It’s Presidents’ Day here in the U.S.

So I’m doing something a little different today…

I’m sharing an excerpt from my 2014 book, All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.

(With kind permission from my publisher, Bold Type Books, formerly Nation Books).

My book tells the story of the hidden alliances between Wall Street and the White House. These alliances have driven American power over the last century.

Today’s excerpt takes us back to 1913, the year the Federal Reserve was born.

I’ll show you how wealthy Wall Street bankers formed cozy relationships with the president at the time, Woodrow Wilson…

And how they pushed the White House to create America’s central bank, the Fed.

You’ll find a link to the excerpt at the end of today’s dispatch.

But first, a little background. This will help you understand the characters and events in today’s excerpt…

The Aldrich Plan

Our story starts with the Panic of 1907. It unfolded over three weeks in October that year.

The New York Stock Exchange dropped roughly 50%. There were numerous runs on banks, and many state and local banks went bankrupt.

As a result, many Americans became distrustful of bankers and of banking in general. It prompted a call for reform of the currency and banking system.

Senator Nelson Aldrich formulated what was called the Aldrich Plan. It proposed a system made up of 15 regional central banks. These would be coordinated by a national board of commercial bankers.

This new system would be responsible for making emergency loans to member banks, creating money, and acting as a fiscal agent for the federal government.

Aldrich’s bill was defeated in the House. Democrats weren’t happy with it. It would give bankers too much control over the financial system, they argued. This would not sit well with voters either.

But the bill provided a blueprint for what would eventually become the Federal Reserve Act passed in 1913.

Cast of Characters

The excerpt I’m sharing with you today details the powerplay between President Woodrow Wilson and the influential bankers of the day.

Here are some names you’ll want to keep in mind as you read it…

  • Nelson Aldrich: Rhode Island senator, 1881-1911. Head of the National Monetary Commission, 1908-1911. Integrated with the Rockefeller family through progeny.

  • Louis B. Brandeis: Preeminent Boston lawyer and future Supreme Court Justice.

  • Robert Bulkley: Millionaire Democrat from Ohio. A member of the subcommittee on banking and currency.

  • Carter Glass: U.S. representative from Virginia, 1902-1919. Senator, 1920-1946. Led a Senate committee to adopt the plan that became the Federal Reserve Act. Treasury secretary, 1918-1920. Coauthor of the Glass-Steagall Act, 1933, that required banks to separate investment and commercial banking activities.

  • Colonel Edward House: Friend, confidant, and unofficial adviser to Wilson.

  • William Gibbs McAdoo: Son-in-law of Wilson. Treasury secretary, 1913-1918.

  • Robert Latham Owen: Senator from Oklahoma, 1907-1925. Senate sponsor of the Glass-Owen Federal Reserve Act of 1913.

  • Frank Vanderlip: Vice president, then president, of National City Bank, 1909-1919. Assistant secretary of the Treasury under President William McKinley. Worked with Nelson Aldrich on the Aldrich plan. Early friend of Wilson, later distant.

  • Paul Warburg: Partner in Kuhn, Loeb & Company. Representative of Rothschild banking dynasty in England and France. Later appointed by Wilson to Federal Reserve Board.

  • Thomas Woodrow Wilson: President of the United States, 1913-1921.

To read the excerpt, follow this link.

Happy Presidents’ Day.

Regards,

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Nomi Prins
Editor, Inside Wall Street with Nomi Prins

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