Act is the work of Mr. Warburg more than any other man in the country. The existence of a

Federal Reserve Board creates, in everything but in name, a real central bank. In the two

Fundamentals of command of reserves and of a discount policy, the Federal Reserve Act has

Frankly accepted the principle of the Aldrich Bill, and these principles, as has been stated, were the creation of Mr. Warburg and Mr. Warburg alone. It must not be forgotten that Mr. Warburg had a practical object in view. In formulating his plans and in advancing in them slightly varying

Suggestions from time to time, it was incumbent on him to remember that the education of the

country must be gradual and that a large part of the task was to break down prejudices and remove suspicion. His plans therefore contained all sorts of elaborate suggestions designed to guard the public against fancied dangers and to persuade the country that the general scheme was at all practicable. It was the hope of Mr. Warburg that with the lapse of time it might be possible to eliminate from the law a few clauses which were inserted largely at his suggestion for educational purposes."

Now that the public debt of the United States has passed a trillion dollars, we may indeed admit "how great is the indebtedness of the United States to Mr. Warburg." At the time he wrote the Federal Reserve Act, the public debt was almost nonexistent.

Professor Seligman points out Warburg’s remarkable prescience that the real task of the members of the Jekyll Island conference was to prepare a banking plan which would gradually "educate the country" and "break down prejudices and remove suspicion". The campaign to enact the plan into law succeeded in doing just that.

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Frank Vanderlip, From Farmboy to Financier

9

CHAPTER TWO

The Aldrich Plan

"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

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