Where does money come from? Where does it go? Who makes it? The money magicians' secrets are unveiled Here is a close look at their mirrors and smoke machines, the pulleys, cogs, and wheels that create the grand illusion called money A boring subject? Just wait' You'll be hooked in five minutes Reads like a detective story - which it really is But if s all true This book is about the most blatant scam of history If s all here: the cause of wars, boom-bust cycles, inflation, depression, prosperity Your world view will definitely change Putting it quite simply: this may be the most important book on world affairs you will ever read "A superb analysis deserving serious attention by all Americans Be prepared for one heck of a journey through time and mind." Ron Paul, member of Congress House Banking Committee "What every American needs to know about central bank power A gripping adventure into the secret world of the international banking cartel." Mark Thornton, Asst Professor of Economics, Auburn University; Coordinator Academic Affairs, Ludwig von Mises Institute "A magnificent accomplishment - a train-load of heavy history, organized so well and written in such a relaxed and easy style that it captivated me I hated to put it d o w n " Dan Smoot Publisher/Editor, Dan Smoot Report "As a career banker and president of a bank consulting firm, I thought I had a good understanding of the Federal Reserve But this book changed the way I view our entire monetary system." Marilyn MacGruder Barn wall Grand Junction, Colorado HOW TO READ THIS BOOK Thick books can be intimidating We tend to put off reading them until we have a suitably large block of time—which is to say, often they are never read That is the reason a preview has been placed at the beginning and a summary at the end of each chapter All of these together can be read in about one hour Although they will not contain details nor documentation, they will cover the major points and will provide an overview of the complete story The best way to read this book, therefore, is to begin with the previews of each section, followed by the chapter previews and summaries Even if the reader is not in a hurry, this is still an excellent approach A look at the map before the journey makes it easier to grapple with a topic such as this which spans so much history THE CREATURE FROM JEKYLL ISLAND A Second Look at the Federal Reserve Third edition by G Edward Griffin American Media Dedicated to the next generation-especially my own brood: James, Daniel, Ralph, and Kathleen May this effort help to build for them a better world Seventh printing: May 1998 Sixth printing: September 1997 Fifth printing: August 1996 Fourth printing: September 1995 Third printing: April 1995 Second printing: November 1994 First printing: July 1994 Third edition: May 1998 Second edition: September 1995 First edition: July 1994 © Copyright 1998,1995 and 1994 by G Edward Griffin Published by American Media P.O Box 4646 Westlake Village, California 91359-1646 Library of Congress Catalog Card Number: 98-71615 ISBN 0-912986-21-2 Manufactured in the United States TABLE OF CONTENTS Preface Acknowledgments Introduction i iv v I WHAT CREATURE IS THIS? What is the Federal Reserve System? The answer may surprise you It is not federal and there are no reserves Furthermore, the Federal Reserve Banks are not even banks The key to this riddle is to be found, not at the beginning of the story, but in the middle Since this is not a textbook, we are not confined to a chronological structure The subject matter is not a curriculum to be mastered but a mystery to be solved So let us start where the action is The Journey to Jekyll Island The Name of the Game Is Bailout Protectors of the Public Home Sweet Loan Nearer to the Heart's Desire Building the New World Order 25 41 67 85 107 II A CRASH COURSE ON MONEY 133 The eight chapters contained in this and the following section deal with material that is organized by topic, not chronology Several of them will jump ahead of events that are not covered until later Furthermore, the scope is such that the reader may wonder what, if any, is the connection with the Federal Reserve System Please