(air whooshing) - "The Creature from Jekyll Island." So paint the picture. For those who don't know this story. - [Connor] Yep. - What is this conspiracy
theory and why is it true? - So Alexander Hamilton was the first one to propose a national bank. There existed several national banks that were wildly unconstitutional, but the very people who
passed the Constitution said, "Okay, yeah sure, we'll do this." They failed. They were shut down. Their charters weren't renewed. So there were all these
banking experiments where the government was involved in kind of a central national bank, but they'd always failed. - And Britain had a central bank. - [Connor] Right. - They were maybe, they might've
been the first central bank if I'm remembering correctly.
- I don't recall. - But yeah, so coming out of the English. - Yeah, yeah, they had a
lot of systems in Europe to look to by way of example, and that's why Hamilton was like, "Hey, we need one of those too." You can control, you know,
the production of money. You can control where it goes. So those banks were eventually
shut down and not renewed. And in the early 1900s, there were a lot of bank, and
there were a ton of banks, but they were all just private banks, little pop-up banks here and there. And a lotta them failed
because they didn't really have a lender of last resort. They didn't have bailout opportunities. And so it was a risky
entrepreneurial enterprise. - Well, and I'll add one
layer to that, which is, in the Great Depression, there was something like
9,000 U.S. bank failures. And there was a Fed already. There were zero in Canada. And the reason for that
is is that people think, "Oh, we needed the Fed
because there was all these bank failures
and the 1907, you know, financial crisis and J.P. Morgan had to bail out the
Treasury and that's crazy." America has always had
a weird banking system in which basically, state-level cronies, kinda like car dealerships, actually. Car dealerships are structured like this. They have like these
weird local monopolies - Yeah. - You couldn't have a bank. You couldn't even have branches
in a state in most states, and you couldn't have
branches across state lines. Which means banks in the
U.S. were very, very fragile, because like what was a lotta the lending? A lot of the lending at
that time was agricultural. "Okay, we're planting our seeds. We need money. We need to borrow money
at the start of the season to plant our seeds and to get through until we have harvest." And it turns out, the weather
affects all the farmers. So if you're a local bank and you've lent to all the farmers, and then
you have like extreme drought or a failed crop, they can't repay you and you go bust. And that was happening all of the time. - Yeah.
- And this was not a failure of the free market. This wasn't like, "Well, that's
why we need blah blah blah." It's like this was a very peculiar, government-created fake crisis, and- - And yet, who got the blame? - Well.
- Not the government. Not the policies. It was the market, right? - Yeah.
- The market is too volatile. This is a problem. The 1907 panic is exactly the
backdrop of this situation. And of course, the bankers
want like any industry with all their protectionism, you know, sitting at the top
perch of their industry, they want to be bailed out. They want securities. They want guarantees. They want to socialize their losses and make everybody else pay for them while they can concentrate those benefits. - And there's one other component to this. I happen to be a geek on this one. William Jennings Bryan
is like this really, like a Populist at the time. And is part of this free silver movement. There is a rural/urban divide here too. So one of the things that
motivates keeping the banks all sort of protected is this fear that, oh, the big New
York banks will just run the whole show and we'll
all be sort of subject to big New York-centered banks. So that was one of the
other things going on there, this sort of Populism
that made things worse, even if you could sort
of understand that like, people have hated bankers forever. It goes back to the Bible. - For sure.
- And usury laws. There's always been ignorance,
basically. (laughing) - But I'm glad you mentioned that, because this was why "The
Creature from Jekyll Island" was born in such secrecy. Because it was the big money. It was the New York bankers. It was the politically
connected banking cartel that designed the system
that we have today. So what happened was you
had Senator Nelson Aldrich, who was over like the Finance Committee. And he wanted to create a central bank. He wanted to say, "Oh we're gonna fix these
market inequities and volatility and we're going to have this one bank." So he had this fancy train. He says all these different bankers and their designees, their associates, "Come meet me on this
train under assumed name. Do not use what your name is. We're gonna go on a duck hunting trip, so wear appropriate attire to fool- so that the reporters don't recognize you. You're just gonna be
all kinda dressed up." - Take your monocles off.
- (laughing) Yeah, exactly. Put the canvas bag.
