T P W I

American bankers knew, like their English counterparts before them, that a central bank with the power to issue a widely accepted paper money would safeguard the long-term interests of the entire banking sector, and particularly its larger players. However, to succeed in the United States, they would be required to overcome the distrust that American politicians had for banks in general. Jefferson’s statements on the topic of money creation by the banking system cannot be misinterpreted. His knowledge of the central banks of France and England, gained during his tenure as American Minister to France in 1786, had already alerted him to the dangers of the paper money system by the time he came to the office of President. Suspecting that powerful foreign interests were ranged against him, intending to entrap the new continent in the same system of debt already implemented in Europe, Jefferson fought a career long campaign to keep them out of the United States.

“The unlimited emission of bank paper has banished all her specie [in England], and is now, by a depreciation acknowledged by her own statesmen, carrying her rapidly to bankruptcy, as it did France, as it did us …. Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us.’“

Thomas Jefferson in a letter to John Wayles Eppes on 24 June 1813,  Jefferson, Writings, 1984, New York: Literary Classics of the United States.

“And I sincerely believe with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

Thomas Jefferson in a letter to John Taylor 28 May 1816, Writings, 1984, New York: Literary Classics of the United States

A federally chartered bank with the authority to extend its operations across the whole country would become a powerful economic (and therefore political) force and would entrench itself within the ruling infrastructure just as it had done in Europe. It might well then become a de facto central bank. Yet, small banks, the only apparent alternative issuers of bank notes, seemed no more reliable as a source for the new nation’s money supply. Many were “wildcat” banks operating on the borderlands of the expanding white American nation. They were often not at all stable, issuing paper money hugely in excess of their gold reserves and regularly collapsing to the ruin of ordinary American families. So which banking solution to choose?

In the early years, the political establishment wavered between those who wished to stick with the seemingly clear constitutional requirement that no state could make anything other than gold or silver legal tender, those who wished to adopt the European central banking model and tighter banking regulation, and those who wanted very little banking regulation at all. Inconveniently, many of those who favoured the first or the third of these solutions found themselves in the Republican party. The owners of the larger banks naturally complicated things further by funding and lobbying both parties in the hope of favourable regulation. This is perhaps how a man such as Daniel Webster, who had once argued that only gold and silver could be legal tender, could in due course find himself siding with bankers for the cause of banking centralisation and paper money. Webster, a lawyer and Congressman, was financially supported by the arrogant but tenacious Nicholas Biddle, founder of the Second Bank of the United States, of whom more shortly.

Given the constitutional position on the use of gold and silver, it is no surprise that the paper money system should provoke passionate debate throughout nineteenth century America. The constitution was not, however, the only reason for the passion. A sore lesson in the use of paper money had been learned by the American colonists during the “Continentals” episode. Starting in 1776, $30 bills were counterfeited using a printing press aboard HMS Phoenix, a British navy gunboat anchored in New York harbour. They were sold into circulation for the cost of the paper they were printed on. The intention, a successful one, was to weaken the rebelling colonists by means of inflation. Economist Karl Rhodes comments that the notes would probably have lost their value anyway because the Continental Congress itself had printed enormous quantities of them to fund the war, but Rhodes then goes on to quote Benjamin Franklin:

“Paper money was in those times our universal currency but, it being the instrument with which we combated our enemies, they resolved to deprive us of its use by depreciating it; and the most effectual means they could contrive was to counterfeit it.”

Benjamin Franklin, quoted by K. Rhodes in The Counterfeiting Weapon, Economic History, First Quarter, 2012.

Biddle’s bank was one of four main contenders to establish a central bank of a kind in the United States. The first three, the National Bank of the United States, the First Bank of the United States, and the Second Bank of the United States, had short lives and were dissolved. The fourth succeeded in 1913 and is today known as the Federal Reserve. The ship that Biddle sailed was the Second Bank of the United States and it foundered upon the rock that was Andrew Jackson. Jackson, as president, fiercely opposed federal banking organisations and the paper money system, like Jefferson before him, and was determined to prevent the re-chartering of the Second Bank when it came up for renewal in 1836. Jackson’s road to victory was however a difficult one. In the year leading up to 1836, recognising that Jackson was winning the public argument over re-chartering, Biddle instructed his managers to call in loans across the country in order to contract money supply and thereby create a recession. The American public, not understanding the mechanics of money supply creation, would surely blame Jackson for their woes, and the Second Bank would prevail, reasoned Biddle.