be patient The importance will eventually become clear It is the author's intent to cover concepts and principles before looking at events Without this background, the history of the Federal Reserve is boring With it, the story emerges as an exciting drama which profoundly affects our lives today So let us begin this adventure with a few discoveries about the nature of money itself The Barbaric Metal Fool's Gold The Secret Science 10 The Mandrake Mechanism 135 155 171 185 III THE NEW ALCHEMY 215 The ancient alchemists sought in vain to convert lead into gold Modern alchemists have succeeded in that quest The lead bullets of war have yielded an endless source of gold for those magicians who control the Mandrake Mechanism The startling fact emerges that, without the ability to create fiat money, most modern wars simply would not have occurred As long as the Mechanism is allowed to function, future wars are inevitable This is the story of how that came to pass 11 The Rothschild Formula 12 Sink the Lusitania! 13 Masquerade in Moscow 14 The Best Enemy Money Can Buy 217 235 263 285 IV A TALE OF THREE BANKS 307 It has been said that those who are ignorant of history are doomed to repeat its mistakes It may come as a surprise to learn that the Federal Reserve System is America's fourth central bank, not its first We have been through all this before and, each time, the result has been the same Interested in what happened? Then let's set the coordinates of our time machine to the colony of Massachusetts and the year 1690 To activate, turn to chapter fifteen 15 The Lost Treasure Map 16 The Creature Comes to America 17 A Den of Vipers 18 Loaves and Fishes, and Civil War 19 Greenbacks and Other Crimes 309 325 341 361 377 V THE HARVEST 405 Monetary and political scientists continue to expound the theoretical merits of the Federal Reserve System It has become a modern act of faith that economic life simply could not go on without it But the time for theory is past The Creature moved into its final lair in 1913 and has snorted and thrashed about the landscape ever since If we wish to know if it is a creature of service or a beast of prey, we merely have to look at what it has done And, after the test of all those years, we can be sure that what it has done, it will continue to Or, to use the Biblical axiom, a tree shall be known by the fruit it bears Let us now examine the harvest t 20 The London Connection 21 Competition Is A Sin 22 The Creature Swallows Congress 23 The Great Duck Dinner 407 431 451 471 VI TIME TRAVEL INTO THE FUTURE 505 In the previous sections of this book, we have travelled through time We began our journey by stepping into the past As we crisscrossed the centuries, we observed wars, treachery, profiteering, and political deception That has brought us to the present Now we are prepared to ride our time machine into the future It will be a hair-raising trip, and much of what lies ahead will be unpleasant But it has not yet come to pass It is merely the projection of present forces If we not like what we see, we still have an opportunity to change those forces The future will be what we choose to make it 24 Doomsday Mechanisms 25 A Pessimistic Scenario 26 A Realistic Scenario PHOTOGRAPHS The seven men who met in secret at Jekyll Island The Fabian Society stained-glass window First photo section Period cartoons about the Rothschilds Items relating to the sinking of the Lusitania Second photo section 507 537 565 24 106 208-214 234 262 396-404 APPENDIX A Structure and Function of the Federal Reserve 590 B Natural Laws of Human Behavior in Economics 592 C Is Ml Subtractive or Accumulative? 