The Beginnings of the “Reform” Movement: The Indianapolis Monetary Convention

The presidential election of 1896 was a great national referendum on the gold standard. The Democratic Party had been captured, at its 1896 convention, by the Populist, ultra-inflationist, anti-gold forces, headed by William Jennings Bryan. The older Democrats, who had been fiercely devoted to hard money and the gold standard, either stayed home on election day or voted, for the first time in their lives, for the hated Republicans.

The Gold Standard Act of 1900 and After

Any reform legislation had to wait until after the elections of 1898, for the gold forces were not yet in control of Congress. In the autumn, the executive committee of the Indianapolis Monetary Convention mobilized its forces, calling on no less than 97,000 correspondents throughout the country through whom it had distributed the preliminary report.

Charles A. Conant, Surplus Capital, and Economic Imperialism

The years shortly before and after 1900 proved to be the beginnings of the drive toward the establishment of a Federal Reserve System. It was also the origin of the gold-exchange standard, the fateful system imposed upon the world by the British in the 1920s and by the United States after World War II at Bretton Woods.

Conant, Monetary Imperialism, and the Gold-Exchange Standard

The leap into political imperialism by the United States in the late 1890s was accompanied by economic imperialism, and one key to economic imperialism was monetary imperialism. In brief, the developed Western countries by this time were on the gold standard, while most of the Third World nations were on the silver standard.

Jacob Schiff Ignites the Drive for a Central Bank

The defeat of the Fowler Bill for a broader asset currency and branch banking in 1902, coupled with the failure of Treasury Secretary Shaw’s attempts of 1903–1905 to use the Treasury as a central bank, led the big bankers and their economist allies to adopt a new solution: the frank imposition of a central bank in the United States.

The Panic of 1907 and Mobilization for a Central Bank

A severe financial crisis, the panic of 1907, struck in early October. Not only was there a general recession and contraction, but the major banks in New York and Chicago were, as in most other depressions in American history, allowed by the government to suspend specie payments, that is, to continue in operation while being relieved of their contractual obligation to redeem their notes and deposits in cash or in gold.

The Final Phase: Coping with the Democratic Ascendancy

The final phase of the drive for a central bank began in January 1911. At the previous January’s meeting of the National Board of Trade, Paul Warburg had put through a resolution setting aside January 18, 1911, as a “monetary day” devoted to a “Business Men’s Monetary Conference.” This conference, run by the National Board of Trade, and featuring delegates from metropolitan mercantile organizations from all over the country, had C. Stuart Patterson as its chairman.

Conclusion

The financial elites of this country, notably the Morgan, Rockefeller, and Kuhn, Loeb interests, were responsible for putting through the Federal Reserve System, as a governmentally created and sanctioned cartel device to enable the nation’s banks to inflate the money supply in a coordinated fashion, without suffering quick retribution from depositors or noteholders demanding cash.

Index

Academy of Political Science (APS), 77n, 80, 91

Adams, Brooks, 42, 43n, 47

Adams, Henry, 42

Adams, Thomas S., 56n

Aldrich, Nelson W., 37, 83, 84–85, 87, 89, 93–95

Aldrich Bill, 37, 83, 94

Aldrich Plan, 94, 97, 99–101

Aldrich-Vreeland Act, 83

Jekyll Island retreat, 93–94

National Monetary Commission (NMC), 83–85, 88–89, 91–92, 94

Allison, William Boyd, 27