Creature From Jekyll Island by G. Edward

3. Establish regional branches to create the appearance of decentralization, not dominated by Wall Street banks.

4. Begin with a conservative structure including many sound banking principles knowing that the provisions can be quietly altered or removed in subsequent years.

5. Use the anger caused by recent panics and bank failures to create popular demand for monetary reform.

6. Offer the Jekyll Island plan as though it were in response to that need.

7. Employ university professors to give the plan the appearance of academic approval.

8. Speak out against the plan to convince the public that Wall Street bankers do not want it.

A CENTRAL BANK BY ANY OTHER NAME

Americans would never have accepted the Federal Reserve System if they had known that it was half cartel and half central bank. Even though the concept of government protectionism was

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rapidly gaining acceptance in business, academic, and political circles, the idea of cartels, trusts, and restraint of free competition was still quite alien to the average voter. And within the halls of Congress, any forthright proposal for either a cartel or a central bank would have been soundly defeated. Congressman Everis Hayes of California warned: 'Our people have set their faces like steel against a central bank.'1 Senator John Shafroth of Colorado declared: 'The Democratic Party is opposed to a central bank.'2

The monetary scientists on Jekyll Island decided, therefore, to devise a name for their new creature which would avoid the word bank altogether and which would conjure the image of the federal government itself. And to create the deception that there would be no concentration of power in the large New York banks, the original plan calling for a central bank was replaced by a proposal for a network of regional institutions which supposedly would share and diffuse that power.

Nathaniel Wright Stephenson, Senator Aldrich's biographer, tells us: 'Aldrich entered the discussion at Jekyll Island an ardent convert to the idea of a central bank. His desire was to transplant the system of one of the great European banks, say the Bank of England, bodily to America.'3 Galbraith explains further: 'It was his [Senator Aldrich's] thought to outflank the opposition by having not one central bank but many. And the word bank would itself be avoided.'

Frank Vanderlip tells us the regional concept was merely window dressing and that the network was always intended to operate as one central bank. He said: 'The law as enacted provided for twelve banks instead of one,... but the intent of the law was to coordinate the twelve through the Federal Reserve Board in Washington, so that in effect they would operate as a central bank.'5

If not using the word bank was essential to the Jekyll Island plan, avoiding the word cartel was even more so. Yet, the cartel nature of the proposed central bank was obvious to any astute observer. In an address before the American Bankers Association, 1- Congressional Record, pt. 5,1913, p. 4655.

2- Congressional Record, pt 6,1913, p. 6021.

3- Stephenson, p. 378.

4- Galbraith, p. 122.

5- Vanderlip, 'From Farm Boy to Financier,' p. 72.

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Aldrich laid it out plainly. He said: 'The organization proposed is not a bank, but a cooperative union of all the banks of the country for definite purposes.'1 Two years later, in a speech before that same group of bankers, A. Barton Hepburn of Chase National Bank was even more candid. He said: 'The measure recognizes and adopts the principles of a central bank. 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.'2 It would be difficult to find a better definition of the word cartel than that.

The plan to structure the Creature conservatively at the start and then to remove the safeguards later was the brainchild of Paul