594 BIBLIOGRAPHY 596 INDEX 602 PREFACE Does the world really need another book on the Federal Reserve System? I have struggled with that question for several years My own library is mute testimony to the fact that there has been no shortage of writers willing to set off into the dark forest to battle with the evil dragon But, for the most part, their books have been ignored by the mainstream, and the giant snorter remains undaunted in his lair There seemed to be little reason to think that I could succeed where so many others have failed Yet, the idea was haunting There was no doubt in my mind that the Federal Reserve is one of the most dangerous creatures ever to stalk our land Furthermore, as my probing brought me into contact with more and more hard data, I came to realize that I was investigating one of the greatest "who-dunits" of history And, to make matters worse, I discovered who did it Someone has to get this story through to the public The problem, however, is that the public doesn't want to hear it After all, this is bad news, and we certainly get enough of that as it is Another obstacle to communication is that this tale truly is incredible, which means unbelievable The magnitude by which reality deviates from the accepted myth is so great that, for most people, it simply is beyond credibility Anyone carrying this message is immediately suspected of paranoia Who will listen to a madman? And, finally, there is the subject matter itself It can become pretty complex Well, at least that's how it seems at first Treatises on this topic often read like curriculum textbooks for banking and finance It is easy to become ensnared in a sticky web of terminology and abstractions Only monetary professionals are motivated to master the new language, and even they often find themselves in serious disagreement For example, in a recent letter circulated by a group of monetary experts who, for years, have conducted an ongoing exchange of ideas regarding monetary reform, the editor said: "It is frustrating that we cannot find more agreement among ourselves on this vital issue We seem to differ so much on definitions and on, really, an unbiased, frank, honest, correct understanding of just how our current monetary system does function." So why am I now making my own charge into the dragon's teeth? It's because I believe there is a definite change in the wind of public attitude As the gathering economic storm draws nearer, more and more people will tune into the weather report—even if it is bad news Furthermore, the evidence of the truth of this story is now so overpowering that I trust my readers will have no choice but to accept it, all questions of sanity aside If the village idiot says the bell has fallen from the steeple and comes dragging the bell behind him, well, Lastly, I have discovered that this subject is not as complicated as it first appeared to be, and I am resolved to avoid the pitfall of trodding the usual convoluted path What follows, therefore, will be the story of a crime, not a course on criminologyIt was intended that this book would be half its present size and be completed in about one year From the beginning, however, it took on a life force of its own, and I became but a servant to its will It refused to stay within the confines prescribed and, like the genie released from its bottle, grew to enormous size When the job was done and it was possible to assess the entire manuscript, I was surprised to realize that four books had been written instead of one First, there is a crash course on money, the basics of banking and currency Without that, it would be impossible to understand the fraud that now passes for acceptable practice within the banking system Second, there is a book on how the world's central banks— the Federal Reserve being one of them—are catalysts for war That is what puts real fire into the subject, because it shows that we are dealing, not with mere money, but with blood, human suffering, and freedom itself Third, there is a history of central banking in America That is essential to a realization that the concept behind the Federal Reserve was tried three times before in America We need to know that and especially need to know why those institutions were eventually junked Finally, there is an analysis of the Federal Reserve itself and its dismal record since 1913 This is probably the least important part of all, but it is the reason we are here It is the least important, not because the subject lacks significance, but ii because it has been written before by writers far more qualified and more skilled than I As mentioned previously, however, those volumes generally have remained unread except by technical