The Jekyll Island story, and what it actually means for Perth property

In November 1910, six men met in secret on a private island off the coast of Georgia. What they wrote there became the blueprint for the United States Federal Reserve, and eventually for the money system most of the world uses today. That meeting gets raised with me surprisingly often in a property context, usually as proof that a small group of bankers quietly took control of the world’s money. So I sat down and wrote up what actually happened, with every claim sourced.

The short answers

Was the meeting real and secret? Yes. The men in the room wrote about it themselves, years later.

Did it hand control of the money to a private cartel? No. That plan was defeated. What passed in 1913 was substantially different, debated in public, and changed by politicians hostile to the men in that room.

Has the system that grew out of it helped or hurt working people? Both, in specific and identifiable ways, and the full paper sets out each side honestly.

Is Australia’s banking system built on the American model? No. Ours comes from a completely different family tree, British and Scottish, with nationwide branch banks since the 1830s, a wholly public central bank, and bank supervision separated from monetary policy. On nearly every point the popular criticism raises, Australia already went further in the direction the criticism points.

The part that matters for property

Here is the finding I keep coming back to as an agent. Roughly 60 percent of Australian bank lending goes to housing, not to business, and that share has risen steadily for decades. A banking system that puts most of its credit into bidding up the price of existing houses will produce exactly what we see: expensive housing, thin business investment, and first-home buyers locked out, in Perth as much as anywhere.

And that is why the conspiracy version of the story misses the point. Canada has arguably the best-designed central bank in the English-speaking world and terrible housing affordability. The real causes of expensive housing live in land supply, tax settings, and the capital rules that make lending against an existing house more attractive than lending to a business that employs people. Unlike a secret meeting in 1910, those are decided in public, by people we elect, every year.

Download the full paper: The Jekyll Island Story (PDF, 26 pages, fully sourced). It covers the meeting itself, what Congress actually passed, what the system has done for and to working people, how it spread around the world, and whether a fairer system was possible.

By James Yeoman, Director, KPR Perth. This is general commentary and personal analysis, not financial advice.

By James Yeoman, Director of KPR Perth Pty Ltd T/A Key Performance Real Estate