THE MONEY MASTERS
How
International Bankers Gained Control of
Produced by Directed by
Patrick S.J. Carmack Bill Still
VIDEO SCRIPT
Extensively Revised & Updated (1998) with Appendices by Patrick S.J. Carmack
copyright 1998, all rights reserved
Royalty Production Company
TABLE OF CONTENTS
PAGE
1. THE PROBLEM.......... ..... ...... .......... ..... ...... .......... ..... ...... ...................... 1
2. THE MONEY CHANGERS.......... ..... ...... .......... ..... ...... .......... ..... ...... ..... 8
3. ROMAN EMPIRE.......... ..... ...... .......... ..... ...... .......... ..... ...... ................... 8
4. THE GOLDSMITHS OF MEDIAEVAL
5. TALLY STICKS.......... ..... ...... .......... ..... ...... .......... ..... ...... ..................... 13
6. THE BANK OF
7. THE RISE OF THE ROTHSCHILDS.......... ..... ...... .......... ..... ...... .................... 17
- 1st American Central Bank War (1764-1776; Bank of England; 12 years) -
8. THE AMERICAN REVOLUTION.......... ..... ...... .......... ..... ...... ......................... 19
- 2nd American Central Bank War (1781-1785; Bank of North America; 4 years) -
9. THE BANK OF
THE CONSTITUTIONAL CONVENTION.......... ..... ...... .......... ..... ...... ............ 22
- 3rd American Central Bank War (1791-1811; 1st BUS; 20 years) -
FIRST BANK OF THE UNITED STATES.......... ..... ...... .......... ..... ...... ............ 24
NAPOLEON'S RISE TO POWER.......... ..... ...... .......... ..... ...... ......................... 26
DEATH OF THE FIRST BANK/THE WAR OF 1812.......... ..... ...... .......................... 27
- 4th American Central Bank War (1816-1836; 2nd BUS; 20 years) -
15. SECOND BANK
OF THE
16. ANDREW JACKSON.......... ..... ...... .......... ..... ...... .......... ..... ...... ............. 30
- 5th American Central Bank War (1863-1913; National Banks/Federal Reserve Banks; 50 years) -
17. ABE LINCOLN AND THE CIVIL WAR.......... ..... ...... .......... ..... ...... ................ 34
18. RETURN OF THE GOLD STANDARD.......... ..... ...... .......... ..... ...... ................. 40
19. FREE SILVER.......... ..... ...... .......... ..... ...... .......... ..... ...... ......................... 44
20. J.P. MORGAN & THE CRASH OF 1907/ROCKEFELLER.......... ..... ...... .................. 46
21.
22. FED ACT OF 1913.......... ..... ...... .......... ..... ...... .......... ..... ...... .................. 53
23. MORGAN/WORLD WAR I.......... ..... ...... .......... ..... ...... .......... ..... ...... ..... 57
24. ROARING 20s/GREAT DEPRESSION.......... ..... ...... .......... ..... ...... .................. 61
25. FDR/WORLD WAR II/FORT KNOX.......... ..... ...... .......... ..... ...... ..................... 65
26. WORLD CENTRAL BANK.......... ..... ...... .......... ..... ...... .......... ..... ...... .... 70
CONCLUSIONS.......... ..... ...... .......... ..... ...... .......... ..... ...... ..................... 77
POSTSCRIPT.............Peeling the Onion.......... ..... ...... .......... ..... ...... ................ 92
APPENDICES.......a. THE FIVE AMERICAN "BANK WARS".......... ..... ...... ......... 95
b. TOWARDS IDEAL MONETARY REFORM (PRINCIPLES).......... 96
c. MONETARY REFORM ACT.......... ..... ...... ........................... 114
d. EARLIER REFORM BILLS PROPOSED IN CONGRESS.............. 126
e. LEWIS v. UNITED STATES.......... ..... ...... ............................. 138
1. THE PROBLEM
There was a time in this country when to ask someone for whom he worked was considered somewhat insulting, as it implied he was an incompetent, incapable of gainful self-employment.
But now, property ownership (net wealth) is not a general feature of our society, as it was before the Civil War, and largely was still until the Great Depression. Rather, net debt and complete dependence on a precarious wage or salary at the will of others is the general condition.
Since the exercise of freedom often includes using material objects such as books, food, clothing, shelter, arms, transport, etc., the choice and possession of which requires some wealth, we are forced to admit that the general condition of Americans is one of increasing dependence and limitations on our freedom.
Since the turn of the century, there has occurred throughout the world a major increase in debt and a major decline in the freedom of individuals, and of states, to conduct their own affairs. To restore a condition of widespread, modest wealth is therefore essential to regaining and preserving our freedom.
What's going on in
Why does the government tell us inflation is low, when the buying power of our paychecks
is declining at an alarming rate? Only a generation ago, bread was a quarter and you could get a new car for $1,995!
Are we headed into an economic crash of unprecedented proportions - one which will make the crash of 1929 and the Great Depression which followed look like a Sunday school picnic? If so, can we prevent it? Or, will we simply arrive at the same point through more inflation-caused poverty, robbing Americans of their savings, fixed incomes and wages by imperceptible degrees - reducing their purchasing power. What can we do to protect our families?
Some reliable experts say a crash is coming. They also say that there are simple, inexpensive things anyone can do to protect their families - to keep food on the table and a roof over our heads even in the worst of times. But to do that, we have to understand why a depression is coming, who's behind it, what they want, and how the perpetrators plan on protecting their families. Armed with this knowledge, any of us can ride out the coming storm.
