Creature From Jekyll Island by G. Edward

This part of the story was corroborated in the official biography of Senator Aldrich, written by Nathaniel Wright Stephenson: In the autumn of 1910, six men [in addition to Aldrich] went out to shoot ducks. That is to say, they told the world that was their purpose.

Mr. Warburg, who was of the number, gives an amusing account of his feelings when he boarded a private car in Jersey City, bringing with him all the accoutrements of a duck shooter. The joke was in the fact that he had never shot a duck in his life and had no intention of shooting any.... The duck shoot was a blind.3

Stephenson continues with a description of the encounter at Brunswick station. He tells us that, shortly after they arrived, the station master walked into the private car and shocked them by his apparent knowledge of the identities of everyone on board. To make matters even worse, he said that a group of reporters were waiting outside. Davison took charge. 'Come outside, old man,' he said, 'and I will tell you a story.' No one claims to know what story was told standing on the railroad ties that morning, but a few moments later Davison returned with a broad smile on his face.

'It's all right,' he said reassuringly. 'They won't give us away.'

Stephenson continues: 'The rest is silence. The reporters dis-persed, and the secret of the strange journey was not divulged. No one asked him how he managed it and he did not volunteer the information.'

1. Paul Warburg, The Federal Reserve System: Its Origin and Growth (New York- Macmil an, 1930), Vol. I, p. 58. It is apparent that Warburg wrote this line two years before the book was published.

2. James Warburg, The Long Road Home (New York: Doubleday, 1964) p 29

3. Nathaniel Wright Stephenson, Nelson W. Aldrich in American Politics New York- Scnbners, 1930; rpt. New York: Kennikat Press, 1971), p. 373.

4. Stephenson, p. 376.

THE JOURNEY TO JEKYLL ISLAND

11

In the February 9, 1935, issue of the Saturday Evening Post, an article appeared written by Frank Vanderlip. In it he said: Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion, near the close of 1910, when I was as secretive—indeed, as furtive—as any conspirator.... I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System....

We were told to leave our last names behind us. We were told, further, that we should avoid dining together on the night of our departure. We were instructed to come one at a time and as unobtrusively as possible to the railroad terminal on the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of a train for the South....

Once aboard the private car we began to observe the taboo that had been fixed on last names. We addressed one another as 'Ben,'

'Paul,' 'Nelson,' 'Abe'—it is Abraham Piatt Andrew. Davison and I adopted even deeper disguises, abandoning our first names. On the theory that we were always right, he became Wilbur and I became Orville, after those two aviation pioneers, the Wright brothers....

The servants and train crew may have known the identities of one or two of us, but they did not know all, and it was the names of all printed together that would have made our mysterious journey significant in Washington, in Wall Street, even in London. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.

THE STRUCTURE WAS PURE CARTEL

The composition of the Jekyll Island meeting was a classic example of cartel structure. A cartel is a group of independent businesses which join together to coordinate the production, pricing, or marketing of their members. The purpose of a cartel is to reduce competition and thereby increase profitability. This is accomplished through a shared monopoly over their industry which forces the public to pay higher prices for their goods or services than would be otherwise required under free-enterprise competition.

1. 'From Farm Boy to Financier,' by Frank A. Vanderlip, The Saturday Evening Post, Feb. 9, 1933, pp. 25, 70. The identical story was told two years later in Vanderlip's book bearing the same title as the article (New York: D. Appleton-Century Company, 1935), pp. 210-219.

12 THE CREATURE FROM JEKYLL ISLAND

Here were representatives of the world's leading banking

consortia: Morgan, Rockefeller, Rothschild, Warburg, and Kuhn-Loeb. They were often competitors, and there is little doubt that there was considerable distrust between them and skillful maneuvering for favored position in any agreement. But they were driven together by one overriding desire to fight their common enemy.

The enemy was competition.

In 1910, the number of banks in the United States was growing at a phenomenal rate. In fact, it had more than doubled to over twenty thousand in just the previous ten years. Furthermore, most of them were springing up in the South and West, causing the New York banks to suffer a steady decline of market share. Almost all banks in the 1880s were national banks, which means they were chartered by the federal government. Generally, they were located in the big cities, and were allowed by law to issue their own currency in the form of bank notes. Even as early as 1896, however, the number of non-national banks had grown to sixty-one per cent, and they already held