It was possibly the most egregious example of monetary manipulation that America had witnessed since the Continentals episode, except that while counterfeiting of the money supply aboard HMS Phoenix was illegal, the equally devastating contraction of money supply by Biddle’s bank wasn’t. Here is a lesson in the political power that the ability to expand or contract money supply gives to the banking sector. It is of great relevance to modern politics, both domestic and international, and should never be forgotten. Jackson makes the point himself, and he does so with the authority of one whose efforts were not motivated by the desire for profit:

“The distress and alarm which pervaded and agitated the whole country when the Bank of the United States waged war upon the people in order to compel them to submit to its demands cannot yet be forgotten. The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, and a scene of cheerful prosperity suddenly changed into one of gloom and despondency ought to be indelibly impressed on the memory of the people of the United States. If such was its power in time of peace, what would it have been in a season of war, with an enemy at your doors? No nation but the free men of the United States could have come out victorious from such a contest; yet, if you had not conquered, the government would have passed from the hands of the many to the few, and this organised money power, from its secret conclave, would have dictated the choice of your highest officials and compelled you to make peace or war, as best suited their own wishes.”

President Andrew Jackson, Address to the American people, 4 March 1837, recorded in Richardson’s Messages, Volume 4, p. 1532.

Throughout these years, the United States Mint continued to operate. Established first in Philadelphia in 1792, the Mint took unrefined gold from miners at centres located across the country and refined it into legal tender coinage, applying a refining charge for the service. Such coins as the US Eagle (since 1795) and Silver Dollar (since 1794) were produced at scale. The amounts were nevertheless insufficient to meet the demands of trade in the growing republic, argued the bankers, and furthermore, the system of numerous small state banks operating after the Jackson-Biddle struggles were simply too small and undercapitalised to produce paper money of sufficient soundness. The pressure for a monetary reorganisation soon mounted again.

Then came Lincoln. He was to confront the banking interests with a threat arguably more formidable than Jackson in the sense that Lincoln’s alternative was not a mere return to state banking, but a far less costly national system in which the only loser was the banking sector. To piggy-back his proposal on the existential crisis of the Civil War was a masterstroke.

Lincoln saw the system of bank funding for government as something illogical and unnecessarily expensive. Why borrow paper money printed by the banks and pay interest, he reasoned, when the government could print the money itself free of interest? By giving the state the authority to create paper money, the nation’s infrastructure needs could be met easily and cheaply. For Lincoln, money creation was to be used for the public good, not for the enrichment of bankers:

The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges … money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.

President Abraham Lincoln, Senate Document 23, 1865.

Thus in 1862, under the Legal Tender Act of that year, Lincoln instructed Treasury Secretary Salmon Chase to arrange the printing of United States Notes as legal tender. These would be spent into circulation to satisfy the war effort. The notes were printed using green ink on the reverse side, hence the term “greenback”. For the banking community, this kind of policy meant emasculation and they knew it. They naturally wanted the power of money creation to remain with themselves, and for this they lobbied. The result was the National Banking Act of 1863 under which the federal government chartered national banks. Further acts over the next two years placed the federal government as a regulator of the system and also discouraged state banks by imposing a tax on the use of their paper money. The number of state banks collapsed from over 1400 to under 300 by 1868 but soon recovered under the realisation that the lower capital requirements required of state banks made them a cheaper entry route to the business of banking.