Larry Bates was a bank president for eleven years. As a member of the Tennessee House of Representatives, he chaired the committee on Banking and Commerce. He's also a former professor of economics and the author of the best-selling book, The New Economic Disorder.
"I can tell you right now that there is going to be a crash of unprecedented proportions. A crash like we have never seen before in this country. The greatest shock of this decade is that more people are about to loose more money then at any
time before in history, but the second greatest shock will be the incredible amount of money a relatively small group of people will make at the same time. You see, in periods of economic upheaval in periods of economic crisis, wealth is not destroyed, it is merely transferred." - Larry Bates
Banker and former Presidential candidate Charles Collins is a lawyer, has owned banks, and served as a bank director. He believes we will never get out of debt because the Federal Reserve is in control of our money.
"Right now, it's perpetuated by the Federal Reserve making us borrow the money from them, at interest, to pay the interest that's already accumulated. So we cannot get out of debt the way we're going now."
Economist Henry Pasquet is a tenured instructor in
economics. He agrees the end is near for
the
"No, not when you are adding roughly a billion dollars a day. We just can't go on. We had less than $1 trillion of national debt in 1980, now it's $5 trillion - 5 times greater in 15 years. It just doesn't take a genius to realize that this just can't go on forever."
The problem is we have one of the worst monetary systems ever devised - a central bank that operates independently of our government, which, with other private banks, creates all of our money with a parallel amount of interest-bearing debt. That's why we can never get out of debt. And that's why a deep depression is a certainty, for most of our citizens, whether caused suddenly in a severe
economic crash, or gradually through continued relentless inflation. The Fed is creating it to enrich its private stockholders, just like it deliberately created the Great Depression of the 1930s.
The Federal Reserve headquarters is in
Well, what we are about to show you is that there is
nothing federal about the Federal Reserve, and there are no reserves. The name is a deception created back before
the Federal Reserve Act was passed in 1913 to make Americans think that
The truth is that the Fed is a private (or, at best, quasi-public) bank, owned by private National banks which are the stockholders, and run for their private profit.
"That's exactly correct, the Fed is a privately-owned, for-profit corporation which has no reserves, at least no reserves to back up the Federal Reserve Notes which are our common currency."
- economist Henry Pasquet
The Federal Reserve Act was railroaded through a carefully prepared Congressional Conference Committee scheduled during the unlikely hours of 1:30 a.m. to 4:30 a.m., Monday, December 22, 1913, when most members were sleeping, at which 20-40 substantial differences in the House and Senate versions were supposedly described, deliberated, debated, reconciled and voted upon in a
near miraculous 4 1/2 to 9 minutes per item, at that late hour. As author Antony C. Sutton noted in The Federal Reserve Conspiracy:
"This miracle of speediness, never equaled before or after in the U.S. Congress, is ominously comparable to the rubber stamp lawmaking of the banana republics."
At 4:30 a.m. a prepared report of this Committee was
handed to the printers. Senator Bristow
of
The Conference report is normally read on the Senate floor. The Republicans did not even see the report. Some Senators stated on the floor of the Senate that they had no knowledge of the contents of the bill. At 6:02 p.m., December 23rd, when many members had already left the Capitol for the Christmas holiday, the very same day the bill was hurried through the House and Senate, President Woodrow Wilson signed the Federal Reserve Act of 1913 into law.
The Act transferred control of the money supply of the
As author Antony C. Sutton noted:
"The Federal Reserve System is a legal private monopoly of the money supply operated for the benefit of the few under the guise of protecting and promoting the public intent."
Heroic Nebraska Senator Hitchcock, the only Senate Democrat working against the bill, had proposed numerous amendments to the bill aimed at making the Federal Reserve System a government agency (i.e. placing control in the Department of the Treasury), rather than a private monopoly, but these were all tabled - so great was the power of the Money Changers over Congress by then.
If there's still any doubt whether the Federal Reserve
is a part of the
Let's take a look at the Fed shareholders: according to researcher Eric Samuelson, as of November, 1997, the Federal Reserve Bank of New York (which completely dominates the other eleven branches through stock ownership, control, influence, having the only permanent voting seat on the Federal Open Market Committee and by handling all open market bond transactions), which has 19,752,655 shares outstanding, was majority-owned by two banks - Chase Manhattan bank (now merged with Chemical Bank) with 6,389,445 shares or 32.35%, and Citibank, N.A. (whose parent Citicorp recently merged with Travelers Group to create the $76 billion giant Citigroup), with 4,051,851 shares or 20.51%. Together those two banks own 10,441,295 shares or 52.86%: majority control.
While majority ownership conclusively demonstrates effective control, it is not critical to control, which is often exercised in large, publically-traded corporations by blocks of as little as 25%, and even 2%, when the other owners hold smaller blocks.
Why can't Congress do something about this dangerous concentration of power. Most members of Congress just don't understand the system, and the few who do are afraid to speak up. For example, initially a veteran Congressman asked us if he could be interviewed. However, both times our camera crew arrived at his office to do the interview, we were not able to film. The Congressman never appeared, and eventually got cold feet and withdrew.
Fighting the bankers is a good way to see one's opponent get heavily funded in the next election. But a few others in Congress have been bolder over the years. Here are three quick examples.
In 1923, Representative Charles A. Lindbergh, a
Republican from
"The financial system ... has been turned over to the Federal Reserve Board. That board administers the finance system by authority of ... a purely profiteering group. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money."
