Obamacare scheming smells of Jekyll Island ~ By Jack Cashill

A century ago, powerful men came up with a plan for a centralized banking system. We now know it as the Federal Reserve.

I started this post of Jack Cashill's column today with the three following paragraphs that should sound very familiar, something that is happening today, 100 years later, with the Health Care reform plan.

To give the illusion of a grass-roots effort, the committee of seven launched a National Citizens League for the Creation of a Sound Banking System and headquartered it in Chicago rather than New York.


To win over Congress, supporters of the plan would have to lose the "Aldrich" name and find a Democratic sponsor. Happily for them, Carter Glass, the head of the House Banking Committee, stepped up to champion the cause in the House.


The House Democrats and now President Wilson insisted on changes. They demanded not only the appearance of decentralization, but also at least a smidgen of reality.

By Jack Cashill

Posted: March 18, 2010 ~ 1:00 am Eastern

© 2010

In my new book, "Popes and Bankers," I tell the story of how 100 years ago this November, six faux duck hunters gathered on a small private island off the coast of Georgia.

The stealthy, incremental way in which the group plotted big government's future set something of a blueprint for a century to come, one that Obama, Pelosi, Reid et al. have followed almost to the letter.

For at least four of the six, the descent to Georgia was draped in mystery. Each guest was instructed to show up at Hoboken Station and there board the private railroad car, blinds drawn, of Sen. Nelson Aldrich.

Aldrich, they knew, was John D. Rockefeller's man in the U.S. Senate. He and Henry Pomeroy Davison, a senior partner in the House of Morgan, would accompany them on the journey to a destination that had been secured by J. Pierpont Morgan himself.

At Brunswick, Ga., the six men boarded a boat headed for Jekyll Island, a hunting retreat for the elite described by one magazine as "the richest, the most exclusive and most inaccessible club in the world."

For the next 10 days, the six men and a small, skeleton staff had the island to themselves. They emerged at retreat's end with what came to be known as the "Aldrich Plan," a document that, with a few modifications, would soon enough reshape the world of finance.

For the record, the duck hunters owed their invitation to the Panic of 1907 and the man who calmed it. That crisis had found Morgan at the peak of his powers.

Now more than 70 years old, he caused Wall Street and Washington to wonder what would happen in a future emergency if there were no Morgan among them.

"Something has got to be done," Aldrich worried out loud. "We may not always have Pierpont Morgan with us to meet a crisis."

Even before the panic, academia had been quietly militating for a solution to future crises that did not involve Morgan or any other independent agent.

The academics saw central control along scientific principles as a solution to a free and competitive market. At a Columbia University conference in 1907, one Frank Vanderlip argued that a competitive, decentralized banking system caused the panic, "one of the great calamities in history."

His outspokenness on this issue earned him a round trip to Jekyll Island. Following Vanderlip at Columbia was Paul Warburg, a 34-year-old partner in the investment banking house of his in-laws, Kuhn, Loeb & Company.

"Small banks constitute a danger," he told those gathered at Columbia in arguing for the benefits of European-style banking.

Warburg, in fact, had a problem with the whole idea of a free, self-regulating market. He hoped to replace Adam Smith's "invisible hand" with the "best judgment of experts," himself high among them. In 1910, Warburg too took up duck hunting on Jekyll Island.

A. Piatt Andrew and Benjamin Strong donned their hunter togs as well. Indiana born, Andrew had been educated at Princeton and in the inevitable Europe and had taught economics at Harvard.

Then the president of Banker's Trust Company, the 39-year-old Strong owed his career to Davison and to Davison's boss, Morgan.

Strong and Davison were the two Morgan men in attendance. Aldrich and Vanderlip were Rockefeller men. Warburg represented Kuhn, Loeb, and Andrew, an economist, was friendly to all camps.

The only duck or wild turkey the men saw during the 10-day retreat was on their dinner plates. Before leaving, the six men took a pledge of secrecy. It would be four years before anyone got wind of the meeting and 20 years before any of the men admitted being there.

Given the secrecy and the seriousness of the enterprise, the swamps of Jekyll Island would serve as the primordial stew for a thousand conspiracy theories, some of which are close to accurate.

Strong and Vanderlip drafted the document, initially called the Aldrich Plan, which summarized the strategy agreed upon at the retreat. The plan called for the creation of a "National Reserve Association," a sort of banker's cooperative that replicated the function of a central bank without calling it such.

The association would have the authority to issue currency and lend to commercial banks. Although government appointees would sit on the association's board, the bankers themselves would control it.

Aldrich had recommended a straightforward central bank on the European model, but the non-politicians knew better than he that a central bank could be more readily sold to the public if packaged as a decentralized bank.

Sound familiar?

