The panic of 1907, which led to wide-scale bank failures, was the cause of the founding of the Federal Reserve Bank and the same assurances were made as had been made after each preceding crisis that this was the last and final crisis and the disturbances to the economy would never be repeated and with every subsequent boom after the slumps the apologists for capitalism asserted that the dire predictions of Marx had been refuted and that there will not be a recurrence of the recession. Many of the US economic booms and slumps can be attributed to international trading of oil, over-investments in unknown areas (such as the dot com boom), or private loans to individuals without income or assets rather than the Federal Reserve policies.
The Panic led to a Congressional investigation, headed by Senator Nelson Aldrich and the Commission led by Aldrich recommended a Central Bank should be implemented so a panic like 1907 could never happen again. This was the spark the international bankers needed to initiate their plan. Aldrich spent some time traveling around Europe, and believed the English, German, and French central banking systems were far better than what was going on in the US at the time. He worked with various bankers and economists to design a plan for the central banking system he had in mind. In fact, he promoted a central banking concept that was decentralized, making it hard to believe he was in on any large conspiracy.
In 1910, a secret meeting was held at a J.P. Morgan estate on Jekyll Island off the coast of Georgia. It was there that the central banking bill called the Federal Reserve Act was written. This legislation was written by bankers, not lawmakers. This meeting was so secretive, so concealed from government and public knowledge, that the 10 or so figures who attend, disguised their names when en route to the island. This meeting was not that secretive. We know exactly who attended:
Nelson Aldrich, US Senator
AP Andrews (Assistant Secretary of the Treasury Department)
Paul Warburg (Kuhn, Loeb, & Co)
Frank A Vanderlip (President, National City Bank of New York)
Henry P Davison (Senior Partner, JP Morgan Company)
Charles D Norton (President, First National Bank of New York)
Benjamin Strong (Representing JP Morgan)
After this bill was constructed, it was then handed over to their political front man, Senator Nelson Aldrich, to push through Congress. And two days before Christmas when most of Congress was at home with their families, the Federal Reserve Act was voted in, and Wilson in turn made it law. The Act had been debated and discussed for more than 4 months prior to being voted on. It passed the House on December 22, 1913 with 298 yeas to 60 nays, with 76 not voting (even if they would have voted all nay, it would still have been a majority of yeas). The next day the Senate passed it, 43 yeas to 25 nays, with 27 not voting. The record shows that almost all of those not voting on the bill had previously declared their intentions, and were paired with members of the opposite intentions.
Banking conspiracists present us with Woodrow Wilson's regret about the Fed's establishment. It is said that years later he wrote:
"Our great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom."..."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 first quote is actually changed a bit, the original is:
"A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom."
What's most interesting is that this originally was in a speech from 1912, so how could he be regretting something that hasn't happened yet?
The second quote is also different, but only slightly edited:
"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."
As with the first quote, this quote is from before the Federal Reserve Act even existed. This is actually from his 1912 campaign speech. How can he regret something that hasn't happened yet?
Woodrow Wilson is frequently quoted expressing his regret for it: "I am a most unhappy man. I have unwittingly ruined my country. A greatindustrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. 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 duress of a small group of dominant men."
Once again this is a made-up quote:
Another critic often cited is Congressman Louis McFadden and who is credited with expressing the truth after the passage of the bill:
"A world banking system was being set up here... a Superstate controlled by international bankers... acting together to enslave the world for their own pleasure. The Fed has usurped the government."
Once more sources for this quote are entirely conspiracy websites. Louis McFadden was quite a shady individual, and he believed that Jews controlled the world, most specifically the American economy. McFadden also blamed Jews for various changes in the American economy, including the Federal Reserve. He was also a major supporter of Hitler and the Nazi policies that were anti-Semitic; more specifically he supported Hitler's attempts to destroy the alleged Jewish control over the German economy, media, education, and business. When he ran for president in 1936, one of his campaign slogans was "Christianity instead of Judaism"
Therefore, in the quote above, if we replace bankers and Fed with "Jews", then we can get a picture of what McFadden was actually talking about. If he believed the banks were controlled by Jews and the Federal Reserve was a Jewish "problem", then it is safe to make such an assumption to change the words to show the truth behind what he was saying.
The Federal Reserve Bank marked the moment when finance-capital became the instrument of the whole of capitalism, and not simply of a few dominant groups.
