Published in the Western Standard


Gold and Economic Freedom was the title of an essay that Alan Greenspan wrote for Ayn Rand’s Capitalism, the Unknown Ideal before he sold his soul to the establishment and became “the Maestro”.


An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire -- that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other...


...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.


This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.


The author of these words went on to become the most influential Federal Reserve Chairmen of our time and was regarded as the Maestro, and all knowing economist and central banker, possibly the surviving oxymoron, if only one could exist. America’s central bank, The Federal Reserve was created by the Federal Reserve Act of 1913. However, most people have little knowledge of the machinations behind the scene in the creation of this institution. Edward G. Griffin has written an extensive book on the Fed’s creation, The Creature from Jekyll Island (as well as a 12 part YouTube video series). I will let him explain the secrecy involved in creating this banking organization from a speech he gave.


Back in 1910, Jekyll Island was completely privately owned by a small group of millionaires from New York. We're talking about people such as J. P. Morgan, William Rockefeller and their associates. This was a social club and it was called "The Jekyll Island Club." They owned the island and it was where their families came to spend the winter months. There was a magnificent structure there, the clubhouse, which was the center of their social activities. That clubhouse is still there, by-the-way. The island has since been purchased by the state of Georgia, converted into a state park and the clubhouse has been restored and you can visit it. I think you'd be very impressed by it. As you walk through the downstairs corridors you'll come to a door and on the door there is a brass plaque and it says: "In this room the Federal Reserve System was created." This is not a secret anymore; it's a matter of public record. Around the clubhouse there were some cottages as they were called which were built by some of the families to quarter themselves. They're attractive little things; they were magnificent examples of the architecture of the turn of the century. One of the cottages through which they take tours if you're interested in doing that, as I recall the guide told us that there were 14 bathrooms in that cottage--not exactly what we would call a cottage.


The clubhouse is where the Federal Reserve System was created. Let's retell that story in detail and see how it came about. The year was 1910, that was three years before the Federal Reserve Act was finally passed into law. It was November of that year when Senator Nelson Aldrich sent his private railroad car to the railroad station in New Jersey and there it was in readiness for the arrival of himself and six other men who were told to come under conditions of great secrecy. For example, they were told to arrive one at a time and not to dine with each other on the night of their departure. They were told that should they arrive at the station at the same time they should pretend like they didn't even know each other. They were instructed to avoid newspaper reporters at all cost because they were well-known people and had they been seen by a reporter they would've asked questions. Especially if two or three of them had been spotted together, this would've raised eyebrows and they would've asked a lot of questions. One of the men carried a shotgun in a big black case so that if he had been stopped and asked where he was going he was prepared to say that he was going on a duck hunting trip. The interesting thing about that part of the story is that we find out later from his biographer that this man never fired a gun in his life, in fact he borrowed that shotgun just to carry with him on this trip as part of the deception.


Once they got on board the private railroad car this pattern continued. They were told to use first names only, not to use their last names at all. A couple of the men even adopted code-names. The reason for that is so that the servants on board the train would not know who these people were. They were afraid that if the servants would talk about it then the word would leak out and it might get into the press. They traveled for two nights and a day on board this car and they arrived after a 1,000 mile journey to Brunswick, Georgia. From there they took a ferry across the inland straits and they ended up on Jekyll Island in the clubhouse where for the next nine days they sat around the table and hammered out all the important details of what eventually became the Federal Reserve System. When they were done they went back to New York.


For quite a few years thereafter these men denied that any such meeting took place. It wasn't until after the Federal Reserve System was firmly established that they then began to talk openly about their journey and what they accomplished. Several of them wrote books on the topic, one of them wrote a magazine article and they gave interviews to newspaper reporters so now it's possible to go into the public record and document quite clearly and in detail what happened there.


Who were these seven men? The first one I have already mentioned, Senator Nelson Aldrich was the Republican whip in the Senate, he was the chairman of the National Monetary Commission which was the special committee of Congress created for the purpose of making a recommendation to Congress for proposed legislation to reform banking. The public was quite concerned in those days over what was going on in the banking industry; a lot of banks were folding, people were losing their investments in banks, they had broken their promise to guard the depositors assets, there were runs on the bank, banks couldn't give the people their money back. In particular they were concerned over the concentration of wealth in the hands of a few large banks in New York on Wall Street. This is what they called the "money trust" in those days. The money trust was a common phrase. Quite a few politicians had been elected to office on their campaign promise to break the grip of the money trust. President Wilson was one of those politicians that campaigned on that even though Wilson was himself hand-picked by the money trust and financed by the money trust and surrounded by the money trust--all of his advisors and politic cronies. The public didn't know that at the time and it was a popular issue. If you campaigned against the money trust you were quite apt to be elected and that was what I call "the people you love to hate" money trust.