One of the most outspoken critics in Congress of the Fed was the Chairman of the House Banking and Currency Committee during the Great Depression years, Louis T. McFadden (R-PA). He said in 1932:
"We have in this country one of the most corrupt
institutions the world has ever known. I
refer to the Federal Reserve Board... This evil institution has impoverished
... the people of the
Senator Barry Goldwater was a frequent critic of the Fed:
"Most Americans have no real understanding of the
operation of the international moneylenders... The accounts of the Federal
Reserve System have never been audited. It operates outside the control of Congress and ... manipulates the
credit of the
Does that power affect you?
"The Fed really is more powerful than the federal
government. It is more powerful than the President, Congress or the
courts. Let me prove my case. The Fed determines what the average person's
car payment and house payment is going to be and whether they have a job or
not. And I submit to you that is total
control. The Fed is the largest single
creditor of the
What one has to understand is that from the day the Constitution was adopted right up to today, the folks who profit from privately-
owned central banks, like the Fed, or, as President
Madison called them, the "Money Changers", have fought a running
battle for control over who gets to issue
Why is who issues the money so important? Thinking of money as just another commodity, if you have a monopoly on a commodity that everyone needs, everyone wants, and nobody has enough of, there are lots of ways to make a profit and also exert tremendous political influence.
That's what this battle is all about. Throughout the history of the
The founding fathers knew the evils of a privately-owned central bank. First of all, they had seen how the privately-owned British central bank, the Bank of England, had run up the British national debt to such an extent that
Parliament had been forced to place unfair taxes on the American colonies.
In fact, as we'll see later, Ben Franklin claimed that
this was the real cause of the American Revolution. Most of the founding fathers realized the
potential dangers of banking, and feared bankers' accumulation of wealth and
power.
"I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs."
That succinct statement of
"History records that the Money Changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance."
The battle over who gets to issue our money has been
the pivotal issue through the history of the
MEDIA CONTROL
By World War I, the Money Changers with their dominant wealth, had seized control of most of the nation's press.
In a 1912 Senate Privileges and Elections Committee hearing, a letter was introduced to the Committee written by Representative Joseph Sibley (PA), a Rockefeller agent in
Congress, to John D. Archbold, a Standard Oil employee of Rockefeller's, which read in part:
"An efficient literary bureau is needed, not for a day or a crisis but a permanent healthy control of the Associated Press and kindred avenues. It will cost money but will be cheapest in the end."
John Swinton, the former Chief of Staff of the New York Times, called by his peers "the Dean of his profession", was asked in 1953 to give a toast before the New York Press Club. He responded with the following statement:
"There is no such thing as an independent press
in
I am paid one hundred and fifty dollars a week so that I may keep my honest opinion out of the newspaper for which I write. You too are paid similar salaries for similar services. Were I to permit that a single edition of my newspaper contained an honest opinion, my occupation - like Othello's - would be gone in less than twenty-four hours.
The man who would be so foolish as to write his honest
opinion would soon be on the streets in search of another job. It is the duty of a
We are the tools and the vassals of the rich behind the scenes. We are marionettes. These men pull the strings and we dance. Our time, our talents, our lives, our capacities are all the property of these men - we are intellectual prostitutes." (As quoted by T. St. John Gaffney in Breaking The Silence, page 4.)
That was the
Press control, and later electronic media control (radio and TV), was seized in carefully planned steps, yielding the present situation in which all major mass media and the critically important major reporting services, which are the source of most news and upon which most news is based, are controlled by the Money Changers.
Representative Callaway discussed some of this press control in the Congressional Record, Vol. 54, Feb. 9, 1917, p.2947:
"In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interests, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press...
They found it was only necessary to purchase the control of 25 of the greatest papers... An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature consid-
ered vital to the interests of the purchasers."
G. Edward Griffin quoting Ferdinand Lundberg adds this detail:
"So far as can be learned, the Rockefellers have given up their old policy of owning newspapers and magazines outright, relying now upon the publications of all camps to serve their best interests in return for the vast volume of petroleum and allied advertising under Rockefeller control.
After the J.P. Morgan bloc, the Rockefellers have the most advertising of any group to dispose of. And when advertising alone is not sufficient to insure the fealty of a newspaper, the Rockefeller companies have been known to make direct payments in return for a friendly editorial attitude."
A few years ago, three-quarters of the majority stockholders of ABC, CBS, NBC and CNN were banks, such as Chase Manhattan Corp., Citibank, Morgan Guaranty Trust and Bank of America; ten such corporations controlled 59 magazines (including Time and Newsweek), 58 newspapers (including the New York Times, the Washington Post, the Wall Street Journal), and various motion picture companies, giving the major Wall Street banks virtually total ownership of the mass media, with few exceptions (such as the Disney Company's purchase of ABC).
Only 50 cities in
by the same group. Only about 25% of the nation's 1,500 daily papers are independently owned. This concentration has been rapidly accelerating in recent years and ownership is
nearly monolithic now, reflecting the identical
control described above.
Of course, much care is taken to fool the public with the appearance of competition by maintaining different corporate logos, anchorpersons and other trivia, projecting a sense of objectivity that belies the uniform underlying bank ownership and editorial control. This accounts for the virtually identical 'news' content and the total blackout on news coverage and investigative reporting of banker control of our country in the various organs of the mass media.
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Nevertheless, throughout
Until we stop talking about "deficits" and "government spending" and start talking about who creates and controls how much money we have, it's just a shell game - a complete and
utter deception. It won't matter if we pass an iron-clad amendment to the Constitution mandating a balanced budget. Our situation is only going to get worse until we root out the cause at its source.
Our leaders and politicians need to understand, those few who are not part of the problem, what is happening, and how, as well as what solutions exist. The government must
take back the power to issue our money, without debt.
