continued to re/resent the Federal Reser'e district of #ew 0or( onthe Council* He was 'ice /resident of the council 45;;2;


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sta&&ers the i)a&ination to thin( what the future )ay ha'e in store for the de'elo/)entof A)erican -an(in&* ,ith Euro/e8s fore)ost /owers li)ited to their own field. with the%nitedStates turned into a creditor nation for all the world. the -oundaries of the field that lieso/en for us are deter)ined only -y our /ower of safe e1/ansion* The sco/e of our -an(in& futurewillulti)ately -e li)ited -y the a)ount of &old that we can )uster as the foundation of our

-an(in&and credit structure*=The co)/osition of the Federal Reser'e Board of o'ernors and the Federal Reser'eAd'isory Council. fro) its initial )e)-ershi/ to the /resent day. shows lin(s to the?e(yll !sland conference and the London -an(in& co))unity which offersincontro'erti-le e'idence. acce/ta-le in any court of law. that there was a /lan to &ain

control of the )oney and credit of the /eo/le of the %nited States. and to use it for the /rofit of the architects* Old ?e(yll !sland hands were Fran( Vanderli/. /resident of the #ational City Ban(. which -ou&ht a lar&e /ortion of the shares of the Federal Reser'eBan( of #ew 0or( in 4546 "aul ,ar-ur& of +uhn. Loe- Co)/any Henry "* Da'ison.?*"* Mor&an8s ri&hthand )an. and director of the First #ational Ban( of #ew 0or( and the

#ational Ban( of Co))erce. which too( a lar&e /ortion of Federal Reser'e Ban( of #ew0or( stoc( and Ben>a)in Stron&. also (nown as a Mor&an lieutenant.66who ser'ed as o'ernor of the Federal Reser'e Ban( of #ew 0or( durin& the 45;@8s*The selection of the re&ional )e)-ers of the Federal Ad'isory Council fro) the list of

-an(ers who wor(ed )ost closely with the =-i& fi'e= -an(s of #ew 0or(. and who weretheir /rinci/al corres/ondent -an(s. /ro'es that the )uch2touted =re&ional safe&uardin&of the /u-lic interest= -y Carter lass and other ,ashin&ton /ro/onents of the FederalReser'e Act was fro) its 'ery ince/tion a deli-erate dece/tion* The fact that for se'entyyears this council was a-le to )eet with the Federal Reser'e Board of o'ernors and to=ad'ise= the o'ernors on decisions of )onetary /olicy which affected the daily li'es ofe'ery /erson in the %nited States. without the /u-lic -ein& aware of their e1istence.de)onstrates that the /lanners of the central -an( o/eration (new e1actly how to achie'etheir o->ecti'es throu&h =ad)inistrati'e /rocesses= of which the /u-lic would re)aini&norant* The clai) that the =ad'ice= of the council )e)-ers is not -indin& on the

o'ernors or that it carries no wei&ht is to clai) that four ti)es a year. twel'e of the)ost influential -an(ers in the %nited States ta(e ti)e fro) their wor( to tra'el to,ashin&ton to )eet with the Federal Reser'e Board )erely to drin( coffee and e1chan&e

/leasantries* !t is a clai) which anyone fa)iliar with the wor(in&s of the -usinessco))unity will find i)/ossi-le to ta(e seriously* !n 4546. it was a four2day tri/ each wayfor -an(ers fro) the Far ,est to co)e to ,ashin&ton for a council )eetin& with theFederal Reser'e Board* These )en had e1tensi'e -usiness interests which de)anded


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their ti)e* ?*"* Mor&an was a director of si1ty2three cor/orations which held annual)eetin&s. and

=The Federal Ad'isory Council has &reat influence with the Federal Reser'e Board*