That was one of the purposes of the National Monetary Commission which was to propose legislation to break the grip of the money trust and Aldrich was chairman of that committee. He was also the very important business associate of J. P. Morgan. He was the father-in-law of John D. Rockefeller, Jr. which means that eventually he became the grandfather of Nelson Rockefeller, our former vice-president. You remember his full name was Nelson Aldrich Rockefeller; his middle name being derived from his famous grandfather.


The second important person there was Abraham Andrew who was Assistant Secretary of the Treasury. He later became a Congressman and he was very important in banking circles.


Frank Vanderlip was there. He was the President of the National City Bank of New York which was the largest of all of the banks in America representing the financial interests of William Rockefeller and the international investment firm of Kuhn, Loeb & Company.


Henry Davison was there, the senior partner of the J. P. Morgan Company. Charles Norton was there; he was the President of the First National Bank of New York which was another one of the giants. Benjamin Strong was at the meeting; he was the head of J. P. Morgan's Banker's Trust Company and Benjamin Strong three years later would become the first head of the Federal Reserve System.


Finally, there was Paul Warburg who was probably the most important at the meeting because of his knowledge of banking as it was practiced in Europe. Paul Warburg was born in Germany and eventually became a naturalized American citizen. He was a partner in Kuhn, Loeb & Company and was a representative of the Rothschild banking dynasty in England and France where he maintained very close working relationships throughout his entire career with his brother, Max Warburg, who was the head of the Warburg banking consortium in Germany and the Netherlands. Paul Warburg was one of the wealthiest men in the world. In fact, those of you who are Little Orphan Annie fans will remember Daddy Warbucks. Daddy Warbucks was the characterization of Paul Warburg and everyone at the time was well aware of that fact. I have his photograph in my book and if you compare the photograph to the cartoon drawing you'll see the resemblance between Paul WARburg and Daddy WARbucks. And while we're on the topic of cartoon characters, if you played Monopoly, you remember the drawing of the capitalist with the handle-bar moustache and the cigar? That's J. P. Morgan.


These were the seven men aboard that railroad car who were at Jekyll Island. Amazing as it may seem, they represented approximately 1/4 of the wealth of the entire world. These are the men that sat around the table and created the Federal Reserve System. For the skeptic who's wondering it didn't happen that way surely Griffin is exaggerating to make some kind of a point. Let me put your mind at ease that it did happen that way (perhaps not at ease but in a state of tension).


How do we know? For example, Frank Vanderlip who was at the meeting wrote an article that appeared in the Saturday Evening Post on February 9, 1935 and I'd like to read for you just a short excerpt from that article. This is what Vanderlip said: "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 to 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 and Abe. 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've made our mysterious journey significant in Washington, in Wall Street, even in London. Discovery we knew simply must not happen."


Why not? why the secrecy? what's the big deal about a group of bankers getting together in private and talking about banking or even banking legislation. And the answer is provided by Vanderlip himself in the same article. He said: "If it were to be exposed publicly that our particular group had gotten together and written a banking bill, that bill would have no chance whatever of passage by Congress." Why not? Because the purpose of the bill was to break the grip of the money trust and it was written by the money trust. And had that fact been known at the get-go, we would never have had a Federal Reserve System because as Vanderlip said it would have had no chance of passage at all by Congress. So it was essential to keep that whole thing a secret as it has remained a secret even to this day.


As one can see, the Fed has never been transparent, so it came as no surprise that Bloomberg will failed in their Freedom of Information Act request to determine who the Fed bailed out last year. The counsel for the Fed is continuing to deny this request.


After the World War 2, and with an adequate amount of money printing to finance the years of fighting and border re-drawing, the gold standard could begin to be removed from society’s conscience. 44 Industrialized nations met in the small New Hampshire town of Bretton Woods and signed an international monetary agreement that would bear the name of the town. This international agreement made the US Dollar (USD) as good as gold, for all transactions in international markets would be settled in USD and participating members would have the option to redeem these US Dollars they collected at the fixed price of $35USD/oz. of gold.