"The coining of money is in all States the act of the sovereign power ..." - Sir William Blackstone, Commentaries on the Laws of England.
Issuing our own debt-free money is not a radical
solution. It's the same solution proposed at different points in
So, to sum the economic problem up: in 1913, Congress
delegated to a privately-owned central bank, deceptively named the Federal
Reserve System, control over the quantity of
Though the Federal Reserve is now one of the two most
powerful central banks in the world, it was not the first. So where did this idea come from? To really understand the magnitude of the
problem, we have to travel back to
2. THE MONEY CHANGERS
Just who are these "Money Changers" James Madison spoke of above?
The Bible tells us that two thousand years ago, Jesus
Christ drove the Money Changers from the
When Jews came to
It was the only coin around at that time which was pure silver and of assured weight, without the image of a pagan Emperor. Therefore, to Jews the half-shekel was the only coin acceptable to God. But these coins were not plentiful. The Money Changers had cornered the market on them. Then, they raised the price of them - just like any other monopolized commodity - to whatever the market would bear.
In other words, the Money Changers were making exorbitant profits because they held a virtual monopoly on money. The Jews had to pay whatever they demanded. To Jesus, this injustice violated the sanctity of God's house.
3. ROMAN EMPIRE
But the money changing scam did not originate in
Jesus' day. Two hundred years before
Christ,
Two early Roman emperors had tried to diminish the power of the Money Changers by reforming usury laws and limiting land ownership to 500 acres. They both were assassinated. In 48 B.C., Julius Caesar took back the power to coin money from the Money Changers and minted coins for the benefit of all.
With this new, plentiful supply of money, he built great public works projects. By making
money plentiful, Caesar won the love of the common man. But the Money Changers hated
him. Some believe this was an important factor in Caesar's assassination.
One thing is for sure, with the death of Caesar came
the demise of plentiful money in
Eventually, the Roman money supply was reduced by
90%. As a result, the common people lost
their lands and homes -- just as has happened and will happen again in
4. THE
GOLDSMITHS OF MEDIEVAL
"Sorrow is knowledge; they who know the most, must mourn the deepest o'er the fatal truth,
the Tree of Knowledge is not that of Life."- Byron
The Chinese were the first to use paper money, known as "Flying Money," (a
kind of banker's draft) in 618-907 A.D. About 1000 A.D. private Chinese merchants in
About that same time, Money Changers - those who exchange, create and manipulate
the quantity of money - were active in medieval
per se. The Money Changers generally were the goldsmiths.
They were the first bankers because they started keeping other people's gold for safekeeping in their safe rooms, or vaults.
The first paper money in
"Rags make paper; paper makes money; money makes banks; banks make loans; loans make beggars; beggars make rags."
Paper money caught on because it was more convenient and safer to carry than a lot of heavy gold and silver coins. As a convenience, to avoid an unnecessary trip to the goldsmiths, depositors began endorsing these gold deposit receipts to others, by their signature.
Over time, to simplify the process the receipts were made out "to the bearer", rather than to the individual depositor, making them readily transferable without the need for a signature. This, however, broke the tie to any identifiable deposit of gold.
Eventually goldsmiths noticed that only a small fraction of the depositors or bearers ever came in and demanded their gold at any one time. Goldsmiths started cheating on the system.
They began by secretly lending out some of the gold that had been entrusted to them for
safekeeping, and keeping the interest earned on this lending.
Then the goldsmiths discovered that they could print more money (i.e. paper gold deposit certificates) than they had gold and usually no one would be the wiser. Then, they could loan out this extra paper money and collect interest on it. This was the birth of fractional reserve lending - that is, loaning out more money than you have reserves on deposit. Obviously, it was fraud, often specifically outlawed, once understood.
The goldsmiths began with relatively modest cheating, loaning out only two or three times in gold deposit certificates the amount of gold they actually had in their safe rooms. But they soon grew more confident, and greedier, loaning out four, five, even ten times more gold certificates than they had gold on deposit.
So, for example, if $1,000 in gold were deposited with them, they could loan out about $10,000 in paper money and charge interest on it, and no one would discover the deception. By this means, goldsmiths gradually accumulated more and more wealth and used this wealth to accumulate more and more gold.
It was this abuse of trust, a fraud, which, after being accepted as standard practice, evolved into modern deposit banking. It is still a fraud, coupled with an unjust and unreasonable delegation of a sovereign government function - money creation - to private banks.
Today, this practice of loaning out more money than there are reserves is known as fractional reserve banking. In other words, banks have only a small fraction of the re-
serves on hand needed to honor their obligations. Should all their account holders come in and demand cash, the banks would run out before even three percent have been paid. That is why banks always live in dread fear of "bank runs". To bankers, fractional reserve loans,
"...are a bright joy as brittle as glass accompanied by the haunting fear of a sudden break 626m1210g ."
This is the fundamental cause of the inherent instability in banking, stock markets and national economies.
The banks in the
Rather than issue more gold certificates then they have gold, modern bankers simply make more loans than they have currency (cash). They do this by making book entries creating loans to borrowers out of thin air (or rather, ink).
To give a modern example: A $10,000 bond purchase by the Fed on the open market results in a $10,000 deposit to the bond seller's bank account. Under a 10% (i.e. fractional) reserve requirement, the bank need keep only $1,000 in reserve, and may lend out $9,000. This $9,000 is ordinarily deposited by the borrower in either the same bank or in other banks, which then must keep 10% ($900) in reserve, and may lend out the other $8,100. This $8,100 is in turn deposited in banks, which must keep 10% ($810) in reserve, and then may lend out $7,290, and so on.
