Aldrich Plan for Banking Reform Submitted: Secret Jekyll Island Meeting Proposes Wall Street-Controlled Central Bank

Senator Nelson Aldrich of Rhode Island, chairman of the National Monetary Commission, submitted his “Suggested Plan for Monetary Legislation” proposing creation of a National Reserve Association to reform the nation’s banking system. The plan emerged from a secret November 1910 meeting at the Jekyll Island Club off the coast of Georgia, where six men—Nelson Aldrich, A. Piatt Andrew, Henry Davison, Arthur Shelton, Frank Vanderlip, and Paul Warburg—gathered to design a central banking system. The meeting’s occurrence and purpose were closely guarded secrets; participants did not admit the meeting happened until the 1930s. Congress had created the National Monetary Commission following the Panic of 1907, recognizing the nation could no longer rely on wealthy individuals like JP Morgan to single-handedly stem financial crises. The Aldrich-Vreeland Act of 1908 provided for emergency currency issuance and established the eighteen-member commission to determine necessary changes to the nation’s monetary system.

The Aldrich Plan called for establishment of a National Reserve Association with 15 regional district branches and 46 geographically dispersed directors primarily from the banking profession. The Association would make emergency loans to member banks, print money, and act as fiscal agent for the U.S. government. It would issue currency based on gold and commercial paper as the liability of the bank—not the government. The Association would carry portions of member banks’ reserves, determine discount rates, buy and sell on the open market, and hold federal government deposits. However, the plan faced immediate opposition from both Democrats and Progressive Republicans who objected to the version of democracy it presented, which would have allowed the largest banks to exert outsized influence on the central bank’s leadership. Republican Senator Robert La Follette and Representative Charles Lindbergh Sr. both spoke out against the favoritism they contended the bill granted to Wall Street. “The Aldrich Plan is the Wall Street Plan,” declared Lindbergh. “I have alleged that there is a ‘Money Trust’. The Aldrich plan is a scheme plainly in the interest of the Trust.”

The Democrats made repudiating the Aldrich Plan part of their 1912 platform. After Democrat Woodrow Wilson won the presidential election with Democrats controlling both houses, any chance the Aldrich plan had of success disappeared. The banking community, which had strongly backed the plan, became anxious about what the new administration would propose. In 1913, the National Monetary Commission’s recommendations were revived with substantial changes as the Federal Reserve Act, creating twelve regional Federal Reserve Banks overseen by a presidentially-appointed Federal Reserve Board of Governors. However, the compromise structure—private banks controlling regional Reserve Banks under nominal government oversight—preserved significant Wall Street influence over monetary policy that the Aldrich Plan had openly championed. The episode demonstrated how financial elites could propose brazen schemes for direct control, face democratic opposition, then achieve their essential objectives through apparently reformed institutions that maintained private banking power under a veneer of public accountability. The pattern established here—where financial capture operates through institutional design rather than individual banker personalities—would characterize Federal Reserve operations throughout the 20th century, as Wall Street consistently influenced monetary policy through the revolving door between Treasury, Fed, and major banks.