Cons/icuously u/on that council is ?*"* Mor&an. the leadin& )e)-er of ?*"* Mor&anCo)/any and son of the late ?*"* Mor&an* E'ery one of the twel'e )e)-ers of theAd'isory Council. as you well (now. was educated in the sa)e at)os/here* The FederalReser'e Act is not only a s/ecial /ri'ile&e act -ut /ri'ile&ed /ersons ha'e -een /laced incontrol and are its ad'isors in its ad)inistration* The Federal Reser'e Board and theFederal Ad'isory Council ad)inister the Federal Reser'e Syste) as its head authority.and no one of the lesser officials. e'en if they wished. would dare to cross swords withthe)*=9FROM =,hy !s 0our Country At ,ar = -y Charles Lind-er&h. /u-lished in 454 :* Thea-o'e /ara&ra/h e1/lains why ,oodrow ,ilson ordered &o'ern)ent a&ents to sei3e anddestroy the /rintin& /lates and co/ies of this -oo( in the s/rin& of 4547*

6oinin& -uildin&s on ,all Street. and. as The #ew 0or( Ti)es noted. =The

uaranty Trust Co)/any lon& has -een (nown as one of Jthe Mor&an &rou/8 of -an(s*=The #ational Ban( of Co))erce has also -een identified with Mor&an interests*6CHA"TER F!VEThe House of RothschildThe success of the Federal Reser'e Cons/iracy will raise )any Iuestions in the )inds ofreaders who are unfa)iliar with the history of the %nited States and finance ca/ital* Howcould the +uhn. Loe-2Mor&an alliance. /owerful thou&h it )i&ht -e. -elie'e that it would

-e ca/a-le. first. of de'isin& a /lan which would -rin& the entire )oney and credit of the /eo/le of the %nited States into their hands. and second. of &ettin& such a /lan enactedinto lawThe ca/a-ility of de'isin& and enactin& the =#ational Reser'e "lan=. as the i))ediateresult of the ?e(yll !sland e1/edition was called. was easily within the /owers of the


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+uhn. Loe-2Mor&an alliance. accordin& to the followin& fro) McClure8s Ma&a3ine.Au&ust 4544. =The Se'en Men= -y ?ohn Moody=Se'en )en in ,all Street now control a &reat share of the funda)ental industry andresourcesof the %nited States* Three of the se'en )en. ?*"* Mor&an. ?a)es ?* Hill. and eor&e F*Ba(er.head of the First #ational Ban( of #ew 0or( -elon& to the so2called Mor&an &rou/ fourof the).?ohn D* and ,illia) Roc(efeller. ?a)es Still)an. head of the #ational City Ban(. and?aco- H*Schiff of the /ri'ate -an(in& fir) of +uhn. Loe- Co)/any. to the so2called Standard OilCity Ban( &rou/*** the central )achine of ca/ital e1tends its control o'er the %nitedStates*** The

/rocess is not only econo)ically lo&ical it is now /ractically auto)atic*= ;Thus we see that the 454@ /lot to sei3e control of the )oney and credit of the /eo/le of

the %nited States was /lanned -y )en who already controlled )ost of the country8sresources* !t see)ed to ?ohn Moody =/ractically auto)atic= that they should continuewith their o/erations*,hat ?ohn Moody did not (now. or did not tell his readers. was that the )ost /owerful)en in the %nited States were the)sel'es answera-le to another /ower. a forei&n /ower.and a /ower which had -een steadfastly see(in& to e1tend its control o'er the youn&re/u-lic of the %nited States since its 'ery ince/tion* This /ower was the financial /owerof En&land. centered in the London Branch of the House of Rothschild* The fact was thatin 454@. the %nited States was for all /ractical /ur/oses -ein& ruled