The national banks bought government bonds to fund the war effort and paid for them with newly printed bank notes. The balance sheet of a national bank could therefore, under the regulation established in 1863, show $100m of paper money issued, backed by $10m of gold and $90m of government bonds. Federal government finance thereby came to stand upon two legs: the borrowing of money created by the national banks at interest, or the creation of money free of charge by the federal government. One would have thought the correct choice from these two options, from the federal government’s perspective to be completely obvious, but not so. Whenever the proposal for the creation of money by the federal government resurfaced, the money power made attempts to stifle it. One particularly disgraceful intervention came from the American Bankers Association in the form of the following letter from James Buel to members of the American Bankers’ Association in 1877:

“DEAR SIR:  It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the agricultural and religious press, as will oppose the greenback issue of paper money;  and that you also withhold patronage from all applicants who are not willing to oppose the Government issue of money.  Let the Government issue the coin and the banks issue the paper money of the country, for then we can better protect each other.  To repeal the Act creating bank notes, or to restore to circulation the Government issue of money, will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders.  See your Congressman at once and engage him to support our interests, that we may control legislation.”

Charles Lindberg, 63rd Congress, First Section, April 29th, 1913, quoting a circular to banks from James Buel, secretary, Associated Bankers of New York, at 247 Broadway, New York, 1877.

Buel’s letter approximately coincided with the emergence of the firm of J. P. Morgan in American banking life. Critical in its rise to power and wealth was one George Peabody, an American who had arrived in London in 1837 and in due course came to represent several of his country’s trade and finance interests there. He forged a strong relationship with Nathan Rothschild and his networking activities soon brought him to prominence on the London social scene. He is remembered in the United States and Britain today for his philanthropy, the Peabody social housing estates in London being one example.

Peabody incorporated George Peabody and Company as a bank in London in 1851. There he encountered Junius Morgan, another American who had spent much of his time in London, appointing him as a partner in 1854. When Peabody retired in 1864, it was Morgan who took over control of the firm, renaming it J. S. Morgan and Company. Junius Morgan’s son, John Pierpoint Morgan, was to become one of the most formidable forces in American banking history. Since 1869, a large bronze sculpture of Peabody has sat (literally) outside the Bank of England in London, not far from the statue of the Duke of Wellington. Their juxtaposition is probably not without meaning, and a short digression is therefore necessary.

Let us deal with Wellington first. His defeat of Napoleon at the Battle of Waterloo in 1815 carries with it a financial context that is unknown to most. McNair Wilson sets the scene:

“… Napoleon had read the riddle of money and of the Money Power. He understood that the French revolution was only one major event in a long process of events which included the English Revolution and before that the enfeeblement, throughout Europe, of the Christian Church. Geneva, Amsterdam and London were the centres of the Money Power which represented a true international force that was replacing Christendom just as Christendom, formerly, had replaced the power of Imperial Rome. The immediate object of Money was to establish Constitutional monarchies on the English plan in all the European capitals and so to govern Europe and the world by means of debts contracted by the constitutional monarchies and their parliaments from the financiers. The weak point in this scheme, as the Corsican [Napoleon] unerringly saw, was the fact that the bankers were without substantial means. Their promises to pay could be sustained as “good money” only while merchandise was exchanged for merchandise – only, that is to say, so long as payment between countries was made in goods and services. If goods could not be shipped to pay for goods, then gold would have to be shipped. The bankers possessed only a tithe [ten per cent] of the gold which they had promised to pay … [Napoleon] bore the English people no ill-will. He understood perfectly that they were without any real say in the government of their country. His thoughts were directed solely against that Master State, neither English nor French, nor Italian, nor Austrian, nor German, nor Russian, but the overlord of all these lands, by which the ancient civilisation of Europe had been destroyed. It was Money, organised as a world power, that he meant to fight, and, if possible, to destroy. Since Money had its headquarters now in the City of London, his attack was directed chiefly against that city and its bankers. The object was not the conquest of England, but the ruin of Lombard street.”