- No top hats, guys, come on. - And so he says, you
know, "Use an assumed name. We're gonna keep this outta the papers. We don't want anybody to know." So they all end up on this train car. Not even the servants know what's going. Like everyone is kinda kept in the dark. And so Aldrich and everybody, they take the train down to
Jekyll Island in Georgia, where there was this swanky resort. Still exists today. I went there a few years ago. Not swanky by today's comparisons. And J.P. Morgan owned
like half the resort, and so these guys went there
and kinda had accommodations for the week where they hold
themselves up in a room, and they architected in secret this system that became
the Federal Reserve. Of course, they had to
go convince Congress, and they had to get a public vote. So it's not like the entire
thing was a conspiracy. The conspiracy was who the actors were, how they were involved,
and what they were trying to foist on the public using
kinda propaganda talking points about why we need this. But it was these bankers
and politicians in a room that said, "Here's what we're going to do. We're gonna construct this central bank. It will be the lender of last resort. We're going to bail out other banks. We're gonna have this system
of privately-owned banks across the country, this network, that all the banks can have shares in." And so it creates this
kinda like incestuous cycle where the banks are
bailed out by the banks of which they're a part, and they can print their, like
it's just this, the genius. I mean, if you're a
banker and a politician that wants access to easy money that you can just, you
know, print and inflate to support your big budgets,
it's a genius system. And it was passed by Congress in 1913. This was Woodrow Wilson. - One of his many fantastic. - [Connor] Oh gosh. - He was a great president, right? So let's just run down the list of Woodrow Wilson hits.
- Income tax. So that's Sixteenth Amendment. Seventeenth Amendment removing states from appointing who the senators are. - Yeah.
- So that's lost state representation in the Senate. World War I, Federal Reserve. - Corporal racism.
- Resegregating the federal government.
- Exactly, yep, yep. - He was in a sense, he's
like the spirit animal for the modern technocratic elite. I think in a very real sense, you know? I remember Hillary
Clinton at one point said, "I'm a Woodrow Wilson progressive." Which really needs to
be properly understood. Because what is this? This was an academic that didn't even win a majority. He only got in because
there was a split vote with, I think, Teddy
Roosevelt or a splinter party. And just comes in as a utopian that thinks that we need to have a
kind of Princeton-educated managerial class running the show and proceeds to do stuff like create the most undemocratic
institution in the United States, the Federal Reserve.
- Yeah. - Among all these other atrocities. - Think of the income tax, right? These reforms were always introduced as the most benign and modest of reforms. Like the income tax,
everyone was convinced, "Oh, this is only gonna
be on the basically the top 1% type people, and it'll be this very minimal tax." We just, you know, and it's
always just that camel's nose in the tent where you get
something like the Federal Reserve or you get something like the income tax. And it's justified as
this minimalist thing, but then the foundation is set and then you just build on
it from there and, you know. - They did a great job
right away, though, right? So it's 1913. Then immediately start
printing money like crazy for World War I, cause a boom and bust, and then screw up in
the opposite direction and create a Great Depression. They did a great job. - I've had a book concept.
(John laughing) There's a genre called
like, what is it called, like historical fiction. Like what's the one where they go back and it's the Nazis
actually won World War II? - Oh, "The Man in the High Castle." - [Connor] "Man in the
High Castle," right? - Deeply upsetting TV show to watch. - Very, you know, and but
there's a genre of fiction that goes back in history
and they change something, and then you fast forward and
you kinda see the impacts. And I've long thought about doing a book where there would be some
time travel component to it, and you go back to 1910, 1913, the dawn of the progressive
era, Woodrow Wilson, the Federal Reserve, income
tax, Seventeenth Amendment, all these things that we're talking about. What would it look like to go back in time and, I mean, one aspect of this story is you just just assassinate
the right people. And then, you know?
(John laughing) Hope nothing happens.
- A little more morally dubious.
- Yes. So the more morally appropriate one is: What if there was like
a Ron Paul revolution style awakening back then? What if you could go back and create this kind of uprising
for individual freedom and get people to see
the writing on the wall, to push back on the progressive agenda? What would today look like,
fast forward over 100 years, if we did not have the income tax, if we did not have the Federal Reserve? That like we think we're a
prosperous culture, you know? I think the size of the
government would be much lower. I think the prosperity and
innovation would be much greater. The wars would be far fewer, which means we'd have more humans, which means more ingenuity. Like, it's so fascinating to think. The utopians that we've
been talking about, the Francis Bellamys and the Horace Manns and all these guys, like, they fashioned themselves as utopians or the collectivists and others. But man, I think, like how
much better could the world be if we did not have all
these policies in the past that we've had? I don't know that I'll
ever write the book, but when we talk about
Woodrow Wilson in 1913, I often kinda think, man, the world could be so much better, different in a good way
today had we not gone through all that and
laid those foundations that FDR built on and everyone after him. - If you liked that clip, we've got a lot more where that came from. Be sure to check out
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