; ?ohn Moody. =The Se'en Men=. McClure8s Ma&a3ine. Au&ust. 4544. /* 6476fro) En&land. and so it is today* The ten lar&est -an( holdin& co)/anies in the %nitedStates are fir)ly in the hands of certain -an(in& houses. all of which ha'e -ranches inLondon* They are ?*"* Mor&an Co)/any. Brown Brothers Harri)an. ,ar-ur&. +uhnLoe- and ?* Henry Schroder* All of the) )aintain close relationshi/s with the House ofRothschild. /rinci/ally throu&h the Rothschild control of international )oney )ar(etsthrou&h its )ani/ulation of the /rice of &old* Each day. the world /rice of &old is set inthe London office of #*M* Rothschild and Co)/any*Althou&h these fir)s are ostensi-ly A)erican fir)s. which )erely )aintain -ranches inLondon. the fact is that these -an(in& houses actually ta(e their direction fro) London*Their history is a fascinatin& one. and un(nown to the A)erican /u-lic. ori&inatin& as itdid in the international traffic in &old. sla'es. dia)onds. and other contra-and* There areno )oral considerations in any -usiness decision )ade -y these fir)s* They areinterested solely in )oney and /ower*Tourists today &a/e at the )a&nificent )ansions of the 'ery rich in #ew/ort. Rhode!sland. without reali3in& that not only do these =cotta&es= stand as a )e)orial to the

-aronial desires of our Victorian )illionaires. -ut that their erection in #ew/ort


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re/resented a nostal&ic )e)oriali3ation of the &reat A)erican fortunes. which had their -e&innin&s in #ew/ort when it was the ca/ital of the sla'e trade*The sla'e trade for centuries had its headIuarters in Venice. until Se'enteenth CenturyBritain. the new )aster of the seas. used its control of the oceans to &ain a )ono/oly* Asthe A)erican colonies were settled. its fiercely inde/endent /eo/le. )ost of who) didnot want sla'es. found to their sur/rise that sla'es were -ein& sent to our /orts in &reatnu)-ers*For )any years. #ew/ort was the ca/ital of this unsa'ory trade* ,illia) Ellery. theCollector of the "ort of #ew/ort. said in 4 54=***an Ethio/ian cld as soon chan&e his s(in as a #ew/ort )erchant cld -e induced tochan&e solucrati'e a trade**** for the slow /rofits of any )anufactory*=?ohn uincy Ada)s re)ar(ed in his Diary. /a&e 6


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Monta&u #or)an was or&ani3er of =infor)al tal(s= -etween heads of central -an(s in45; . which led directly to the reat Stoc()ar(et Crash of 45;5*Soon after he arri'ed in London. eor&e "ea-ody was sur/rised to -e su))oned to anaudience with the &ruff Baron #athan Mayer Rothschild* ,ithout )incin& words.Rothschild re'ealed to "ea-ody. that )uch of the London aristocracy o/enly disli(edRothschild and refused his in'itations* He /ro/osed that "ea-ody. a )an of )odest)eans. -e esta-lished as a la'ish host whose entertain)ents would soon -e the tal( ofLondon* Rothschild would. of course. /ay all the -ills* "ea-ody acce/ted the offer. andsoon -eca)e (nown as the )ost /o/ular host in London* His annual Fourth of ?ulydinner. cele-ratin& A)erican !nde/endence. -eca)e e1tre)ely /o/ular with the En&lisharistocracy. )any of who). while drin(in& "ea-ody8s wine. re&aled each other with

>o(es a-out Rothschild8s crudities and -ad )anners. without reali3in& that e'ery dro/they dran( had -een /aid for -y Rothschild*

=There is an infor)al understandin& that a director of Brown. Shi/ley should -e on the

Board of the Ban( of En&land. and #or)an was elected to it in 45@ *= Monta&u #or)an.Current Bio&ra/hy. 456@*65!t is hardly sur/risin& that the )ost /o/ular host in London would also -eco)e a 'erysuccessful -usiness)an. /articularly with the House of Rothschild su//ortin& hi) -ehindthe scenes* "ea-ody often o/erated with a ca/ital of oin hi) in London as a /artner in eor&e "ea-ody and Co)/any in 47


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Althou&h #icholas Biddle was "resident of the Ban( of the %nited States. it was well(nown that Baron ?a)es de Rothschild of "aris was the /rinci/al in'estor in this central

-an(* Althou&h ?ac(son had 'etoed the renewal of the charter of the Ban( of the %nitedStates. he /ro-a-ly was unaware that a few )onths earlier. in 47