R. McNair Wilson, The Mind of Napoleon, George Routledge, 1934, p. 104

Napoleon’s strategy of cutting the ties of trade between England and the Continent, and between England and the East, would have removed one of the foundations upon which the lending activities of the London banks was based. In the course of international trade, merchants in different countries would issue to one another bills of exchange, these being promises to pay at a future date for goods purchased. Banks would lend to sellers by discounting these bills, but the commitments made in this manner tended to cancel one another out since trade flows in both directions would be approximately equal over time. And since this was the case, gold barely needed to make an appearance at the scene on settlement day. The threat posed to the banks by Napoleon’s foreign policy was further amplified by his support for home grown produce, for local markets as opposed to foreign ones, for state-issued money and low interest rate loans to farmers and manufacturers. The majority of the British public naturally accepted the official and simplistic view that Napoleon was a megalomaniac who threatened the common man of Europe. Meanwhile, the London banking houses mobilised against him and provided every recourse necessary for his defeat:

The part played by Nathan Mayer Rothschild (1777-1836) and his brothers in helping the British Government to finance military operations against Napoleon is legendary. Nathan’s London House, N M Rothschild, dealt in bullion and foreign exchange, and his remarkable successes in these fields earned him the contract from the British Government to supply Wellington’s troops with gold coin in 1814 and 1815, leading up to the Battle of Waterloo.

Rothschild Family Archive, rothschildarchive.org, April 2025

According to official narratives, Wellington’s statue in the City of London has, since 1844, commemorated his political role in arranging the rebuilding of London Bridge. It is surely more significant that the statue of the man who defeated Napoleon and thereby saved the system of British money creation and usury, stands directly outside the castle upon which that system was founded, the Bank of England.

Soon, the House of Rothschild was to become an even more essential component in British monetary life. The crisis of 1825-1826 cemented the family’s role in the operations, and indeed the very survival, of the Bank of England:

“The position of Nathan Rothschild as the leading City merchant banker was consolidated in 1826, when the firm stepped in, with an instant injection of gold, to save the Bank of England”.

Rothschild Family Archive, rothschildarchive.org, April 2025

It is highly unlikely that a shrewd operator like Nathan Rothschild would have made the decision to rescue the Bank without extracting a major concession from it. Or perhaps the concession was already in place, and the rescue came as a consequence. It is also reasonable to suppose that the concession was not something temporary, so that even with Nathan’s death in 1836, the firm under his son Lionel would have continued to benefit from it. Yet if one tries to find what exactly that concession was, one encounters silence in almost every direction. Gladstone’s remarks on the topic are unspecific but nonetheless crucial:

In 1852, Gladstone, then Chancellor of the Exchequer and later prime minister, declared “The hinge of the whole situation was this: the government itself was not to be a substantive power in matters of Finance, but was to leave the Money Power supreme and unquestioned”.

Quigley, C., Tragedy and Hope, 1966, p.325

Quigley goes on to quote another Chancellor of the Exchequer, Reginald McKenna, later chairman of Midland Bank, speaking in January 1924 at a shareholders’ meeting:

“… they who control the credit of a nation direct the policy of Governments and hold in the hollow of their hands the destiny of the people.”

Quigley, C., Tragedy and Hope, 1966, p. 325

What then of Peabody? Does he take his seat outside the Bank of England on account of his philanthropy? Sir Benjamin Phillips, chairman of the Peabody Memorial Committee, proposes that the “statue is a symbol of the gratitude of the English people to Peabody for all he had done for the poor of London”. Maybe, or maybe not.

According to both Gille and Ferguson in their histories of the House of Rothschild, Alphonse Rothschild’s correspondence with his family in London and Paris from 1848 onwards expressed the strong opinion that a full Rothschild House should be established in America. The potential for the country to grow into an economic powerhouse was as obvious to Alphonse as it was to other European and American bankers. Since 1838, August Belmont, formerly August Schoenberg, had represented the Rothschild interests in America. Relations with the European mothership had been through testing periods with questions being raised over Belmont’s commitment to the family interests. These only increased when Belmont became Chair of the Democratic National Committee in 1860 and gave more of his time to politics. With Belmont facing an abundance of anti-Jewish sentiment from American public officials and businessmen, the family was well aware of the difficulties that a full American House of Rothschild was likely to encounter. Ferguson quotes one reaction from an American newspaper:

“ ‘Will we have a dishonourable peace, in order to enrich Belmont, the Rothschilds, and the whole tribe of Jews, who have been buying up Confederate bonds’, thundered the Chicago Tribune in 1864”.

