FINAL WARNING: Financial Background
Plan aroused such nationwide resentment and opposition. The
mastermind of both plans was Alfred Rothschild of London.”
Professor E. R. A. Seligman, head of the Economics Department of
Columbia University, wrote in the preface of one of Warburg’s essays
on central banking: “The Federal Reserve Act is the work of Mr. (Paul)
Warburg more than any other man in the country.”In 1903, Paul Warburg gave Schiff a memo describing the application
of the European central banking system to America’s monetary
system. Schiff, in turn, gave it to James Stillman, President of the
National City Bank in New York City. Warburg had graduated from the
University of Hamburg in 1886, and studied English central banking
methods, while working in a London brokerage house. In 1891, he
studied French banking methods; and from 1892-93, traveled the world
to study central banking applications. The bottom line, was that he was
the foremost authority in the world on central banking. It is interesting
to note, that the fifth plank in the 1848 Communist Manifesto had to do
with central banking.In 1906, Frank A. Vanderlip, of the National City Bank, convinced many
of New York’s banking establishment, that they needed a banker-
controlled central bank, that could serve the nation’s financial system.
Up to that time, the House of Morgan had filled that role. Some of the
people involved with Morgan were: Walter Burns, Clinton Dawkins,
Edward Grenfell, Willard Straight, Thomas Lamont, Dwight Morrow,
Nelson Perkins, Russell Leffingwell, Elihu Root, John W. Davis, John
Foster Dulles, S. Parker Gilbert, and Paul D. Cravath. The financial
panics of 1873, 1884, 1893, 1907, and later 1920, were initiated by
Morgan with the intent of pushing for a much stronger banking system.On January 6, 1907, the New York Times published an article by
Warburg, called “Defects and Needs of Our Banking System,” after
which he became the leading exponent of monetary reform. That same
year, Jacob Schiff told the New York Chamber of Commerce, that
“unless we have a Central Bank with adequate control of credit
resources, this country is going to undergo the most severe and far
reaching money panic in history.” When Morgan initiated the economic
panic in 1907, by circulating rumors that the Knickerbocker Bank and
Trust Co. of America was going broke, there was a run on the banks,
creating a financial crisis, which began to solidify support for a central