by Eustace Mullins
CHAPTER TWO
"Finance and the tariff are reserved by Nelson
Aldrich as falling within his sole purview and jurisdiction. Mr.
Aldrich is endeavoring to devise, through the National Monetary
Commission, a banking and currency law. A great many hundred thousand
persons are firmly of the opinion that Mr. Aldrich sums up in his
personality the greatest and most sinister menace to the popular
welfare of the United States. Ernest Newman recently said, 'What the
South visits on the Negro in a political way, Aldrich would mete out
to the mudsills of the North, if he could devise a safe and practical
way to accomplish it.'"-Harper's Weekly, May 7, 1910.
The participants in the Jekyll Island conference
returned to New York to direct a nationwide propaganda campaign in favor
of the "Aldrich Plan". Three of the leading universities, Princeton,
Harvard, and the University of Chicago, were used as the rallying points
for this propaganda, and national banks had to contribute to a fund of
five million dollars to persuade the American public that this central
bank plan should be enacted into law by Congress.
Woodrow Wilson, governor of New Jersey and former
president of Princeton University, was enlisted as a spokesman for the
Aldrich Plan. During the Panic of 1907, Wilson had declared, "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."
In his biography of Nelson Aldrich in 1930, Stephenson
says:
"A pamphlet was issued January 16, 1911, 'Suggested
Plan for Monetary Legislation', by Hon. Nelson Aldrich, based on
Jekyll Island conclusions." Stephenson says on page 388, "An
organization for financial progress has been formed. Mr. Warburg
introduced a resolution authorizing the establishment of the Citizens'
League, later the National Citizens League . . . Professor Laughlin of
the University of Chicago was given charge of the League's
propaganda." 11
It is notable that Stephenson characterizes the work
of the National Citizens League as "propaganda", in line with Seligman's
exposition of Warburg's work as "the education of the country" and "to
break down prejudices".
Much of the five million dollars of the bankers slush
fund was spent under the auspices of the National Citizens' League,
which was made up of college professors. The two most tireless
propagandists for the Aldrich Plan were Professor O.M. Sprague of
Harvard, and J. Laurence Laughlin of the University of Chicago.
Congressman Charles A. Lindbergh, Sr., notes:
"J. Laurence Laughlin, Chairman of the Executive
Committee of the National Citizens' League since its organization, has
returned to his position as professor of political economics in the
University of Chicago. In June, 1911, Professor Laughlin was given a
year's leave from the university, that he might give all of his time
to the campaign of education undertaken by the League . . . He has
worked indefatigably, and it is largely due to his efforts and his
persistence that the campaign enters the final stage with flattering
prospects of a successful outcome . . . The reader knows that the
University of Chicago is an institution endowed by John D.
Rockefeller, with nearly fifty million dollars."
12
In his biography of Nelson Aldrich, Stephenson reveals
that the Citizens' League was also a Jekyll Island product. In chapter
24 we find that: The Aldrich Plan was represented to Congress as the
result of three years of work, study and travel by members of the
National Monetary Commission, with expenditures of more than three
hundred thousand dollars.*
Testifying before the Committee on Rules, December 15,
1911, after the Aldrich plan had been introduced in Congress,
Congressman Lindbergh stated,
"Our financial system is a false one and a huge
burden on the people . . . I have alleged that there is a Money Trust.
The Aldrich plan is a scheme plainly in the interest of the Trust . .
. Why does the Money Trust press so hard for the Aldrich Plan now,
before the people know what the money trust has been doing?"
Lindbergh continued his speech,
"The Aldrich Plan is the Wall Street Plan. It is a
broad challenge to the Government by the champion of the Money Trust.
It means another panic, if necessary, to intimidate the people.
Aldrich, paid by the Government to represent the people, proposes a
plan for the trusts instead. It was by a very clever move that the
National Monetary Commission was created. In 1907 nature responded
most beautifully and gave this country the most bountiful crop it had
ever had. Other industries were busy too, and from a natural
standpoint all the conditions were right for a most prosperous year.