The House of Rothschild 1848-1998, Ferguson, N., 2000, p. 204

So what to do? Surely a different intermediary was needed, one who was less suspect than Belmont, one who could operate incognito to build the Rothschild business in the United States? Who better to use as an interface than the overtly Protestant folks at the Peabody/Morgan firm? All the better if Belmont continued as the Rothschild’s recognised agent meantime, a kind of sacrificial lamb to take the heat and shift attention away from the place where the real action was happening.

In the 1857 financial panic which affected the United States, large volumes of bills of exchange issued by American importers to British exporters had been discounted by Peabody’s firm in London but were now looking almost worthless. Peabody, having bought those bills from the British exporters at the normal small discount to face value, was now facing the serious prospect that their American issuers would not be able to redeem them. With other London discount houses in a similar position, seeking funds from anywhere they could, the chance of Peabody’s survival looked grim. Suddenly the Bank of England came to the rescue with a loan of £800,000 (more, according to some reports). Peabody didn’t just survive, he thrived. He used the borrowed cash to settle amounts due and buy financial assets from others who, unlike him, were still desperate for cash and therefore sold up at distressed prices. Peabody’s firm grew dramatically in power and wealth.

Why did the Bank of England choose to rescue Peabody and not others? Was the bailout indicative of a Peabody-Rothschild alliance? We are confined to making educated guesses, but as for business the trans-Atlantic relationship was only heading in one direction. The scale of transactions being undertaken soon became unprecedented. In 1877, working with Belmont and the Rothschilds, Morgan floated US$260 million in American Treasury bonds. In 1901, Morgan purchased Andrew Carnegie’s steel operations, merged them with other manufacturers, and floated the first billion dollar corporation in history, U.S. Steel. The international banking alliance now extended its reach into media, academia, and thought leadership at the highest levels. Quigley writes:

… the Round Table Groups were semi-secret discussion and lobbying groups organized by Lionel Curtis, Philip H. Kerr (Lord Lothian) and Sir William S. Marris in 1908-1911 … The original purpose of these groups was to seek to federate the English speaking world along lines laid down by Cecil Rhodes (1853-1902) and William T. Stead (1849-1912) … Money for the widely ramified activities of this organization came originally from the associates and followers of Cecil Rhodes …. the Carnegie United Kingdom Trust and other organizations associated with J.P. Morgan, the Rockefeller and Whitney families and the associates of Lazard Brothers and of Morgan, Grenfell and Company. The chief backbone of this organization grew up along the already existing financial cooperation running from the Morgan Bank in New York to a group of international financiers in London led by Lazard Brothers … [Lionel Curtis] established, in England and each dominion, a front organization to the existing local Round Table Group. This front organization called the Royal Institute of International Affairs, had as its nucleus in each area the existing submerged Round Table Group. In New York, it was known as the Council on Foreign Relations and was a front for J.P. Morgan and Company in association with the very small American Round Table Group. The American organizers were dominated by the large number of Morgan “experts” including Lamont and Beer, who had gone to the Paris Peace Conference and there became close friends with the similar group of English “experts” … On this basis, which was originally financial and goes back to George Peabody, there grew up in the 20th century a power structure between London and New York which penetrated deeply into university life, the press, and the practice of foreign policy. In England the center was the Round Table Group and in the United States it was J. P. Morgan and Company … The American branch of this “English Establishment” exerted much of its influence through five American newspapers (The New York Times, New York Herald Tribune, Christian Science Monitor, the Washington Post, and the lamented Boston Evening Transcript) … It might be mentioned that the existence of this Wall Street Anglo-American axis is quite obvious once it is pointed out. It is reflected in the fact that such Wall Street luminaries as John W. Davis, Lewis Douglas, Jock Whitney and Douglas Dillon were appointed to be American ambassadors in London.