Carried to the theoretical limits, the initial $10,000 created by the Fed and deposited in numerous banks in the banking system, gives rise (in roughly 20 repeated stages) to an expansion of $90,000 in new loans, in addition to the $10,000 in new reserves.
In other words, the banking system, collectively, multiplies the $10,000 created by the Fed by a factor of 10. However, less than 1% of the banks create over 75% of this money. In other words, a handful of the largest Wall Street banks create money, as loans, literally by the hundred billion, charging interest on these loans, leaving crumbs for the rest of the banks to create. But because those crumbs represent billions too, the lesser bankers rarely grumble. Rather, they too support this corrupt system, with rare exceptions.
Similarly, the two largest credit card networks
(MasterCard and Visa), jointly controlled by the same group of large banks,
account for 75% of all credit card sales in the
In actual practice, due to numerous exceptions to the 10% reserve requirement, the banking system multiplies the Fed's money creation by several magnitudes over 10 times (e.g. the Fed requires only 3% reserves on deposits under c. $50 million, and no reserves on Eurodollars and nonpersonal time deposits). As a result, today's American banking system requires only roughly 1.65% reserves across all classes of reserves.
Thus the U.S. currency and bank reserve total of roughly $600 billion, supports a total debt structure in the U.S. of over $20 trillion in debt - roughly $80,000 in debt for every
American, man, woman and child, which
includes the national debt, bank debt, credit card debt, home mortgages, etc. This figure does not include contingent liabilities such as certain 'derivatives', which would multiply the total debt figure several times.
The Fed created only roughly 1.65% of this total;
private banks created roughly 98.35% (excluding intra-government debt). All of
this could and should have been created by the
MORAL ISSUES
But does all of this mean that all interest or all banking should be illegal? No. In the Middle Ages, Canon law, the law of the Catholic Church, forbade charging interest on loans. This concept followed the teachings of Aristotle as well as of Saint Thomas Aquinas.
They taught that the purpose of money was to serve the members of society as a medium of exchange to facilitate the exchange of goods needed to lead a virtuous life. Interest, in their belief, hindered this purpose by putting an unnecessary and inequitable burden on the use of money. In other words, interest was contrary to reason and justice.
Reflecting Church Law in the Middle Ages, all European nations forbade charging interest, except on productive loans (i.e. on loans generating a profit to be shared with the lenders as their "interest", as a partner, or "silent
investor at risk", as we would say today), and made it a crime called usury.
As commerce grew and therefore opportunities for investment arose in the late Middle Ages, it came to be that to loan money had a
cost to the lender in lost gain given up, and in risks. So such "extrinsic" charges were allowed, as was profit-sharing on productive
investments, but not interest per se as pure (or "intrinsic") gain from a loan.
But all moralists, no matter what religion or what their position on usury, condemn fraud, oppression of the poor and injustice as clearly immoral. As we will see, fractional reserve lending is rooted in a fraud, results in widespread poverty, oppression of the poor, and reduces the value of everyone else's money. Charging interest on money created by banks out-of-nothing, exceeds any injustice of the older forms of usury for use of another's real wealth, and cannot be justified. Ignorance of this technique has largely silenced moral condemnation of it.
Unfortunately, a few schools of some religions, limit their condemnation of fraud, oppression and injustice to that conducted against their own people, only. This deplorable limitation, which arises out of an exclusiveness in justice and charity, is one of the causes of this banking problem. Other peoples inevitably come to be regarded as inferior or even subhuman.
This inevitably results in a weltanschauung or world view, according to which "peace" means the predominance of the "superior" peoples and the "superior" race - a gross form of crude materialism which is merely a concealed nationalism, even though it condemns the defensive nationalism it arouses in others. But the principal determinants of nationalism, in its last analysis, are merely psychological and variable, not any inherent "superiority".
Men forget that the human species is one great human race with a common origin, a common end, and equality of rational nature, in which there are no special "higher races", as
linguistics, genetics, anthropology and other sciences increasingly affirm.
Even if there were superior races, surely they should be measured by excellence in virtue, not in cunning and deceit. But as it is, the differences in peoples should serve to enrich and embellish the human race by the sharing of their own peculiar gifts and by the reciprocal interchange of goods.
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To return to the goldsmiths: they also discovered that extra profits could be made by "rowing" the economy between easy money and tight money. When they made money easier to borrow, then the amount of money in circulation expanded. Money was plentiful. People took out more loans to expand their businesses. But then the goldsmiths would
tighten the money supply. They would make loans more difficult to get.
What would happen? Just what happens today. A certain percentage of people could not repay their previous loans, and could not take out new loans to repay the old ones. Therefore they went bankrupt, and had to sell their assets to the goldsmiths or at auction for pennies on the dollar.
The same thing is still going on today, only today we call this rowing of the economy, up and down, the "business cycle," or more recently in the stock markets, "corrections".
5. TALLY STICKS
King Henry I, son of William the Conqueror, ascended the English throne in 1100 A.D.
At that time, long before the invention of the printing press, taxes were generally paid in kind - i.e. in goods, based on the productive capacity of the land under the care of the tax- paying serf or lesser noble. To record production, medieval European scribes used a crude accounting device - notches on sticks or "tallies" (from the Latin talea meaning "twig" or "stake"). Tally sticks worked better than faulty memory or notches on barn doors, as were sometimes used.