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One of the hi&h water )ar(s of the successful Rothschild2"ea-ody Mor&an -usiness'enture was the "anic of 47< * !t had -een twenty years since the "anic of 47 itslessons had -een for&otten -y hordes of ea&er in'estors who were an1ious to in'est the

/rofits of a de'elo/in& A)erica* !t was ti)e to fleece the) a&ain* The stoc( )ar(eto/erates li(e a wa'e washin& u/ on the -each* !t swee/s with it )any )inusculecreatures who deri'e all of their life su//ort fro) the o1y&en and water of the wa'e*They coast alon& at the crest of the =Tide of "ros/erity=* Suddenly the wa'e. ha'in&reached the hi&h water )ar( on the -each. recedes. lea'in& all of the creatures &as/in& onthe sand* Another wa'e )ay co)e in ti)e to


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Mor&an*** as far as the A)erican field was concerned*8 Secrecy was )ore /rofita-lethan 'alor*

6 Corsair. The Life of Mor&an< ?ohn +* ,in(ler. Mor&an the Ma&nificent. Van&uard. #*0* 45 @

Matthew ?ose/hson. The Ro--er Barons. Harcourt Brace. #*0* 45 6 ?ohn Moody. The Masters of Ca/ital


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7 eor&e ,heeler. "ier/ont Mor&an and Friends. the Anato)y of a Myth. "rentice Hall. #*?* 45

5 Lyndon H* LaRouche. ?r*. Do/e. !nc*. The #ew Ben>a)in Fran(lin House "u-lishin&Co)/any. #*0* 45 76@ Dr* Carrol ui&ley. Tra&edy and Ho/e. Mac)illan Co*. #*0*es Cie of "aris. M*M* ,ar-ur& Co)/any of

er)any and A)erica. and the House of Rothschild were all affiliated*=64A//arently unaware of the "ea-ody connection with the Rothschilds and the fact that theMor&ans had always -een affiliated with the House of Rothschild. Carr su//osed that hehad unco'ered this relationshi/ as of 4755. when in fact it went -ac( to 47


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that "ea-ody and his /artners &a'e us no faith and no hel/ in our stru&&le for nationale1istence* They /artici/ated to the fullest in the co))on En&lish distrust of our causeand our success. and tal(ed and acted for the South rather than for our nation* #oindi'iduals contri-uted so )uch to floodin& our )oney )ar(ets and wea(enin& financialconfidence in our nationality than eor&e "ea-ody Q Co)/any. and none )ade )ore)oney -y the o/eration* All the )oney that Mr* "ea-ody is &i'in& away so la'ishlya)on& our institutions of learnin& was &ained -y the s/eculations of his house in our)isfortunes*= Also. #ew 0or( Ti)es. Oct* 4. 47 Reconstruction Car/et-a&&ersMoney Fund* Li&htnin& o'er the Treasury Buildin&. ?ohn Elson. Meador "u-lishin& Co*.Boston 64. /&* < . =The Ban( of En&land with its su-sidiary -an(s in A)erica 9under thedo)ination of ?*"* Mor&an: the Ban( of France. and the Reichs-an( of er)any.co)/osed an interloc(in& and coo/erati'e -an(in& syste). the )ain o->ecti'e of whichwas the e1/loitation of the /eo/le*=


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'ulnera-le and in an unsta-le /osition*


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66 E*C* +nuth. E)/ire of the City. /* 46< reat So'iet Encyclo/aedia. Edition . 45 . Mac)illan. London. Vol* 46. /&* 54

=The ori&inal na)e of Rothschild was Bauer*= /* 5 . Henry Clews. Twenty2ei&ht yearsin ,all Street*o- waitin& to -e done. Her-ert Hoo'erwould ne'er ha'e -een elected "resident of the %nited States* The election of Mr* Hoo'er to the "residency was throu&h the influence of the ,ar-ur& Brothers. directors of the&reat -an( of +uhn Loe- Co)/any. who carried the cost of his election* !n e1chan&e forthis colla-oration Mr* Hoo'er /ro)ised to i)/ose the )oratoriu) of er)an de-ts*Hoo'er sou&ht to e1e)/t +reu&er8s loan to er)any of 4;< )illion fro) the o/erationof the Hoo'er Moratoriu)* The nature of +reu&er8s swindle was (nown here in ?anuarywhen he 'isited his friend. Mr* Hoo'er. in the ,hite House*=

