Editor's Note: The debate over the subsidies giant banks enjoy from their "too big to fail" status has proliferated in the aftermath of the financial crisis. According to All the Presidents' Bankers: The Hidden Alliances that Drive American Power (Nation Books, 2014), top banks' ties to Washington have endowed them with unique advantages for many decades. The following passage, taken from "Chapter One: The Early 1910s: Post-Panic Creature and Party Posturing," outlines the influence of leading bankers, including J.P. Morgan, during the creation of the Federal Reserve-and the lengths to which government officials went to cover it up. 

Second of two parts; part one is here.

Jekyll Island, the smallest of Georgia's barrier islands, lies midway between Savannah, Georgia, and Jacksonville, Florida. Endowed with majestic moss-coated oaks, marshes, and beaches cradled by windswept sand dunes, the Jekyll Island Club hosted aristocratic members including J. P. Morgan, William Rockefeller, Vincent Astor, Joseph Pulitzer, George Baker, and James Stillman.

It was a place where the unelected leaders of the country often convened to enjoy leisure time and discuss their business affairs in an isolated retreat with all the creature comforts of home. They built 6,500- to 12,000-square-foot "cottages" near the main clubhouse, as well as the nation's first "condominium," a six-apartment compound in which Morgan, Rockefeller, and four others shared a common space. On Jekyll Island, the country's ultraselect luxuriated in a six-to-one servant-to-guest ratio and impeccable hospitality under the watchful direction of Edward Grobe, a Swiss man who ran the hotel like a European manor. They usually visited during the winter season, which began at Christmas and lasted through March.

Jekyll Island was not the first choice for this secret rendezvous, however. Stillman had originally suggested transporting [Henry ] Davison, [a senior partner at J.P. Morgan] and [Frank] Vanderlip to Warwick, [Senator Nelson] Aldrich's Rhode Island abode, to begin substantive strategy sessions. But on October 21, 1910, while in New York City, Aldrich was struck by a southbound Madison Avenue trolley car. He was hurled into the street and knocked unconscious. Confined to bed in the Park Avenue home of his son, Winthrop (who would later become chairman of the Chase Bank), Aldrich reluctantly postponed work on the central bank plan.

As the deadlines for issuing a report and introducing a draft bill to Congress drew nearer, Aldrich's concern about the as-yet-unwritten report intensified. In the wake of growing anti-banker sentiment and ascendant muckraking journalism, Aldrich was paranoid. He knew he couldn't conceivably get a plan passed through Congress if it were branded a ploy between Republicans and bankers, and if it became known that he was seeking help from Wall Street.

That's when the idea of meeting at "the richest, the most exclusive, the most inaccessible club in the world" came to being. Aldrich had close person relationships with Morgan, Stillman, and Rockefeller, all of whom were members of the Jekyll Island Club. Yet these men decided they were too prominent to risk association with an expedition to bang out the central bank plan, so they sent their lieutenants. No one on the team accompanying Aldrich to Jekyll Island, including Aldrich, was a member of the club at the time. They could only enter the exclusive locale if a member sponsored them.

That member, who had ties to each person in the group, was J. P. Morgan. He was thought to have made the arrangements for all of them to be his guests, or "strangers," as visitors were called in the Jekyll Island guest book. In attendance were Aldrich; his personal secretary, Arthur Shelton; assistant secretary of the Treasury A. Piatt Andrew; Frank Vanderlip; Henry Davison; Benjamin Strong, head of J. P. Morgan Bankers Trust Company; and Paul Warburg, a partner at Kuhn, Loeb & Company and a representative of the Rothschild banking dynasty in England and France.

Precautions were taken as if the men were spies. The club circulated notices on the Georgia mainland reminding locals that the island was "private," as it did before every winter season. But this time the notices were posted earlier. Aldrich instructed the members of his team to avoid dining together on the night of their departure and to go to the railroad terminal on the New Jersey side of the Hudson River as "unobtrusively as possible." There, his car would be attached to the rear end of a southbound train. If anyone asked, the men were duck hunters going on an expedition.

"When I came to that car, the blinds were down and only slender threads of amber light showed the shape of the windows," Vanderlip recalled. "Once aboard the private car we [would] address one another as 'Paul,' 'Ben,' 'Nelson'. . . . Davison and I inducted even deeper disguises abandoning even our first name . . . he became Wilbur and I became Orville after those two aviation pioneers, the Wright brothers."

The men spent ten days in seclusion on Jekyll Island, hard at work though no doubt also enjoying leisure activities. (Aldrich and Davison were so taken with the island that they became club members two years later.) Over a Thanksgiving dinner of wild turkey with oyster stuffing, they argued and debated. But the men knew they were hatching something bigger than themselves. They were formulating a blueprint for banking in America and for American banking power around the world.

As Vanderlip said, "I enjoyed it as I have never enjoyed anything else. I lived during those days on Jekyll Island at the highest picture of intellectual awareness that I have ever experienced. It was entirely thrilling."

Their plan called for the establishment of a National Reserve Association. In keeping with the strategy to create a central bank without calling it such, the moniker omitted the word "bank." The men agreed upon a central structure, with fifteen quasi-independent branches whose policies would be coordinated through a central national committee. It would have the power to create one standard currency that would support the country and the big banks in times of emergency, ensuring their stability. The Treasury was in charge of creating coins and paper currency; its Bureau of Engraving and Printing had been producing all currency for the U.S. government, including silver and gold certificates, since 1877. A central bank would add another dimension to the U.S. banking system. (On October 28, 1914, the bureau began printing paper Federal Reserve notes, as instructed by Federal Reserve members.)

On its surface, the Aldrich plan seemed a fair idea for a country as geographically expansive as the United States. Congress would surely see the logic in such a structure. And the population would surely take comfort in what would be presented as a way to keep the economy protected from the money trusts' machinations. The fact that it really was a means to provide an easier money supply to the big banks would not be part of its publicized benefits.

Satisfied with the results, Aldrich set out to present the draft bill to the Senate. The men departed as covertly as they had arrived. Aldrich and Andrew exited the northbound train at Washington, D.C. Warburg, Davison, Strong, and Vanderlip traveled onward toward New York.

But on November 26, 1910, the New York contingent got word that Aldrich had fallen ill. The strain of the days so close to the accident had proved too taxing. Aldrich was too weak to write an appropriate document to accompany his plan. There was no time to waste.

In a pinch, Strong and Vanderlip traveled to Washington and prepared the summary report. "If what we have done then had been made known publicly, the effort would have been denounced as a piece of Wall Street chicanery, which it certainly was not," claimed Vanderlip. Such was the thinking of one of the wealthiest bankers in the country.

Nomi Prins is a journalist and senior fellow at Demos, and author of five previous books, including "Other People's Money" and "It Takes a Pillage." Alex Amend of Demos provided additional research for this excerpt.