This system worked well for a period of time, but by the 1958 recession in the US it began to fall apart. The 1958 recession led to a run on gold in America as countries redeemed their gold to stabilize their domestic economies. In addition, in the 1960s Lyndon Johnson’s “guns and butter” policies (the Great Society and the early escalation of the Vietnam war) had further escalated these domestic inflationary pressures and from a foreigners perspective reduced value of the USD assets their central bank held. This led to further redemptions of gold holdings and the US having to make good on printed money. To combat this in 1960 (before Johnsons policies made it unbearable) JKF, with fellow US centric nations, set up the London Gold Pool to manage the price of gold and keep it at the fixed $35USD/oz, when it had been trading in London consistently closer to $40USD/oz. The Gold Pool’s success ended on February 4, 1965 with Charles de Gaulle’s withdrawal from the London Gold Pool and his suggestion to return to a gold exchange standard. France began withdrawing its gold from the US and this eventually forced Richard Nixon to hammer the final nail in the gold standard coffin, when on August 15, 1971 the “gold window was closed” and Nixon uttered those words that should scare all libertarians, “we are all Keynesian now”.


For an action to be premeditated it must have mens rae and modus operandi and as one can see there is definitely an incentive for the United States and her allies, to manipulate the price of gold. This action allows the US to convey strength, that does not exist, in the USD, the global reserve currency.


After the collapse of the Bretton Woods system we entered the era of the fiat currency, a currency that has only the faith and backing of the government and is issued by government edict. In the approximately 40 year era since the close of the gold window, the world has operated on a handful of currencies issued by governments and one alternative currency, gold, the currency with no liability. By this I mean, gold does not represent the liabilities of any nation like a fiat currency does. This is a concept not understood by all. A fiat currency works so long as that another is willing to accept it as a means of payment. This means that fiat currency represents a liability of the issuer, a promise to pay or bill of credit. The issuer is the Fed. By manipulating the price of gold the populace is given another reason to keep from fleeing their paper currencies and keeping their savings in the currency with no liabilities keeping the Federal Reserve from having to redeem its liabilities. For gold has been known to keep its purchasing power over centuries. The following is from Jeff Clark, editor of Casey Research’s Gold and Resource Report.


Let's trace what an ounce of gold or silver – true money – has been able to purchase at various periods in history, and how it compares to today.


1979: Gold's average price that year was $306.68. This bought an average-priced full size bed. 30 years later, $950 would still buy you a full size bed.


1963: A gallon of gasoline in America sold for 31 cents. This meant that 3 silver dimes could buy a gallon of gasoline. The total weight of silver in 3 silver dimes is .217 of an ounce. Today, 3 silver dimes would buy a gallon of gasoline anywhere in the U.S.


600 AD: In the Middle East, a chicken at the time of Mohammad would cost a family one silver Dirham (3 grams). Today, 1,400 years later, a chicken in the Middle East would still cost a family one silver Dirham.


Time of Christ: Under the Roman Empire, an ounce of gold purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.


400 BC: Some scholars report that during the reign of King Nebuchadnezzar, an ounce of gold bought 350 loaves of bread. Today, an ounce of gold still buys about 350 loaves ($950 divided by 350 = $2.73/loaf).


1000 BC: King Solomon was known to have purchased many horses for his army. Historical records show he bought them in Egypt for 150 shekels of silver each. 150 shekels was about 55 troy ounces of silver. Today, you can still buy a riding horse for 55 troy ounces of silver ($800).


What You Have in Common with King NebuchadnezzarSource: Jeff Clark, Casey’s Gold & Resource Report 08/13/2009


If society did not lose their purchasing power through inflation they would not be forced to participate in the stock and bond markets to prepare for retirement and protect the purchasing power of their labour and savings. If this were the case the banksters on Wall Street and in the City would not have the political clout they currently possess. Collapses like last autumns stock market collapse would have much smaller implications, affecting only those who chose to participate in their game.


The manipulation of the gold price damages the economies of poor resource producing nations. With an artificially low gold price, African nations sell undervalued gold to the market for overvalued US Dollars. This system keeps their citizens poor and dependent upon the Western nations for aid.

© 2014 by Bradley Parkes