historians, and the Creature has continued to dine upon its hapless victims There are seven discernible threads that are woven throughout the fabric of this study They represent the reasons for abolition of the Federal Reserve System When stated in their purest form, without embellishment or explanation, they sound absurd to the casual observer It is the purpose of this book, however, to show that these statements are all-too-easy to substantiate The Federal Reserve System should be abolished for the following reasons: • It is incapable of accomplishing its stated objectives (Chapter 1.) • It is a cartel operating against the public interest (Chapter 3.) • It is the supreme instrument of usury (Chapter 10.) • It generates our most unfair tax (Chapter 10.) • It encourages war (Chapter 14.) • It destabilizes the economy (Chapter 23.) • It is an instrument of totalitarianism (Chapters and 26.) This is a story about limitless money and hidden global power The good news is that it is as fascinating as any work of fiction could be, and this, I trust, will add both pleasure and excitement to the learning process The bad news is that every detail of what follows is true G Edward Griffin iii INDEX Regan, D o n a l d : 58,114 Reichsbank: 18,183,269,425 R e m i n i , Robert: 354,356 Report f r o m I r o n M o u n t a i n : 516,518, 521,523-526,534,536, 556,558,560 Resolution F u n d i n g C o r p o r a t i o n : 74 Resolution T r u s t C o r p o r a t i o n : 81-82 Resolution T r u s t O v e r s i g h t Board: 74 Rhodes, Cecil: 208,219, 263, 270-272, 277-278, 281-283, 410, 428, 430,534 Ricardo, D a v i d : 180 Rist, Charles: 269,425,472 Roberts, Paul: 96 Robins, R a y m o n d : 212, 281-282, 284,290 Rockefeller, D a v i d : 42,47,112-113,123, 297,299, 532 Rockefeller, John D.: 209, 266,400,434, 446,555 Rockefeller, John D I l l : 401 Rockefeller, Jr., John D.: - Rockefeller, W i l l i a m : , Rockefellers: 245, 272 Roosevelt, F r a n k l i n Delano: 10, 68, 239, 258,502 Roosevelt, Theodore: 6 , ^ , 455456,468 Roscoe, Theodore: 393 Rostow, W a l t : 524 R o t h b a r d , M u r r a y : 142,176,327, 337, 344,362,423, 484-485,495 Rothschild, A l p h o n s e : 414, 418 R o t h s c h i l d , A m s c h e l : 225 R o t h s c h i l d , H o u s e of: 5,219-220, 227, 232,413,415,417-418,429 R o t h s c h i l d , James (Jacob): 224,228, 232 Rothschild, K a l m a n n : 225 R o t h s c h i l d , N a t h a n : 224-227, 234, 271, 331,413, 415 Rothschild, Salomon: 225,231 R o t h s c h i l d F o n m i l a : Chap 11 + 303-305 Rothschilds: 234,235,240,246, 271, 331, 340, 374,383, 389, 413-419,482 R o u n d Table: 270, 272-275, 277-283, 291292, 296-297, 302, 305,428 Royal Bank of Canada: 127 Royal I n s t i t u t e of I i i t e r n t l A f f a i r s : 273 R u b i n , Robert: 119 R u m l , Beardsley: 204 Rusk, Dean: 525 R u s k i n , John: 270-271 Russell, Bertrand: 529 Russia: 107,124-132, 263-267,274-276, 279-296, 299-302, 306, 377-378,395 Russian R e v o l u t i o n : 263, 265,267 Ryan, John D.: 266 607 Ryan, Thomas: 453 S&Ls: 68-74,76-81, 83-84 S.S K r i s t i a n i a f j o r d : 265, 288,292 Salinas, Carlos: 119 Salomon Brothers: 81 Sandinistas: 301 Schacht, H j a l m a r : 269,425 Schapiro, Leonard: 286 Schiff, Jacob: 210,263-266,285, 292,395, 453-454,458 Schlicktenthalers: 318 Schmidt, H e l m u t : Second Bank of the U n i t e d States: 359,375,382-386,442,565 Selgin, George: 366 Seligman, E d w i n : 17,440 Sennholz, Hans: , , Seymour, Charles: 241, 459,465 Shafroth, John: 439 Shaw, George Bernard: 87,101 Sibley, Joseph: 245 Sidonia: 227-228 Silver certificates: 485 Simpson, C o l i n : 246,251, 254 Sjaastad, L a r r y A.: 121 S k u l l a n d Bones: 80 Slavery: 370-377,379,382,392, 395 Smuts, Jan: 278 Social Democrats: 124-125,129 Social Security: 509-510, 535 Socialism/Socialists: 85-88,95-106,109, 124,266-267,270,420,530, 535, 546 Solidus: 149 S o u t h A f r i c a : 271-272, 276-278 Soviet U n i o n : 89,100,293, 296,304 Soviets: 121,123-124,126-129,132 Spanish dollar: 319,324 Special D r a w i n g R i g h t (SDR): 90 Sprague, I r v i n e : 49-54, 57-61 S t a n d a r d Brands: 499 Standard O i l C o m p a n y : 245,435 Stanton, E d w i n M : 