It is not federal. It has no reserves. And the US government does not own it.
https://x.com/Deeteem1/status/2082108092406219034
Two Jewish brothers from Hamburg. One sat on the board of the Federal Reserve. One sat on the board of Germany's central bank. Then their countries went to war. The institution one of them designed is called the Federal Reserve. It is not federal. It has no reserves. And the US government does not own it.
In November 1910 six men boarded a private railway car in New Jersey under assumed names. They told no one where they were going. They used first names only among themselves. They traveled to a remote barrier island off the coast of Georgia called Jekyll Island, checked into an exclusive private club whose members included the Vanderbilts, the Rockefellers, and the Morgans, and spent nine days in secret writing the legislation that would become the Federal Reserve Act of 1913 and create the central banking system that controls the American economy to this day.
The meeting was not admitted to have occurred until the 1930s, nearly twenty years after it happened. It is now documented on the Federal Reserve's own official history website. It is also almost never taught in American schools.
The most remarkable figure in the room was a German-born Jewish banker named Paul Warburg. And the most remarkable fact about Paul Warburg is not what he built in America. It is what his brother was doing in Germany at the same time.
The Men on the Island
The participants were Senator Nelson Aldrich, A. Piatt Andrew who was an economist and Treasury assistant secretary, Henry Davison who was a senior partner at J.P. Morgan, Arthur Shelton who was Aldrich's personal secretary, Frank Vanderlip who was president of National City Bank then the largest bank in the United States, and Paul Warburg, a German-born partner at Kuhn Loeb and Co. who had been arguing for years that America needed a European-style central bank.
The group represented the concentrated financial power of the Morgan and Rockefeller banking empires alongside one German Jewish immigrant banker whose intellectual contribution would turn out to be the most significant of anyone in the room.
Paul Warburg's model for the American central bank was the German Reichsbank, an institution that held the reserves of private banks, acted as a clearinghouse, and could lend freely against good collateral in times of stress. Warburg understood something his American colleagues often missed. A central bank's power derived not merely from its capital but from its credibility, the market's certainty that it would act consistently and predictably to prevent liquidity crises from cascading into solvency crises. The Reichsbank had that credibility. The United States had nothing equivalent.
Columbia University economist Edwin Seligman assessed the Federal Reserve Act a year after it passed and concluded: "In its fundamental features the Federal Reserve Act is the work of Mr. Warburg more than of any other man." Warburg himself confirmed that the key technical matters were discussed and settled at Jekyll Island. The man who designed the Federal Reserve modeled it on the German central bank and was appointed to the Federal Reserve's first board by President Woodrow Wilson in 1914.
The Brother Nobody Discusses
Paul Warburg came from Hamburg. The Warburg family bank, M.M. Warburg and Co., was one of the great German banking dynasties, established in 1798 and still operating today. Paul had emigrated to America in 1902 after marrying into the Loeb family of Kuhn Loeb banking. His older brother Max stayed in Hamburg and ran the family bank.
Max Warburg was the personal adviser of the German autocrat Kaiser Wilhelm II. The two banking brothers Warburg were in fact on both sides of the Atlantic energetically pushing for German-American institutions that would offer an alternative to the British industrial and financial monopoly. They were convinced that Germany and the United States were growing stronger year by year while British power would erode.
When World War One began in 1914, the United States and Germany were on opposite sides. Paul Warburg sat on the board of the Federal Reserve, the central bank of the United States. Max Warburg sat on the board of the Reichsbank, the central bank of Germany. Two brothers from the same Hamburg banking family were simultaneously managing the central banking systems of nations whose soldiers were killing each other in the trenches of France and Belgium.
This is not an allegation. It is documented in Ron Chernow's Pulitzer Prize-winning biography of the Warburg family, in the Centre for Economic Policy Research's academic analysis of WW1 financial history, in Federal Reserve historical records, and in Britannica. It is sitting in the open historical record and it is almost never discussed.
The Secrecy That Took Twenty Years to Break
The meeting and its purpose were closely guarded secrets and participants did not admit that the meeting occurred until the 1930s. Warburg himself wrote: the results of the conference were entirely confidential. Even the fact that there had been a meeting was not permitted to become public.
Think about what that means. The legislation that created the central banking system of the United States, which controls American monetary policy, interest rates, the money supply, and the financial conditions under which every American borrows, saves, and operates, was written in secret by a group of bankers who concealed the meeting's existence for nearly two decades. The Federal Reserve Act was presented to Congress and the public as the product of official deliberation. The private nine-day retreat on a Georgian barrier island where its fundamental architecture was designed was not disclosed until long after the institution it created was permanently embedded in American life.
The cover was eventually broken not by a journalist or an investigator but by B.C. Forbes, the founder of Forbes Magazine, who published an account in Current Opinion in December 1916 describing how five men had evolved the Federal Reserve on Jekyll Island. The participants continued to deny it. Full acknowledgment did not come until the 1930s.