Member of the Federal Reserve Board, Paul M. Warburg, describes its chosen form
“From a technical and banking standpoint, it might have been a better system to have one central bank with branches. Centralization is always an economy of power, and makes for greater efficiency. For political and other reasons it was essential to have the system as it is, and the proof of its wisdom lies in its success. With political, economic and social conditions what they are, a central bank would be likely to become the target of constant political attacks. There would always be suspicion of too extended a concentration of control either by capital or ‘politics.’ The present form offers a better protection in this regard, and the present system ought therefore to be better protected and to have better chance for untrammeled development than a full-fledged central bank...We have brought into effective co-ordination a large portion of the country’s banking reserves. We have regulated and brought about a general understanding of modern methods of re-discounting. We have created a world-wide market for bankers’ acceptances, so that American trade is now largely financed by our own acceptances instead of by foreign ones, and at the same time our member banks now have an easy means of recourse to the Federal Reserve banks in case they wish to replenish their reserves. We have established fiscal agency relations with the Government and perfected an instrument which has proved of the greatest value in placing our issues of Government securities ... In this world of the future we shall have to maintain our own position, and it requires on our part thorough organization and steady leadership. Under our democratic system this cannot be furnished by changing party governments, but can only be provided by fairly permanent, non-partisan and expert bodies. These bodies must combine the judicial point of view with that of active and constructive business minds. They must be able to act as expert advisers to Congress and to the industries concerned. They must break down the suspicion and prejudice of Government against business and business against Government. They must stand for the interest of all against the exaction or aggression of any single individual or group, be it called labor or capital, carrier or shipper, lender or borrower, Republican or Democrat...” New York Times, August 18, 1918
When the crash of 29 happened McFadden began bringing impeachment proceedings against the Federal Reserve Board, saying of the crash and depression:
"It was a carefully contrived occurrence. International bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all."
He moved to impeach president Hoover in 1932 and he went to bring conspiracy charges against Board of Governors of the Federal Reserve. The impeachment resolution was defeated by a vote of 361 to 8. Yes, just eight people voted for it. As previously mentioned McFadden believed International Bankers were a Jewish conspiracy and that Jews controlled American banks and the Federal Reserve, therefore he thought it must have been a Jewish conspiracy to make the market crash. Who else, in his mind, but the Jews would want to make American suffer just for their evil personal ambitions?
Conspiracists declare that after two previous assassination attempts, McFadden was poisoned at a banquet before he could push for the impeachment. He was poisoned and died in 1936, however he did attempt to bring the impeachment and conspiracy charges forth in 1933, and they were overturned, as we discussed; he did not die for another 3 years after that -- so it was not some kind of conspiracy to keep him from impeaching anyone. No one knows why he was poisoned, but some think it was his opposition to the Federal Reserve system. We may never know.
Anti-Fed Reserve conspirators insist that having reduced the society to squalor, the Federal Reserve bankers decided that the Gold Standard should be removed. In order to do this, they needed to acquire the remaining gold in the system. So, under the pretense of helping to end the depression came the 1933 gold seizure. Under threat of imprisonment for 10 years, everyone in America was required to turn in all gold bullion to the Treasury, essentially robbing the public of what little wealth they had left. At the end of 1933, the gold standard was abolished. If you look at a dollar bill from before 1933, it says it is redeemable in gold. If you look at a dollar bill today, it says it is legal tender, which means it is backed by absolutely nothing. It is worthless paper.
Actually the Gold Standard was not abandoned at this time, instead something very different happened. The causes of the great depression were not completely clear, but in order to address the perceived causes and effects, Executive Order 6102 was signed on April 5, 1933 -- its purpose was to keep people from hoarding gold, by outlawing ownership of gold by an individual person or corporation greater than the amount of $100 ($1,500 today) in value. The government required holders of large quantities of gold to sell their gold at the prevailing price of $20.67 per ounce -- later on the price was raised to $35 per ounce, and the government devalued dollars by 41% of the previous value. Money was still redeemable in silver and gold before August 15, 1971 when Richard Nixon announced the US would abandon the gold standard. The limitation on gold ownership no longer exists, anyone can own any amount of gold they wish.
It is often stated erroneously that the Federal Reserve is a private corporation, that it makes its own policies and is under virtually no regulation by the US government and is a private bank that loans all the currency at interest to the government. Those who offer this interpretation have a very small understanding of the Federal Reserve. Yes, it is a private corporation, however it is not as private as ,say, Federal Express. It is considered private because the decisions it makes do not necessarily have to be ratified by the President or anyone else in the executive or legislature. However, the Federal Reserve has a board of governors with seats for congressional officials. The Federal Reserve is also subject to heavy oversight from Congress. Therefore, it is not necessarily private or public, rather it is "independent within the government." What a central bank does, among other things, is to print money and, with that money, buy public bonds of the state, making sure the interest rates on those bonds are reasonable and do not become excessive. (The U.S. Federal Reserve, for example, has created more than $2.3 trillion since 2008 and used it to buy U.S. government bonds and mortgage-backed securities). The central bank protects states against the financial market’s speculation.
Again to quote Warbuck:
“Our ability to handle effectually the great economic problems of the future will depend upon developing boards and commissions of sufficient expert knowledge and independence of character. This will be possible only if both Government and people fully appreciate the importance of such bodies, so that the country may find its ablest sons willing to render public service worthy of the personal sacrifice it entails ...
..It appears inevitable that America will be one of the dominating financial powers in the coming era of peace. Indeed, if we play our cards right and if the war ends within a reasonable time, we should be the dominating financial power of the world. When peace comes we should command the three essentials that would assure us an unassailable strategic commercial position – the raw materials, the ships and the gold. The world at large is indebted to us. Nothing but mismanagement could wrest the financial premiership of the world from us.”” New York Times, August 18, 1918
For those wishing to read further, this topic and related issues often feature in the Socialist Standard, eg:
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