Quigley, C., Tragedy and Hope, p. 950-953

While Quigley refrains on the Rothschild connection (he surely cannot be unaware of it) Carr is explicit:

In 1899, J.P. Morgan and Drexel went to England to attend the International Bankers Convention. When they returned, J.P. Morgan had been appointed head representative of the Rothschild interests in the United States. As the result of the London Conference, J.P. Morgan and Company of New York, Drexel and Company of Philadelphia, Grenfell and Company of London, and Morgan Harjes Cie of Paris, M.M. Warburg Company of Germany and America, and the House of Rothschild were all affiliated.

Carr, W. G., Pawns In The Game, 1956, p. 60

The twentieth century dawned and still America had no formal central bank. Nationwide banking crises in 1873, 1893, and 1907 saw the issue of banking reform coming onto the political agenda. Each time, the hard money advocates pointed to the evils of fractional reserve banking or paper money, and bankers responded by pointing to some factor in the real economy, a bad harvest, a down phase in the real estate market, and frequently to the need for an “elastic” money supply which could expand or contract to suit economic conditions. What could be more reasonable one wonders? Does not the supply of gold increase when the cost of producing it falls? Does not the supply of gold fall, relative to other economic activity, when the cost of producing it rises? Is there not, therefore, elasticity in the supply of gold? And if so, why not give that same elasticity to paper money and the credits which constitute bank money? A system of banking that provided a lever for controlling money supply and at the same time made available a lender of last resort function to the national banks would be a win-win, argued the banking lobby.

With this goal in mind, a group of the world’s most senior banking executives assembled in late 1910 at the Jekyll Island resort off the coast of Georgia in the United States to discuss the options for the establishment of a central bank for the whole of America. At the meeting were Paul Warburg (a German and partner at the New York bank Kuhn, Loeb & Co.), J.P. Morgan senior (the aforementioned son of Junius Morgan and still the driving force behind J. P. Morgan), Frank Vanderlip (President of the National City Bank of New York, later to become Citibank), Henry P. Davison (a founding member of Bankers Trust, a J. P. Morgan controlled bank founded in 1903, and partner at J. P. Morgan since 1909), Arthur Shelton (Aldrich’s Secretary), and Benjamin Strong (at that time a Vice-president of Banker’s Trust). The meeting at Jekyll Island was chaired by Republican Senator Nelson Aldrich, a darling of the banking lobby with much political clout, and attended by Abram Andrew, Assistant Treasury Secretary of the United States. It is worth noting that the firm of Kuhn, Loeb & Co., under the control of one Jacob Schiff, had in 1904 provided Japan with a loan of US$ 200 million to fight war with Russia, and would within a decade of the Jekyll Island meeting be providing the communist Alexander Kerensky with loans in the tens of millions of dollars to help bring down the Russian Tsar. With grand schemes of political revolution on his radar half a world away, his partner at Kuhn Loeb, Paul Warburg, drove the revolutionary plans being laid for the United States at the Jekyll Island meeting in the Autumn of 1910.

The attendees at that meeting knew that the political challenge laying ahead was to frame their proposal in language that was acceptable to a political establishment that had three times previously rejected an American central bank. Their plan for a such a bank, with the capacity to issue paper notes as a monetary medium, only partially backed by gold, would need expert political manoeuvring and a deft legal touch. Senator Aldrich was precisely the man for the job. He would draft what was to become known as the “Aldrich Plan”.

Many uncertainties hung over Aldrich’s plan. One constitutional question in particular refused to go away. In making federal reserve notes legal tender, was he not steamrollering the constitutional requirement that “no State … shall make any thing but gold and silver coin a tender in payment of debts”? The central banking proponents said not, for in this seemingly categorical clause they saw ambiguity. The States were indeed prohibited from making anything other than gold or silver coin legal tender, but the Federal government wasn’t. The legal drafting that allowed this argument to be made must surely be one of the great oversights of monetary history, but the bankers could point to two Supreme Court decisions of 1871, Knox v. Lee and Parker v. Davis, in which the legality of federally issued paper money was upheld as valid payment for all debts existing and pre-existing. These cases were themselves a consequence in part of Lincoln’s decision to issue paper money as federal obligations, authorised under the Legal Tender Act of 1862. If a critic of banking such as Lincoln was allowed to issue federal paper money, why could not the supporters of banking do it too?