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Ron Paul's hour of power ~ By Patrick J. Buchanan

Commentary from WorldNetDaily

By Patrick J. Buchanan Posted: December 11, 2009 ~ 1:00 am Eastern © 2009 The decades-long campaign of Ron Paul to have the Government Accountability Office do a full audit of the Federal Reserve now has 313 sponsors in the House. Sometimes perseverance does pay off. If not derailed by the establishment, the audit may happen. Yet, many columnists and commentators are aghast. An auditors' probe, they wail, would imperil the Fed's independence and expose it to pressure from Congress to keep interest rates low and money flowing when the need of the nation and economy might call for tightening. They cite Paul Volcker, who to squeeze double-digit inflation out of the economy in the late Carter and early Reagan years, drove the prime rate to 21 percent, causing the worst recession since the Depression. Volcker, they claim, prepared the ground for the Reagan tax cuts and seven fat years of prosperity. That decade, America created 20 million jobs – and another 22 million in the Clinton era. Without Volcker putting the economy through the wringer, it could not have happened. And had he been forced to explain his decisions, Congress would have broken his policy. Such is the cast for Fed independence. But if true, what does this say about our republic? READ FULL STORY >

What really caused the Great Depression ~ By Walter E. Williams

From WorldNetDaily

By Walter E. Williams Posted: November 04, 2009 ~ 1:00 am Eastern © 2009 Steve H. Hanke is a professor of Applied Economics at Johns Hopkins University in Baltimore and senior fellow at the Cato Institute in Washington, D.C., and writes frequently for Globe Asia and Forbes magazine. Professor Hanke starts off his "Hu versus Sarkozy" article (Globe Asia, November 2009) with a warning. There is no more reliable rule than the 95 percent rule: 95 percent of what you read about economics and finance is either wrong or irrelevant. The article contrasts the Chinese versus the French responses to the financial crisis, but the major focus is on economic myths. Hanke says that the most repeated statement about the cause of the U.S. Great Depression is that it was caused by the October 1929 stock market crash. How could that be? By April 1930, the stock market had recovered to its pre-crash level. What is not taught in history books is the Great Depression was caused by a massive government failure. The most important part of that failure were the actions by the Federal Reserve Bank that led to the contraction of the money supply by 25 percent. Then, in the name of saving jobs, Congress enacted the Smoot-Hawley Act in June 1930, which increased U.S. tariffs by more than 50 percent. Other nations retaliated and world trade collapsed. U.S. unemployment rose from 8 percent in 1930 to 25 percent in 1933. In 1932, the Herbert Hoover administration and a Democratic Congress imposed the largest tax increase in U.S. history, raising the top tax rate on income from 25 percent to 63 percent. The Roosevelt administration followed these destructive policies with New Deal legislation that massively regulated the economy and extended the Great Depression to after World War II. Have today's politicians and their economic advisers learned anything from yesteryear's policy that turned what would have been a short, sharp downturn in the economy into a 16-year affair? The answer is very little. Professor Hanke argues that the chief enabler of both the Great Depression and our latest economic downturn is the Federal Reserve Bank, who sees itself as America's systemic risk regulator. This is the world upside down, Hanke explains: The Federal Reserve is the systemic risk. [CLICK HERE TO READ MORE]

Economist warns of president's financial 'bubble'

From WorldNetDaily

By Jerome R. Corsi Posted: November 02, 2009 ~ 10:26 pm Eastern © 2009 WorldNetDaily While President Obama declared today from the White House that his goal was to create "post-bubble" growth in the U.S. economy, a top economist at New York University published an article in the Financial Times charging that under Obama the Federal Reserve is creating one of the greatest economic bubbles in financial history. NYU economist Nouriel Roubini argued in the newspaper that by keeping federal fund interest rates at zero, Federal Reserve Chairman Ben Bernanke is stimulating a historic stock market rise that is being fueled by money investment managers borrowing from the federal government. Roubini warned that the dollar has become the "mother of all carry trades" and that it faces "an inevitable bust" that will cause asset prices to plummet in what will amount to a global stock market crash of historic proportions. A currency is defined as being involved in a "carry trade" when the currency can be borrowed at relatively low cost and invested for what appears to be a certain or "locked-in" gain. [CLICK HERE TO READ MORE]

Federal Reserve Board fights to keep its secrets

From WorldNetDaily

Warns disclosing where money went would cause 'irreparable harm' Posted: August 29, 2009 ~ 12:25 am Eastern By Drew Zahn © 2009 WorldNetDaily The Federal Reserve Board, despite being ordered to disclose to whom it awarded roughly $2 trillion in discount "stimulus" loans, is fighting to keep the information under wraps as a protected "trade secret." Earlier this week, a U.S. district court judge rejected the Fed's argument that the names of borrowers are exempt from disclosure under the Freedom of Information Act and ordered the board to release the information by Monday, Aug. 31. The Fed's board of governors, however, has now filed a motion asking the judge to delay enforcement of the order, seeking time to appeal and arguing that disclosing which banks borrowed the funds could lead to a backlash from the banks' customers and stockholders. [READ ENTIRE STORY]