Instead, a panic entailed enormous losses upon us. Wall Street knew
the American people were demanding a remedy against the recurrence of
such a ridiculously unnatural condition. Most Senators and
Representatives fell into the Wall Street trap and passed the Aldrich
Vreeland Emergency Currency Bill. But the real purpose was to get a
monetary commission which would frame a proposition for amendments to
our currency and banking laws which would suit the Money Trust. The
interests are now busy everywhere educating the people in favor of the
Aldrich Plan. It is reported that a large sum of money has been raised
for this purpose. Wall Street speculation brought on the Panic of
1907. The depositors' funds were loaned to gamblers and anybody the
Money Trust wanted to favour. Then when the depositors wanted their
money, the banks did not have it. That made the panic."
Edward Vreeland, co-author of the bill, wrote in the
August 25, 1910 Independent (which was owned by Aldrich):
"Under the proposed monetary plan of Senator
Aldrich, monopolies will disappear, because they will not be able to
make more than four percent interest and monopolies cannot continue at
such a low rate. Also, this will mark the disappearance of the
Government from the banking business."
Vreeland's fantastic claims were typical of the
propaganda flood unleashed to pass the Aldrich Plan. Monopolies would
disappear, the Government would disappear from the banking business. Pie
in the sky.
Nation Magazine, January 19, 1911, noted,
"The name of Central Bank is carefully avoided, but
the 'Federal Reserve Association', the name given to the proposed
central organization, is endowed with the usual powers and
responsibilities of a European Central Bank."
After the National Monetary Commission had returned
from Europe, it held no official meetings for nearly two years. No
records or minutes were ever presented showing who had authored the
Aldrich Plan. Since they held no official meetings, the members of the
commission could hardly claim the Plan as their own. The sole tangible
result of the Commission's three hundred thousand dollar expenditure was
a library of thirty massive volumes on European banking. Typical of
these works is a thousand page history of the Reichsbank, the central
bank which controlled money and credit in Germany, and whose principal
stockholders, were the Rothschilds and Paul Warburg's family banking
house of M.M. Warburg Company. The Commission's records show that it
never functioned as a deliberative body. Indeed, its only "meeting" was
the secret conference held at Jekyll Island, and this conference is not
mentioned in any publication of the Commission. Senator Cummins passed a
resolution in Congress ordering the Commission to report on January 8,
1912, and show some constructive results of its three years' work. In
the face of this challenge, the National Monetary Commission ceased to
exist.
With their five million dollars as a war chest, the
Aldrich Plan propagandists waged a no-holds barred war against their
opposition. Andrew Frame testified before the House Banking and Currency
Committee of the American Bankers Association. He represented a group of
Western bankers who opposed the Aldrich Plan:
CHAIRMAN CARTER GLASS: "Why didn't the Western
bankers make themselves heard when the American Bankers Association
gave its unqualified and, we are assured, unanimous approval of the
scheme proposed by the National Monetary Commission?"
ANDREW FRAME: "I'm glad you called my attention to
that. When that monetary bill was given to the country, it was but a
few days previous to the meeting of the American Bankers Association
in New Orleans in 1911. There was not one banker in a hundred who had
read that bill. We had twelve addresses in favor of it. General Hamby
of Austin, Texas, wrote a letter to President Watts asking for a
hearing against the bill. He did not get a very courteous answer. I
refused to vote on it, and a great many other bankers did likewise."
MR. BULKLEY: "Do you mean that no member of the
Association could be heard in opposition to the bill?"
ANDREW FRAME: "They throttled all argument."
MR. KINDRED: "But the report was given out that it
was practically unanimous."
ANDREW FRAME: "The bill had already been prepared by
Senator Aldrich and presented to the executive council of the American
Bankers Association in May, 1911. As a member of that council, I
received a copy the day before they acted upon it. When the bill came
in at New Orleans, the bankers of the United States had not read it."
MR. KINDRED: "Did the presiding officer simply rule
out those who wanted to discuss it negatively?"
ANDREW FRAME: "They would not allow anyone on the
program who was not in favor of the bill."
CHAIRMAN GLASS: "What significance has the fact that
at the next annual meeting of the American Bankers Association held at
Detroit in 1912, the Association did not reiterate its endorsement of
the plan of the National Monetary Commission, known as the Aldrich
scheme?"
ANDREW FRAME: "It did not reiterate the endorsement
for the simple fact that the backers of the Aldrich Plan knew that the
Association would not endorse it. We were ready for them, but they did
not bring it up."
