EVIL ONLY EXISTS TO THE EXTENT GOOD MEN DO NOTHING
PART 3
Promises of the Federal Reserve Turned Out
to Be Pie Crusts--Made to Be Broken
As mentioned earlier, the original promises of the Federal Reserve promoters
were so glorious that it seemed it would be the height of stupidity to turn down
such a marvelous opportunity, the Constitution to the contrary notwithstanding.
All the Federal Reserve wanted was the privilege of printing the nation's
currency and serving as the government's bank. In exchange for this great
privilege, the following promises were made:
The Federal Reserve promised to operate entirely under the direction and
control of the President and his appointees to the Board of Governors. The
Fed escaped from this control almost immediately. It has so much influence
in Congress that over two hundred amendments were added to the original
act, and these gradually altered the entire statutory profile of the act. Even
the Secretary of the Treasury and the Controller of Currency were eliminated
from its Board of Governors. Hundreds of times the Fed has defiantly acted
against the interests of the American people and made billion dollar decisions
favorable to its banker stockholders. In these cases, the President and the
Congress found themselves helpless and unable to intervene. The former
chairman of the Federal Reserve Board, Marriner S. Eccles, admitted this to
the head of the Banking and Currency Committee of the House. When Mr.
Eccles was asked if the Federal Reserve had more power than either the
Congress or the President, Mr. Eccles replied: "In the field of money and
credit, yes." (Quoted in ibid., p. 206.)
1.
The Fed Pays Nothing for the "Right" to Print Money
Section 16 of the act provided that the Federal Reserve would pay the
government interest for the privilege of printing Federal Reserve notes as the
nation's currency. However, the act left this to the discretion of the Board of
Governors, who elected from the beginning to pay the government zero
interest for this right to manufacture the nation's money. No legal remedy to
enforce this section is available.
2.
Failure to Provide Free Banking Services
The Fed promised to perform many banking services for the government
free of charge, but in spite of this provision it began charging for its services
right from the start.
3.
Wright Patman, chairman of the House Banking and Currency Committee,
asked Mr. Eccles: "Wasn't it intended when the Federal Reserve Act was
passed that the Federal Reserve Bank would render this service without
charge-since under the Act the government would give them the use of
government's credit free?"
Mr. Eccles seemed shocked and replied, "I wouldn't think so!"
Failure to Stabilize the Dollar
It was promised that the Federal Reserve would manage the nation's money
supply so that the American dollar would be protected and remain stable so
as to keep prices relatively stable. The Federal Reserve stockholders are now
known to have manipulated the dollar until today its purchasing power is not
worth more than ten cents of what it was when the Federal Reserve took
over. The Federal Reserve was behind the legislation which took the nation
off the gold standard and used its lobby in Congress to force the bill through
without a hearing. Later it removed the nation from what was left of the
silver standard and has since been found maneuvering behind the scenes in
an attempt to get the dollar replaced with some kind of international money.
4.
Failure to Eliminate the Control of Wall Street
It was promised that the Federal Reserve Act would take the United States out
from under the control of Wall Street. This was the biggest deception of all.
The most powerful money trusts on Wall Street were the ones behind the
passage of the bill, and it was their money managers who took over the
Federal Reserve System as soon as the act went into operation. During
debates in the House, Congressman Charles A. Lindbergh, father of the
famous Atlantic nonstop flyer, declared:
5.
This Act establishes the most gigantic trust on earth. When the
President signs this bill, the invisible government by the
monetary power will be legalized.... The worst legislative crime
of the ages is perpetrated by this banking and currency bill. The
caucus and the party bosses have again operated and prevented
the people from getting the benefits of their own government.
(Quoted in Kenan, p. 138-39.)
Failure to Forestall Depressions
It was promised that the Federal Reserve would prevent any future
depressions. Now it is known that the Federal Reserve deliberately
engineered and prolonged the worst depression in the history of the United
States. As the well-known economist Dr. Milton Friedman states in his text,
Capitalism and Freedom:
6.
I am myself persuaded, on the basis of extensive study of the
historical evidence, that ... the severity of each of the major
contractions [depressions]-1920-21, 1929-33, and 1937-38-is
directly attributable to acts of commission and omission by the
[Federal] Reserve authorities and would not have occurred under
earlier monetary and banking arrangements. (Capitalism and
Freedom [Chicago: The University of Chicago Press, 19621, p.
45.)
Failure to Serve the Farmer and Small Business
The promise was made that the Federal Reserve would be the friend and
helper of the farmer and the monetary needs of small businesses. The Fed so
completely failed in this promise that entirely new lending agencies had to be
created by Congress to help the farmers and small-business men.
Furthermore, the Federal Reserve used its power in 1920 to deliberately
manipulate the economy to produce an agriculture collapse. This caused tens
of thousands of farmers to lose their farms. (Kenan, pp. 129-30.)
7.
Failure to Decentralize Banking
The promise was made that the new system would forever remain
decentralized so that the Federal Reserve Bank of San Francisco would have
as much to say about monetary policies as the one in New York. This proved
fallacious from the first year of operation. The centralized money market in
the United States is in New York City, and the New York Federal Reserve
Bank has dominated the other eleven districts to the point where the latter are
usually not even consulted when decisions are made by the Open Market
Committee.
8.
Foreign Entanglements
The promise was made that the Federal Reserve would protect American
interests against foreign monetary assaults. Studies show that the privately
owned money trust which set up the Federal Reserve System is riddled with
foreign entanglements. It operates European branch banks and was found to
have drained off billions in American resources to underwrite its interests
abroad. In the midst of the Depression, Congressman Louis T. McFadden
(R-Pa.) declared:
9.
Mr. Chairman, we have in this country one of the most corrupt
institutions the world has ever known. I refer to the Federal
Reserve Board and the Federal Reserve Banks. The Federal
Reserve Board, a government board, has cheated the
Government of the United States and the people of the United
States out of enough money to pay the national debt.... The
wealth of the United States and the working capital of the United
States have been taken away from them and has either been
locked in the vaults of certain banks and the great corporations
or exported to foreign countries for the benefit of foreign
customers of these banks and corporations. So far as the people
of the United States are concerned, the cupboard is bare. (Quoted
in Kenan, pp. 141, 172-73; also in Collective Speeches of
Congressman Louis T. McFadden, [Hawthorne, Calif.; Omni
Publications, 1970], p. 298.)
Domestic Commercial Banks at the Mercy of the Federal Reserve
The Federal Reserve System was specifically committed to supervising and
inspecting the local banks and also providing funds in case they were pressed
by unexpected demands for payment. It was recognized that every time a
bank is forced to close its doors the savings and deposits as well as the stock
of the bank's investors and stockholders are lost. But instead of being its
protector, the policies of the Federal Reserve frequently have been a
nightmare to the neighborhood commercial bank with which most
Americans are familiar. Thousands of them have been forced into
bankruptcy by inconsistent and selfish policies imposed on them by the big
money trusts operating out of New York and Europe.