Culmination at Jekyll Island
Now that the groundwork had been laid for a central bank among scholars, bankers and interested public opinion by the latter half of 1910,
it was time to formulate a concrete, practical plan and to focus the rest of the agitation to push it through.
As Warburg noted in the Academy of Political Science book on Reform of the Currency,
Advanced is possible only by outline a tangible plan to set the terms of the debate.
The tangible plan phase of the central bank movement was launched by the ever-pliant Academy of Political Science of Columbia University,
which held a monetary conference in November 1910 in conjunction with the New York Chamber of Commerce and the Merchant's Association of New York.
of New York. The members of the NMC were the joint guests of honor at this conclave, and
delegates to it were chosen by governors of 22 states, as well as presidents of 24 chambers
of commerce. Also attending this conference were large number of economists, monetary
analysts and representatives of the nation's leading bankers. Attendance at the conference
Sessions included Frank Vanderlip, Ella Hugh Root, Jacob Schiff, Thomas W. Lamont, partner
of the Morgan Bank, and J.P. Morgan himself.
The formal sessions of the conference were organized around papers delivered by Loughlin,
Johnson, Bush, Warburg, and Conant.
C. Stuart Patterson, Dean of the University of Pennsylvania Law School and member of the
The Finance Committee of the Morgan Oriented Pennsylvania Railroad, who had been the chairman
of the first IMC and a member of the Indianapolis Monetary Commission, laid down the marching
orders for the assembled troops.
He recalled the great lesson of the IMC and the way its proposals had triumphed because
we went home and organized an aggressive and active movement.
He then exhorted the troops, that is just what you must do in this case. You must uphold
the hands of Senator Aldrich. You have got to see that the bill which he formulates obtains
the support of every part of this country.
With the movement fully primed, it was now time for Senator Aldrich to write the bill.
Or rather, it was time for the senator, surrounded by a few of the top-most leaders of the financial
to go off in seclusion and hammer out a detailed plan around which all parts of the central banking movement could rally.
Someone, probably Henry P. Davison, got the idea of convening a small group of top leaders in a super-secret conclave to draft the bill.
The Eager J.P. Morgan arranged for a plush private conference at his exclusive Millionaires Retreat at the Jekyll Island Club on Jekyll Island, Georgia.
Morgan was a co-owner of the club.
On November 22, 1910, Senator Aldrich, with a handful of companions, set forth under assumed names in a privately charted railroad car
from Hoboken, New Jersey to the coast of Georgia, allegedly on a duck-hunting expedition.
The conferees worked for a solid week at the plush Jekyll Island retreat
and hammered out the draft of the bill for the Federal Reserve system.
Only six people attended this super-secret week-long meeting,
and these six neatly reflected the power structure within the Bankers' Alliance of the Central Banking Movement.
The conferees were, in addition to Aldrich, Rockefeller-Kinsman, Henry P. Davison, Morgan Partner, Paul Warburg, Kuhn Loeb Partner,
Partner, Frank A. Vanderlip, Vice President of Rockefeller's National City Bank of New
York, Charles D. Norton, President of Morgan's First National Bank of New York, and Professor
A. Piet Andrew, Head of the NMC Research Staff who had recently been made an Assistant
Secretary of the Treasury under Taft, and who was a technician with a foot in both the
by Rockefeller and Morgan Camps. The conferees forged the Aldrich bill, which with only minor
variations was to become the Federal Reserve Act of 1913. The only substantial disagreement
at Jekyll Island was tactical. Aldrich attempted to hold out for a straightforward central
bank on the European model, while Warburg, backed by the other bankers, insisted that
The political realities required the reality of central control to be cloaked in the palatable
camouflage of decentralization. Warburg's more realistic duplicitous tactic won the
day. Aldrich presented the Jekyll Island draft with only minor revisions to the full
and M.C. as the Aldrich Bill in January 1911.
Why then did it take until December 1913 for Congress to pass the Federal Reserve Act?
The hitch in the timing resulted from the democratic capture of the House of Representatives
in the 1910 elections and from the looming probability that the Democrats would capture
the White House in 1912.
The reformers had to regroup, drop the highly partisan name of Aldrich from the bill and
recast it as a democratic bill under Virginia's Representative Carter Glass.
But despite the delay in numerous drafts, the structure of the Federal Reserve has passed
overwhelmingly in December 1913, was virtually the same as the bill that emerged from the
secret Jekyll Island meeting three years earlier.
Successful agitation brought bankers, the business community, and the general public
rather easily into line.
The top bankers were brought into camp at the outset.
As early as February 1911, Aldrich organized a closed-door conference of 23 leading bankers
at Atlantic City.
Not only did this conference of bankers endorse the Aldrich Plan, but it was made clear to
to them that the real purpose of the conference was to discuss winning the banking community
over to government control directly by the bankers for their own ends.
The big bankers at the conference also realized that the Aldrich Plan would increase the power
of the big national banks to compete with the rapidly growing state banks and help bring
the state banks under control.
By November 1911, it was easy to line up the full American Bankers Association behind the
Aldrich Plan. The threat of small banking insurgency was over, and the nation's banking
community was now lined up solidly behind the drive for a central bank. Finally, after
much backing and filling, after Aldrich's name was removed from the bill and Aldrich
which himself decided not to run for re-election in 1912, the Federal Reserve Act was passed overwhelmingly on December 22, 1913, to go into effect in November of the following year.
As A. Barton Hepburn exalted to the annual meeting of the American Bankers Association in late August 1913,
the measure recognizes and adopts the principles of a central bank.
Indeed, if it works out as the sponsors of the law hope, it will make all incorporated banks together joint owners of a central dominating power.