To prevent alteration or counterfeiting, the sticks
were cut in half lengthwise, leaving one half of the notches on each piece, one
of which was given to the taxpayer, which could be compared for accuracy by
reuniting the pieces. Henry adopted this
method of tax recordkeeping in
Over time, the role of tally sticks evolved and expanded. By the time of Henry II taxes were paid two times a year. The first payment, made at Eastertime, was evidenced by giving the taxpayer a tally stick notched to indicate partial payment received, with the same lengthwise split to record, for both parties, the payment made. These were presented at Michaelmas with the balance of taxes then due.
It takes only a little imagination to arrive at the next step: tallies were issued by the government in advance of taxes being paid in order to raise funds in emergencies or financial straits. The recipients would accept such tallies for goods sold at a profit or for coin, at a discount, and then would use them later, at Easter or Michaelmas, for the payment of the taxes. Thus, tallies took on some of the same functions as coin - they served as money for the payment of taxes.
After 1694 the government issued paper "tallies" as paper evidence of debt (i.e. government borrowing) in anticipation of the collection of future taxes. Paper could be made easily negotiable, which made them the full equivalent of the paper bank note money issued by the Bank of England beginning in 1694. By 1697 tallies, bank notes and bank-bills all began to circulate freely as interchangeable forms of money. Wooden stick tallies continued to be used until 1826. Doubtless, ways were found to make them circulate at discounts too, like the paper tallies.
One particular Tally Stick was quite valuable. It represented ?25,000. One of the original stockholders in the Bank of England purchased his original shares with such a stick. In other words, he bought shares in the world's richest and most powerful corporation, with a stick of wood.
It's ironic that after its formation in 1694, the Bank of England attacked the Tally Stick system because it was money issued outside the control of the Money Changers.
Why would people accept sticks of wood for money? That's a great question. Throughout history, people have traded anything they thought had value and used that for money. You see, the secret is that money is only what people agree on to use as money. What's our paper money today? It's really just paper.
But here's the trick: King Henry ordered that Tally Sticks be used to evidence tax payments
received by the government. This built
in demand for tallies and eventually made them circulate and be accepted as
money. And they worked well. In fact, no other money worked and for so long in the
In the 1500's, King Henry VIII relaxed the laws concerning usury and debased the national coin. The Money Changers wasted no time reasserting themselves. They made their gold and silver money plentiful for a few decades.
But when Queen Mary took the throne and tightened the usury laws again, the Money Changers renewed the hoarding of gold and silver coin, forcing the economy to plummet.
When Mary's half-sister, Queen Elizabeth I, took the throne, she was determined to regain control over English money. Her solution was to issue gold and silver coins from the public treasury, restoring the standards established by Edward IV, and thus take the control over the money supply away from the Money Changers.
Although control over money was not the only cause of the English Revolution in 1642
- religious differences fueled the conflict - monetary policy played a major role. Financed by the Money Changers, Oliver Cromwell finally overthrew King Charles, purged Parliament, and put the King to death.
The Money Changers were immediately allowed to
consolidate their financial power. The
result was that for the next fifty years the Money Changers plunged
Conflicts with the Stuart kings led the Money Changers
in
This symbiotic relationship between the Money Changers and the higher British aristocracy continues to this day. The Monarch has no real power, but serves as a useful shield for the Money Changers who rule The City, dominated by the banking House of Rothschild:
"in theory still a real monarch, although in
reality only a convenient puppet, to be used by the cabinet (The City) at
pleasure to suit their own ends; not able even to exercise the power of pardon
that is a prerogative of a governor of an American state and of the President
of the
In 1934, (June 20), the New Britain Magazine of London cited a devastating assertion by former British Prime Minister David Lloyd George that,
"
It also quoted these words written by Lord Bryce:
"Democracy has no more persistent and insidious foe than the money powers..." and pointed out that "questions regarding the Bank of England, its conduct and its objects, are not allowed by the Speaker" (of the House of Commons).
6. THE BANK OF
By the end of the 1600s,
Frantic government officials met with the Money Changers to beg for the loans necessary to pursue their political purposes. The price was high - a government-sanctioned, privately-owned central bank which could issue money created out of nothing, as loans.
It was to be the modern world's first privately-owned, national central bank in a powerful country, the Bank of England, though earlier deposit banks had existed in Venice (1361), in Amsterdam (1609), and Sweden (1661) which issued the first bank notes in Europe that same year - 1661. Although it was deceptively called the Bank of England to make the general population think it was part of the government, it was not. Like any other private corporation, the Bank of England sold shares to get started.
The investors, whose names were never revealed, were supposed to put up one and a quarter million (British pounds) in gold coin to buy their shares in the Bank. But only ?750,000 pounds was ever received.
Despite that, the Bank of England was duly chartered in 1694, and started out in the business of loaning out several times the money it supposedly had in reserves, all at interest.
In exchange, the new bank would loan British politicians as much as they wanted. The debt was secured by direct taxation of the British people.
So, legalization of the Bank of England amounted to nothing less than legalized counterfeiting of a national currency for private gain. Unfortunately, nearly every nation now has a privately controlled central bank, the local Money Changers using the Bank of England as the basic model.
Such is the power of these central banks that they soon take total control over a nation's economy. It soon amounts to nothing but a plutocracy - rule by the rich, and the bankers soon come to be the dominant super-rich class. It is like putting control of the army in the hands of the mafia. The danger of tyranny is extreme. Yes, we need a central monetary authority - but one owned and controlled by the government, not by bankers for their private profit.
Sir William Pitt, speaking to the House of Lords in 1770 stated:
"There is something behind the throne greater than the king himself."
This reference to the Money Changers behind the Bank of England gave birth to the expression "the power behind the throne."