393-394 Steffens, L i n c o l n : 288 Stephenson, N a t h a n i e l W r i g h t : 10,439, 446 S t i l l m a n , James: 454 Stockman, D a v i d : 114 Strong, Benjamin: 24,258,269,423-429, 441,450,472-474, 484-489,497, 502 Strong, M a u r i c e : 531-533,549 Sumner, W i l l i a m : 169 Supply-siders: 570 Supreme C o u r t : 346-347,349, 351 608 INDEX Sutton, A n t h o n y : 2 , 6 , , , 3 S w i f t , H a r o l d : 292 S w i f t , Helen: 292 Taft, W i l l i a m H o w a r d : 451-453,456,468 T a w n e y , R.H.: 273 Taxes: 191,193,196,199,203-205 T e r r o r i s m : 546,562 Thalers: 318 Theobald, Thomas: 297 T h o m p s o n , W i l l i a m : 289-291 T h o m p s o n , W i l l i a m Boyce: - , - 282 T i a n a n m e n Square: 301 T o c q u e v i l l e , A l e x i s de: 554 Torrijos: 115 Toynbee, A r n o l d : 273 Trade deficit: 91, 93-94 Traficant, Rep James: 304,305 Transvaal: 277-278 T r i l a t e r a l C o m m i s s i o n : 112 T r o t s k y : 264-267, 282-283,286-287,291 T r u m a n , H a r r y : 88 Tsar A l e x a n d e r II: 377-378, 395 Tsar N i c h o l a s : 264-265,267,274,280, 283, 285, 288 T u l i p o m a n i a : 491-492 T u r n e r , Dennis: 7 , T u r n e r , C a p t a i n W i l l i a m : 255 T u t k o , Thomas: 521 U - b o a t : 237, 248-249,252-253, 261 U.S Steel: 435 U n i t e d A m e r i c a n s : 279 U n i t e d N a t i o n s : 86, , , 1 , 2 , 516,526, 530-532, 541,544-545,548, 550, 561,563-564,577 U n i t y Bank a n d T r u s t C o m p a n y : 50-51 U s u r y : 190-191, 207 V a n d e r l i p , Frank: , 1 , , 439, 441,450, 460,463-464,469 V e r n o n S & L : 78 Vieira, E d w i n : 318 Viereck, George: 240-241, 251, 456-457 Volcker, Paul: 54, 58, 60, 65, 71,112,116, 117 Vreeland, E d w a r d : 437, 441,450 W a l l Street: , 1 , , 2 - , - , 237,244, 257-259, 266, 276,281,288, 290-295,302,408,415, 417,431,433, 435,442-448,453-456, 461-462,472, 482, 497, 502 Wall, M Danny: 73 W a l l i c h , H e n r y : 116 W a r Industries Board: 258-259 W a r o f 1812:336,340-341,357,359,363 W a r b u r g & C o m p a n y , M M : 18 W a r b u r g , Felix: 18, 453 W a r b u r g , James: 10 Warburg, Max: 5,18 W a r b u r g , Paul: , - , - , 22-24,438, 440,444-445,448, 450,453,455, 458, 461,465-466,481-482,486, 496 W a s h i n g t o n , George: 161,164,312, 315, 322-323 Waterloo: 224, 226-227,233 W a t t , James: 114,119 Webb, Sidney a n d Beatrice: 87 Webster, Daniel: 351 Welles, Chris: 42, 44 W e l l i n g t o n , D u k e of: 224-227 Wells, H.G.: 88 W e n t w o r t h , W.C.: 399, 498 Westinghouse Acceptance Bank: 482 Westinghouse, H H : 279 Wheeler, George: 244, 415 W h i t e Star Lines: 246 W h i t e , H a r r y Dexter: 87,105, 212 W h i t n e y f a m i l y : 272 W i l d c a t banks: 333,336-337, 340 W i l l a r d , Daniel: 279 W i l l i n g , Thomas: 330 W i l l i s , H e n r y Parker: 427, 460-462, 465 W i l s o n , Derek: 219, 227,331,383,414-415 W i l s o n , James: 315 W i l s o n , R M c N a i r : 221,223 W i l s o n , W o o d r o w : 238-243, 250-252, 255-258,260-261,266,275, , 8 289,293, 447-449, 452-460,466-469 W o l f , George: 356 W o o d , Daniel: 532 W o o d s H o l e Oceanographic Institute: 254 W o r l d Bank: - , 8 - , - , 0 103,105-109,118,121,124,126,130132, 296,301,302 W o r l d F u t u r e Society: 532 W o r l d T r a d e O r g a n i z a t i o n ( W T O ) : 113, 114 W o r l d W a r I: 235,238, 259-261, 265,275, 473,479,483-484,489, 502 W o r l d W a r II: 502 W o r l d w a t c h Institute: 528 W r a n g e l l - R o k a s s o w s k y , Carl: 378 Yago, Glenn: 80 Yeltsin, Boris: 300 Y i l i n , Yao: 122 Zakaria, Fareed: 304 ... FROM JEKYLL ISLAND this most interesting conference concerning which Senator Aldrich pledged all participants to secrecy."1 An interesting insight to Paul Warburg's attendance at the Jekyll Island. .. edition: July 1994 © Copyright 1998,1995 and 1994 by G Edward Griffin Published by American Media P.O Box 4646 Westlake Village, California 91359-1646 Library of Congress Catalog Card Number: 98-71615... TO JEKYLL ISLAND The secret meeting on Jekyll Island in Georgia at which the Federal Reserve was conceived; the birth of a banking cartel to protect its members from competition; the strategy