#ot only did Hoo'er entertain FrancIui in the ,hite House. -ut also !'ar +reu&er. the)ost fa)ous swindler of the twentieth century*,hen FrancIui died on #o'e)-er 4 . 45


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Hoo'er had also carried out a nu)-er of )inin& /ro)otions in 'arious /arts of the worldas a secret a&ent for the Rothschilds. and had -een rewarded with a directorshi/ in one ofthe /rinci/al Rothschild enter/rises. the Rio Tinto Mines in S/ain and Boli'ia* FrancIuiand Hoo'er threw the)sel'es into the see)in&ly i)/ossi-le tas( of /ro'isionin&

er)any durin& the First ,orld ,ar* Their success was noted in #ordeutscheAll&e)eine $eitun&. March 4 . 454


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Cu-a Cane Cor/oration. and director of Manati Su&ar Co)/any. A)erican British andContinental Cor/oration. and other fir)s* Baron Bruno 'on Schroder. senior /artner ofthe fir). was a director of #orth British and Mercantile !nsurance Co)/any* His father.Baron Rudol/h 'on Schroder of Ha)-ur&. was a director of Sao "aulo Coffee Ltd*. oneof the lar&est Bra3ilian coffee co)/anies. with F*C* Tiar(s. also of the Schroder fir)*

The #ew 0or( Ti)es noted on Octo-er 44. 45; =Fran( C* Tiar(s. o'ernor of the

Ban( of En&land. will s/end two wee(s here to set u/ the o/enin& of the -an(in& house -ranch of ?* Henry Schroder of London*=

After the war. $a-ris(ie. who had -een su&ar C3ar of the %nited States -y /residin& o'erthe %*S* Su&ar EIuali3ation Board. -eca)e the /resident of se'eral of the lar&est -a(in&cor/orations in the %nited States E)/ire Biscuit. Southern Ba(in& Cor/oration.Colu)-ia Ba(in&. and other fir)s*As his /rinci/al assistant in the %*S* Food Ad)inistration. Hoo'er chose Lewis

Lichtenstein Strauss. who was soon to -eco)e a /artner in +uhn Loe- Co)/any.)arryin& the dau&hter of ?ero)e Hanauer of +uhn Loe-* Throu&hout his distin&uishedhu)anitarian ser'ice with the Bel&ian Relief Co))ission. the %*S* Food Ad)inistration.and. after the war. the A)erican Relief Ad)inistration. Hoo'er8s closest associate wasone Ed&ar Ric(ard. -orn in "ont&i-aud. France* !n ,ho8s ,ho. he states that he was=,orld ,ar ad)inistrati'e assistant to Her-ert Hoo'er in all war and /ost2waror&ani3ations includin& the Co))ission For Relief in Bel&iu)* He also ser'ed on the%*S* Food Ad)inistration fro) 4546245;6*= He re)ained one of Hoo'er8s closestfriends. and usually the Ric(ards and Hoo'ers too( their 'acations to&ether* After Hoo'er

-eca)e Secretary of Co))erce under Coolid&e. Ha)ill tells us that Hoo'er awarded his

friend the Ha3eltine Radio /atents. which /aid hi) one )illion dollars a year in royalties*!n 45;7. =the London Connection= decided to run Her-ert Hoo'er for /resident of the%nited States* There was only one /ro-le) althou&h Her-ert Hoo'er had -een -orn inthe %nited States. and was thus eli&i-le for the office of the /residency. accordin& to theConstitution. he had ne'er had a -usiness address or a ho)e address in the %nited States.as he had &one a-road >ust after co)/letin& colle&e at Stanford* The result was thatdurin& his ca)/ai&n for the /residency. Her-ert Hoo'er listed

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