In 1844, Benjamin Disraeli, in a veiled allusion to this same power wrote:
"The world is governed by very different personages from what is imagined by those who are not behind the scenes."
On November 21, 1933, President Franklin D. Roosevelt, in a letter to a confidant, wrote:
"The real truth of the matter is, as you and I know, that a financial element in the
large centers has owned government ever since the days of Andrew Jackson..."
[Note: Besides FDR's main point, this amounts to high praise for President Jackson, as we will see.]
The central bank scam is really a hidden tax, but one that benefits private banks more than the government. The government sells bonds to pay for things for which the government does not have the political wisdom or will to raise taxes to pay. But about 10% of these new government bonds are purchased with money the central bank creates out of nothing. The government then spends this new money.
Once deposited, private banks use these new deposits
to create ten times as much in new fractional reserve loans. This provides the economy with the additional
money needed to purchase the other 90% of the new bonds, without drying up
capital markets and forcing up interest rates. This explains why the Fed consistently holds approximately ten percent
(10%) of all
By borrowing the money (i.e. selling new bonds), the government spreads the inflationary effects out over the term of the bonds. Thus there is little to no immediate inflation.
More money in circulation makes your money worth less. The politicians get as much money as they want, and the people pay for it in inflation, which erodes the purchasing power of their savings, fixed income and wages. The perverse beauty of the plan is that not one person in a thousand can figure it out because it's deliberately hidden behind complex-sounding economics gibberish. The full effects of the inflation are only experienced much later - too late to stop.
With the formation of the Bank of England, the nation
was soon awash in money. Prices
throughout the country doubled. Massive
loans were granted for just about any wild scheme. One venture proposed draining the
By 1698, just four years later, government debt had grown from the initial 1-1/4 million pounds to 16 million. Naturally, taxes were increased and then increased again to pay for all this.
With the British money supply firmly in their grip, the British economy began a wild roller coaster series of booms and depressions - exactly the sort of thing a central bank claims
it is designed to prevent, as Eddie George, Governor of the Bank of England, stated:
"There are two things which are intrinsic, not
just to the Bank of
7. THE RISE OF THE ROTHSCHILDS
This is
When his son, Meyer Amschel Bauer, inherited the business, he decided to change his name to Rothschild.
Meyer Rothschild soon learned that loaning money to governments and kings was more profitable than loaning to private individuals. Not only were the loans bigger, but they were secured by the nation's taxes.
Meyer Rothschild had five sons. He trained them all in the secret techniques
of money creation and manipulation, then sent them out to the major capitals of
rule the family business; women were excluded.
His first son, Amschel, stayed in
"There is evidence that when the five brothers
spread out to the five provinces of the financial empire of
In 1785, Meyer moved his entire family to a larger
house, a five story dwelling he shared with the Schiff family. This house was known as the "Green
Shield" house. The Rothschilds and
the Schiffs would play a central role in the rest of European financial
history, and in that of the
helped fund the Bolshevik coup d'etat in 1917 in
The Rothschilds broke into dealings with European
royalty in Wilhelmshohe, the palace of the wealthiest man in
At first, the Rothschilds were only helping William
speculate in precious coins. But when
Napoleon chased Prince William into exile, William sent ?550,000 (a gigantic
sum at that time, equivalent to many millions of current U.S. dollars) to Nathan Rothschild in
loose, the opportunities for highly profitable wartime investments were nearly limitless.
William returned to Wilhelmshohe, sometime prior to the Battle of Waterloo in 1815. He
summoned the Rothschilds and demanded his money back.
The Rothschilds returned William's money, with the 8% interest the British Consols would have paid him had the investment actually been made. But the Rothschilds kept all the vast wartime profits they had made using Wilhelm's money - shady practice in any century.
Partly by such practices, Nathan Rothschild was able to later brag that in the seventeen years he had been in England, he had increased his original ?20,000 stake given to him by his father by 2,500 times (=?50,000,000), a truly vast sum at that time, comparable to billions of current U.S. dollars in purchasing power.
As early as 1817, the director of the Prussian
Treasury, on a visit to
"... incredible influence upon all financial
affairs here in
Austrian Prince Metternich's secretary wrote of the Rothschilds as early as 1818 that:
"...they
are the richest people in
By cooperating within the family, using fractional
reserve banking techniques, the Rothschilds' banks soon grew unbelievably
wealthy. By the mid-1800s, they dominated
all European banking, and were certainly the wealthiest family in the world. A
large part of the profligate nobility of
In virtue of their presence in five nations as bankers, they were effectively autonomous - an entity independent from the nations in which they operated. If one nation's policies were displeasing to them or their interests, they could simply do no further lending there, or lend to those nations or groups opposed to such policies. Only they knew where their gold and other reserves were located, thus shielding them from government seizure, penalty, pressure or taxation, as well as effectively making any national investigation or audit meaningless. Only they knew the extent (or paucity) of their fractional reserves, scattered in five nations - a tremendous advantage over purely national banks engaging in fractional reserve banking too.
It was precisely their international character that gave them unique advantages over national banks and governments, and that was precisely what rulers and national parliaments should have prohibited, but did not. This remains true of international or multi-national banks to this very day, and is the driving force of globalization - the push for one-world government.
The Rothschilds provided huge loans to establish monopolies in various industries, thereby guaranteeing the borrowers' ability to repay the loans by raising prices without fear
of price competition, while increasing the Rothschild's economic and political power.
They financed Cecil Rhodes, making it possible for him
to establish a monopoly over the gold fields of
over diamonds. In
The National City Bank of
Jacob Schiff, who had been born in the Rothschild
"Green Shield" house in
and developed the infamous rebate deal
Rockefeller secretly demanded from railroads shipping competitors' oil.