Griffin points out that it is highly unlikely the intentions of the founding fathers were anything other than to prohibit the issuance of paper money by any organisation, public or private. It was paper money in and of itself that the likes of Jefferson were against. Jefferson would surely have laughed at the suggestion that he was against paper money issued by the States, but not against paper money issued by the Federal government.

Charles A. Lindbergh, American Congressman and father of the famous aviator Lucky Lindbergh, had lobbied for many years for an investigation of the control exerted by large New York banks and banking families over American economic life. He was a diehard opponent of the Aldrich Plan. Although he was marginalised by a system already subservient to those interests, his lobbying efforts were in part responsible for the establishment of a subcommittee of the House Committee on Banking and Currency to investigate those issues of control. The Committee sat in 1912 and was chaired by Congressman Arsène Pujo of Louisiana. The committee counsel would be Samuel Untermyer, a lawyer who is framed by history as a civic activist but who derived his income from the financial transactions of Wall Street. Arsene Pujo himself, the sponsor of the committee, was connected to the Rockefeller oil interests and could therefore hardly be said to be removed from the nexus of American corporate life. Untermyer refused to call Lindbergh to testify at the very committee which the latter had called for. Neither did Untermyer call Senator Robert La Follette of Wisconsin, another principled and respected critic of the Aldrich Plan that was by now coming forth in the form of the Federal Reserve Bill. Of La Follette, Mullins writes:

Senator LaFollette publicly charged that a money trust of fifty men controlled the United States. George F. Baker, partner of J.P. Morgan, on being queried by reporters as to the truth of the charge, replied that it was absolutely in error. He said that he knew from personal knowledge that not more than eight men ran this country … Senator LaFollette remarks in his memoirs that his speech against the Money Trust later cost him the Presidency of the United States, just as Woodrow Wilson’s early support of the Aldrich Plan had brought him into consideration for that office.

Secrets of the Federal Reserve, Mullins, E., Bridger House Publishers Inc., 2009, p.16.

Mullins goes on to provide some detail on Wilson’s election to president in readable though often unreferenced style:

The Presidential campaign of 1912 records one of the more interesting political upsets in American history. The incumbent, William Howard Taft, was a popular president, and the Republicans, in a period of general prosperity, were firmly in control of the government through a Republican majority in both houses. The Democratic challenger, Woodrow Wilson, Governor of New Jersey, had no national recognition, and was a stiff, austere man who excited little public support. Both parties included a monetary reform bill in their platforms: The Republicans were committed to the Aldrich Plan, which had been denounced as a Wall Street plan, and the Democrats had the Federal Reserve Act. Neither party bothered to inform the public that the bills were almost identical except for the names. In retrospect, it seems obvious that the money creators decided to dump Taft and go with Wilson. How do we know this? Taft seemed certain of re-election, and Wilson would return to obscurity. Suddenly, Theodore Roosevelt “threw his hat into the ring”. He announced that he was running as a third party candidate, the “Bull Moose”. His candidacy would have been ludicrous had it not been for the fact that he was exceptionally well-financed. Moreover, he was given unlimited press coverage, more than Taft and Wilson combined. As a Republican ex-president, it was obvious that Roosevelt would cut deeply into Taft’s vote. This proved the case, and Wilson won the election. To this day, no one can say what Theodore Roosevelt’s program was, or why he would sabotage his own party. Since the bankers were financing all three candidates, they would win regardless of the outcome. Later Congressional testimony showed that in the firm of Kuhn Loeb Company, Felix Warburg was supporting Taft, Paul Warburg and Jacob Schiff were supporting Wilson, and Otto Kahn was supporting Roosevelt. The result was that a Democratic Congress and a Democratic President were elected in 1912 to get the central bank legislation passed.

Mullins, E., Secrets of the Federal Reserve, Bridger House Publishers Inc., 2009, p. 18.

