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NOTE Culmination at Jekyll Island

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Culmination at Jekyll Island

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Now that the groundwork had been laid for a central bank among scholars, bankers and interested public opinion by the latter half of 1910,

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it was time to formulate a concrete, practical plan and to focus the rest of the agitation to push it through.

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As Warburg noted in the Academy of Political Science book on Reform of the Currency,

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Advanced is possible only by outline a tangible plan to set the terms of the debate.

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The tangible plan phase of the central bank movement was launched by the ever-pliant Academy of Political Science of Columbia University,

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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.

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of New York. The members of the NMC were the joint guests of honor at this conclave, and

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delegates to it were chosen by governors of 22 states, as well as presidents of 24 chambers

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of commerce. Also attending this conference were large number of economists, monetary

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analysts and representatives of the nation's leading bankers. Attendance at the conference

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Sessions included Frank Vanderlip, Ella Hugh Root, Jacob Schiff, Thomas W. Lamont, partner

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of the Morgan Bank, and J.P. Morgan himself.

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The formal sessions of the conference were organized around papers delivered by Loughlin,

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Johnson, Bush, Warburg, and Conant.

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C. Stuart Patterson, Dean of the University of Pennsylvania Law School and member of the

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The Finance Committee of the Morgan Oriented Pennsylvania Railroad, who had been the chairman

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of the first IMC and a member of the Indianapolis Monetary Commission, laid down the marching

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orders for the assembled troops.

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He recalled the great lesson of the IMC and the way its proposals had triumphed because

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we went home and organized an aggressive and active movement.

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He then exhorted the troops, that is just what you must do in this case. You must uphold

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the hands of Senator Aldrich. You have got to see that the bill which he formulates obtains

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the support of every part of this country.

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With the movement fully primed, it was now time for Senator Aldrich to write the bill.

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Or rather, it was time for the senator, surrounded by a few of the top-most leaders of the financial

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to go off in seclusion and hammer out a detailed plan around which all parts of the central banking movement could rally.

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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.

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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.

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Morgan was a co-owner of the club.

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On November 22, 1910, Senator Aldrich, with a handful of companions, set forth under assumed names in a privately charted railroad car

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from Hoboken, New Jersey to the coast of Georgia, allegedly on a duck-hunting expedition.

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The conferees worked for a solid week at the plush Jekyll Island retreat

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and hammered out the draft of the bill for the Federal Reserve system.

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Only six people attended this super-secret week-long meeting,

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and these six neatly reflected the power structure within the Bankers' Alliance of the Central Banking Movement.

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The conferees were, in addition to Aldrich, Rockefeller-Kinsman, Henry P. Davison, Morgan Partner, Paul Warburg, Kuhn Loeb Partner,

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Partner, Frank A. Vanderlip, Vice President of Rockefeller's National City Bank of New

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York, Charles D. Norton, President of Morgan's First National Bank of New York, and Professor

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A. Piet Andrew, Head of the NMC Research Staff who had recently been made an Assistant

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Secretary of the Treasury under Taft, and who was a technician with a foot in both the

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by Rockefeller and Morgan Camps. The conferees forged the Aldrich bill, which with only minor

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variations was to become the Federal Reserve Act of 1913. The only substantial disagreement

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at Jekyll Island was tactical. Aldrich attempted to hold out for a straightforward central

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bank on the European model, while Warburg, backed by the other bankers, insisted that

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The political realities required the reality of central control to be cloaked in the palatable

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camouflage of decentralization. Warburg's more realistic duplicitous tactic won the

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day. Aldrich presented the Jekyll Island draft with only minor revisions to the full

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and M.C. as the Aldrich Bill in January 1911.

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Why then did it take until December 1913 for Congress to pass the Federal Reserve Act?

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The hitch in the timing resulted from the democratic capture of the House of Representatives

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in the 1910 elections and from the looming probability that the Democrats would capture

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the White House in 1912.

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The reformers had to regroup, drop the highly partisan name of Aldrich from the bill and

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recast it as a democratic bill under Virginia's Representative Carter Glass.

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But despite the delay in numerous drafts, the structure of the Federal Reserve has passed

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overwhelmingly in December 1913, was virtually the same as the bill that emerged from the

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secret Jekyll Island meeting three years earlier.

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Successful agitation brought bankers, the business community, and the general public

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rather easily into line.

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The top bankers were brought into camp at the outset.

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As early as February 1911, Aldrich organized a closed-door conference of 23 leading bankers

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at Atlantic City.

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Not only did this conference of bankers endorse the Aldrich Plan, but it was made clear to

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to them that the real purpose of the conference was to discuss winning the banking community

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over to government control directly by the bankers for their own ends.

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The big bankers at the conference also realized that the Aldrich Plan would increase the power

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of the big national banks to compete with the rapidly growing state banks and help bring

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the state banks under control.

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By November 1911, it was easy to line up the full American Bankers Association behind the

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Aldrich Plan. The threat of small banking insurgency was over, and the nation's banking

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community was now lined up solidly behind the drive for a central bank. Finally, after

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much backing and filling, after Aldrich's name was removed from the bill and Aldrich

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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.

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As A. Barton Hepburn exalted to the annual meeting of the American Bankers Association in late August 1913,

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the measure recognizes and adopts the principles of a central bank.

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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.