The Panic That Made It Possible
To understand why the Jekyll Island meeting happened you need to understand the Panic of 1907. In October 1907 the American banking system came close to complete collapse. A failed attempt to corner the copper market triggered a cascading bank run that spread across New York and then the entire country within days. The only thing that prevented total financial collapse was J.P. Morgan personally, at the age of 70, locking the leading bankers of New York in his library and refusing to let them leave until they had collectively agreed to prop up the failing institutions. One private banker's personal authority and personal fortune stood between the American economy and catastrophe.
Paul Warburg had been writing about exactly this vulnerability since at least 1907, publishing essays that laid out in technical detail what American banking lacked and what a reserve system could provide. He had been arguing in newspapers and lectures that America needed a central bank for years before anyone with political power was willing to listen. The Panic of 1907 made people willing to listen. Senator Aldrich was dispatched to Europe to study the German and British banking systems. He came back convinced Warburg was right. The Jekyll Island meeting was the result.
The model Warburg brought to the island was the Reichsbank his brother Max was helping to run in Hamburg. The institution that was designed to prevent America from experiencing another Panic of 1907 was modeled on the central bank of the country America would go to war with seven years later, designed by a man whose brother was sitting on that central bank's board when the war began.
What the Federal Reserve Actually Does
Before going further it is worth being precise about what the Federal Reserve is and is not, because this subject attracts more misinformation than almost any other in American financial history.
The Federal Reserve is a hybrid institution. The Federal Reserve has a government-appointed Board of Governors that controls policy, not the banks. It is neither purely governmental nor purely private. Member banks hold stock in regional Federal Reserve banks but that stock carries no voting rights on monetary policy, pays a fixed dividend, and cannot be sold or traded. The Board of Governors that sets interest rates and monetary policy is appointed by the President and confirmed by the Senate.
The Jekyll Island plan the bankers wrote in 1910, the Aldrich Plan, was publicly rejected by Congress. The Federal Reserve Act that passed in December 1913 drew heavily on its technical architecture while adding public oversight provisions the bankers had not wanted. The final institution was meaningfully different from what the Jekyll Island group had designed, with considerably more government oversight and accountability.
None of this means the meeting did not happen, that its secrecy was not deliberate, or that the concentration of private banking power in the room was not remarkable. It means the story is more complicated than either the conspiracy version or the official version presents it.
The Question the History Books Skip
What the documented record establishes is this. The fundamental architecture of American monetary policy was designed in secret by a group that included representatives of the Morgan and Rockefeller banking empires and a German Jewish immigrant whose family bank was one of the central institutions of German finance. The secrecy was deliberate and maintained for nearly twenty years. The man whose intellectual contribution was most significant was simultaneously connected through his brother to the central bank of Germany. When America went to war with Germany three years after the Federal Reserve opened for business, Paul Warburg resigned from the Federal Reserve Board because his German connections made his position untenable. Max Warburg in Hamburg was simultaneously helping Germany finance its side of the same war.
The two Warburg brothers were in fact on both sides of the Atlantic energetically pushing for German-American institutions that would offer an alternative to the British industrial and financial monopoly before the war. They were convinced that Germany and America were growing stronger while British power eroded. When the war separated them onto opposite sides of a conflict neither had wanted, Paul resigned from the institution he had built rather than become a political liability to the country he had chosen. Max survived the war and eventually helped negotiate the German reparations terms at Versailles, sitting on the German side of the same table where Bernard Baruch sat on the American side.
Two Jewish banking brothers from Hamburg. One designed the American central bank. One advised the German Kaiser. One sat on the Federal Reserve. One sat on the Reichsbank. Then their countries went to war.
That is in the historical record. It is documented by the Federal Reserve itself, by Ron Chernow's Pulitzer Prize-winning biography, by Harvard academic research, and by the Centre for Economic Policy Research. It is taught almost nowhere.
The island still exists off the coast of Georgia. The Jekyll Island Club has been restored and operates today as a hotel. You can stay in the room where they wrote the legislation. The Federal Reserve's own website has the full history of what happened there. It is not hidden. It is just not in the curriculum.
Sources
The Meeting at Jekyll Island, Federal Reserve History official website: federalreservehistory.org/essays/jekyll-
Paul M. Warburg, Federal Reserve History official website: federalreservehistory.org/people/paul-m-
Paul Warburg and the Federal Reserve, Federal Reserve Bank of Minneapolis: minneapolisfed.org/article/1989/p
The Federal Reserve Founding, Market Histories: markethistories.com/en/the-federal
Warburg Brothers and WW1 financial history, Centre for Economic Policy Research: cepr.org/voxeu/columns/
Paul Warburg, Daddy Warbucks and the Federal Reserve: joyshistoryventures.com/post/paul-warb
Ron Chernow, The Warburgs: The Twentieth Century Odyssey of a Remarkable Jewish Family, Vintage Books 1994
posted by Satish Sharma at
14:30
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