Andrew Frame exposed the collusion which in 1911
procured an endorsement of the Aldrich Plan from the American Bankers
Association but which in 1912 did not even dare to repeat its
endorsement, for fear of an honest and open discussion of the merits of
the plan.
Chairman Glass then called as witness one of the ten
most powerful bankers in the United States, George Blumenthal, partner
of the international banking house of Lazard Freres and brother-in-law
of Eugene Meyer, Jr. Carter Glass effusively welcomed Blumenthal,
stating that "Senator O'Gorman of New York was kind enough to suggest
your name to us." A year later, O'Gorman prevented a Senate Committee
from asking his master, Paul Warburg, any embarrassing questions before
approving his nomination as the first Governor of the Federal Reserve
Board.
George Blumenthal stated,
"Since 1893 my firm of Lazard Freres has been
foremost in importations and exportations of gold and has thereby come
into contact with everybody who had anything to do with it."
Congressman Taylor asked,
"Have you a statement there as to the part you have
had in the importation of gold into the United States?" Taylor asked
this because the Panic of 1893 is known to economists as a classic
example of a money panic caused by gold movements.
"No," replied George Blumenthal, "I have nothing at
all on that, because it is not bearing on the question."
A banker from Philadelphia, Leslie Shaw, dissented
with other witnesses at these hearings, criticizing the much vaunted
"decentralization" of the System. He said,
"Under the Aldrich Plan the bankers are to have
local associations and district associations, and when you have a
local organization, the centered control is assured. Suppose we have a
local association in Indianapolis; can you not name the three men who
will dominate that association? And then can you not name the one man
everywhere else. When you have hooked the banks together, they can
have the biggest influence of anything in this country, with the
exception of the newspapers."
To promote the Democratic currency bill, Carter Glass
made public the sorry record of the Republican efforts of Senator
Aldrich's National Monetary Commission. His House Report in 1913 said,
"Senator MacVeagh fixes the cost of the National
Monetary Commission to May 12, 1911 at $207,130. They have since spent
another hundred thousand dollars of the taxpayer's money. The work
done at such cost cannot be ignored, but, having examined the
extensive literature published by the Commission, the Banking and
Currency Committee finds little that bears upon the present state of
the credit market of the United States. We object to the Aldrich Bill
on the following points:
* Its entire lack of adequate government or public
control of the banking mechanism it sets up.
* Its tendency to throw voting control into the hands of the large
banks of the system.
* The extreme danger of inflation of currency inherent in the system.
* The insincerity of the bond-funding plan provided for by the
measure, there being a barefaced pretense that this system was to cost
the government nothing.
* The dangerous monopolistic aspects of the bill.
* Our Committee at the outset of its work was met by a well-defined
sentiment in favor of a central bank which was the manifest outgrowth
of the work that had been done by the National Monetary Commission."
Glass's denunciation of the Aldrich Bill as a central
bank plan ignored the fact that his own Federal Reserve Act would
fulfill all the functions of a central bank. Its stock would be owned by
private stockholders who could use the credit of the Government for
their own profit; it would have control of the nation's money and credit
resources; and it would be a bank of issue which would finance the
government by "mobilizing" credit in time of war. In "The Rationale of
Central Banking," Vera C. Smith (Committee for Monetary Research and
Education, June, 1981) writes,
"The primary definition of a central bank is a
banking system in which a single bank has either a complete or
residuary monopoly in the note issue. A central bank is not a natural
product of banking development. It is imposed from outside or comes
into being as the result of Government favors."
Thus a central bank attains its commanding position
from its government granted monopoly of the note issue. This is the key
to its power. Also, the act of establishing a central bank has a direct
inflationary impact because of the fractional reserve system, which
allows the creation of book-entry loans and thereby, money, a number of
times the actual "money" which the bank has in its deposits or reserves.
The Aldrich Plan never came to a vote in Congress,
because the Republicans lost control of the House in 1910, and
subsequently lost the Senate and the Presidency in 1912.
* In 1911, the
Aldrich Plan became part of the official platform of the Republican
Party.
11. Nathaniel Wright Stephenson, Nelson W. Aldrich, A
Leader in American Politics, Scribners, N.Y. 1930
12. Charles A. Lindbergh, Sr., Banking, Currency and the Money Trust,
1913, p. 131
<back---Table
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The world gets crazier and crazier everyday, doesn't it? The world that many
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