The association of Senator Aldrich with the central banking plan was however something of a liability. It was well known whose interests he represented in the Senate, and in order not to give the impression that the forthcoming legislation was a creature of the banking lobby, the bill that Congress and Senate in due course authorised was not attributed to him. Instead, the joint chairs of the House and Senate Committees on Banking and Currency, Carter Glass and Robert Owen, having consulted with Paul Warburg, introduced proposals for a central banking system closely based on the Aldrich plan but carrying the names of Carter and Glass. Colonel Edward House, Woodrow Wilson’s close adviser from the commencement of his bid for presidency in 1912, was closely involved. He corresponded frequently with the main banking actors in the unfolding play, including Warburg, and gently guided the new president on matters of banking reform.

Wilson was an academic man who confessed a weak understanding of banking and money but he was aware of the context which campaigners like Lindbergh were referring to. In The New Freedom, published in 1913, Wilson writes:

“ … one of the most significant signs of the new social era is the degree to which government has become associated with business. I speak, for the moment, of the control over the government exercised by Big Business. Behind the whole subject, of course, is the truth that, in the new order, government and business must be associated closely. But that association is at present of a nature absolutely intolerable; the precedence is wrong the association is upside down. Our government has been for the past few years under the control of heads of great allied corporations with special interests. It has not controlled these interests and assigned them a proper place in the whole system of business; it has submitted itself to their control”.

The New Freedom, W. Wilson, Doubleday, USA, 1913, s.1

The Sherman Antirust Act of 1890, designed to protect against unfair and monopolistic trade practices, was ineffectual enough for Wilson to continue:

“We have, not one or two or three, but many, established and formidable monopolies in the United States. We have, not one or two, but many, fields of endeavor into which it is difficult, if not impossible, for the independent man to enter. We have restricted credit, we have restricted opportunity, we have controlled development, and we have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”

The New Freedom, W. Wilson, Doubleday, USA, 1913, s. 9

With a president writing like this, and keen to avoid the impression that America’s economy was being usurped by a central bank along the lines of the British or French example, the drafters of the Federal Reserve Bill instead proposed a bank split into separate organisations for each of the various regions within the United States. They would be privately owned but would be known by the term “Federal Reserve Bank”, giving the impression of some kind of connection with government or public ownership. A Federal Reserve Board would decide on monetary policy, with one governor from each of twelve regions and a chairman as a thirteenth member to give a casting vote where necessary. This nod to regionality and diversified control was not however enough to see the Carter-Glass bill past its opponents. Mullins summarises what happened next:

The Glass Bill (the House version of the final Federal Reserve Act) had passed the House on September 18, 1913 by 287 to 85. On December 19, 1913, the Senate passed their version by a vote of 54-34. More than forty important differences in the House and Senate versions remained to be settled, and the opponents of the bill in both houses of Congress were led to believe that many weeks would yet elapse before the Conference bill would be ready for consideration. The Congressmen prepared to leave Washington for the annual Christmas recess, assured that the Conference bill would not be brought up until the following year. Now the money creators prepared and executed the most brilliant stroke of their plan. In a single day, they ironed out all forty of the disputed passages in the bill and quickly brought it to a vote. On Monday, December 22, 1913, the bill was passed by the House 282-60 and the Senate 43-23.”

Secrets of the Federal Reserve, Mullins, E., Bridger House Publishers Inc., 2009, p. 27

On the 23^rd December 1913, Woodrow Wilson signed the Federal Reserve Act into law. The creature from Jekyll Island had been born and would now proceed to cause havoc not just in the United States but across the world. It would produce the unrepayable debt that crushes the United States of America in 2025. It would help fund the wars of hegemony and the massive corporate monopolies through which so many things of value to humanity are now debased. Lindbergh’s words on the day of the Act’s passing were a siren call, precisely presaging the Wall Street Crash of 1929 in the face of abundant establishment naysayers:

This Act establishes the most gigantic trust on Earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized, the people may not know it immediately, but the day of reckoning is only a few years removed … “

Charles Lindbergh, Speech to Congress, 22 December 1913