The Federal Reserve Act of 1913 - Quick History #2

Amongst a smoke filled room lit only with dim candles you can hear ice bathed in gin rattling against crystal glasses. Hidden in the bog of swampy Georgia Nelson Aldrich, A. Piatt Andrew, Henry Davison, Arthur Shelton, Frank Vanderlip and Paul Warburg gathered on Jekyll Island in October of 1910 to devise a plan for establishing the a central bank of the United States, the Federal Reserve.

There hadn't been a central bank since President Andrew Jackson vetoed the charter for the second bank of the United States in 1832. Americans naturally feared central banking as they had been caught doing unscrupulous things in the past.

Out of this meeting came the Aldrich plan. 15 regional banks called "National Reserve Associations" would fall under the umbrella of the "National Board of Commercial Bankers". They would provide emergency loans to member banks and control the printing of money to provide elasticity to the market. The problem, it would be controlled by private bankers.

After the secret meeting universities were employed to promote the Aldrich plan. Princeton, Harvard and the University of Chicago were ground zero for propaganda. Former university President Woodrow Wilson lead the National propaganda campaign stating "All this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country."

Ultimately the measure failed to pass Congress. The public was unwilling to leave private bankers in charge of the National monetary system.

The election of 1912 seem clearly in the hands of the Republican party who was popular at the time and the country was in a time of general prosperity. Howard Taft (incumbent Republican) was running for a second term as president against Woodrow Wilson (Democrat). Both parties included a monetary plan for the country, but the republicans supported the Aldrich plan which had already been denounced as a fraud. The Democrats proposed the Federal Reserve Act, virtually the same as the Aldrich plan, under a more palatable name.

Woodrow Wilson won the election and paved the way for the Federal Reserve Act to pass. On December 23rd 1913 Congress passed the federal reserve act, allowing private banks to assume full monetary control of our country.

3 years after its passage Woodrow Wilson stated "I have unwittingly ruined my country. A great industrial 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 the Government by the opinion and duress of small groups of dominated men."