These same railroads were already monopolized by
Rothschild control through agents and allies J.P. Morgan and Kuhn, Loeb &
Company (Schiff was on the Board) which together controlled 95% of all
By 1850, James Rothschild, the heir of the French
branch of the family, was said to be worth 600 million French francs - 150
million more than all the other bankers in
James had been established in
James Rothschild, the poet Heinrich Heine said:
"Money is the god of our times, and Rothschild is his prophet."
James built his fabulous mansion, called Ferrieres, 19
miles northeast of
"There is but one power in
There is no evidence that their predominant standing in European or world finance has changed, to the contrary, as their wealth has increased they have simply increased their "passion for anonymity". Their vast holdings rarely bear their name.
Author Frederic Morton wrote of them that they had "conquered the world more thoroughly, more cunningly, and much more lastingly than all the Caesars before..."
Now let's take a look at the results the Bank of England produced on the British economy,
and how that later was the root cause of the American Revolution.
8. THE AMERICAN REVOLUTION
By the mid-1700s, the
free currency, had borrowed heavily from the Bank.
By the mid-1700s, the government's debt was ?140,000,000 - a staggering sum for those days. Consequently, the British government embarked on a program of trying to raise revenues from its American colonies in order to make the interest payments to the Bank.
But in
Four years earlier, in 1690 the Massachusetts Bay
colony printed its own paper money - the first in
In 1720 every colonial Royal Governor was instructed to curtail the issue of colonial money. This was largely unsuccessful. In 1742 the British Resumption Act required that taxes and other debts be paid in gold. This caused a depression in the colonies - property was seized on foreclosure by the rich for one-tenth its value.
Benjamin Franklin was a big supporter of the colonies
printing their own money. In 1757,
ignoring Parliament, more American colonies began to issue their own money.
Called Colonial Scrip, the endeavor was successful, with notable exceptions. It provided a reliable medium of exchange, and it also helped to provide a feeling of unity between the colonies. Remember, most Colonial Scrip was just paper money - debt-free money - printed in the public interest and not really backed by gold or silver coin. In other words, it was a fiat currency.
Officials of the Bank of England asked
"That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make
the products pass easily from the producers to the consumers...
In this manner, creating for ourselves our own paper money, we control its purchas-
ing power, and we have no interest to pay to no one."
This was just common sense to
[1st American Central Bank War (1764-1776); Bank of England; 12 years duration]
As a result, Parliament hurriedly passed the Currency
Act of 1764. This prohibited colonial
officials from issuing their own money and ordered them to pay all future taxes
in gold or silver coins. In other words,
it forced the colonies on a gold and silver standard. This initiated the first intense phase of the
first "Bank War" in
For those who believe that a gold standard is the
answer for
"In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."
"The Colonies would gladly have borne the little
tax on tea and other matters had it not been that
In 1774, Parliament passed the Stamp Act which required that a stamp be placed on every
instrument of commerce indicating payment of tax in gold, which threatened the colonial paper money again. Less than two weeks later, the Massachusetts Committee of Safety passed a resolution directing the issuance of more colonial currency and honoring the currency of other colonies.
On June 10 and June 22, 1775, the "Congress of the Colonies" resolved to issue $2 million in paper money based on the credit and faith of the "United Colonies". This flew in the face of the Bank of England and Parliament. It constituted an act of defiance, a
refusal to accept a monetary system unjust to the people of the colonies.
"Thus the bills of credit [i.e. paper money] which historians with ignorance or prejudice have belittled as instruments of reckless financial policy, were really the standards of the Revolution. They were more than this: they were the Revolution itself." - Alexander Del Mar, historian
By the time the first shots were fired in
At the start of the Revolution, the
As George Washington lamented, "A wagon load of money will scarcely purchase a wagon load of provisions."
Earlier, Colonial scrip had worked because just enough was issued to facilitate trade and counterfeiting was minimal. Today, those who support a gold-backed currency point to this period during the Revolution to demonstrate the evils of a fiat currency. But remember, the same currency had worked so well twenty years earlier during times of peace that the Bank of England had Parliament outlaw it, and during the war the British deliberately sought
to undermine it by counterfeiting it in
[2nd American Central Bank War (1781-1785); Bank of North America; 4 years]
9. THE BANK OF
Towards the end of the Revolution, the Continental
Congress, meeting at Independence Hall
in
would help. Incidentally, Morris was a wealthy man who had grown wealthier during the Revolution by trading in war materials.
Called the Bank of North America, the new bank was closely modeled after the Bank of England. It was allowed to practice (or rather, it was not prohibited from) fractional reserve banking - that is, it could lend out money it didn't have, then charge interest on it. If you or I were to do that, we would be charged with fraud, a felony. Few understood this practice at the time, which was, of course, concealed from the public and politicians as much as possible. Further, the bank was given a monopoly on issuing bank notes, acceptable in payment of taxes
The Bank's charter called for private investors to put
up $400,000 worth of initial capital. But when Morris was unable to raise the money, he brazenly used his
political influence to have gold deposited in the bank which had been loaned to
reinvest in shares of the bank. The second American Bank War was on.
Soon, the dangers became clear. The value of American currency continued to plummet, so, four years later, in 1785, the Bank's charter was not renewed, effectively ending the threat of the Bank's power. Thus the second American Bank War quickly ended in defeat for the Money Changers.
The leader of the successful effort to kill the Bank,
a patriot named William Findley, of
"This institution, having no principle but that of avarice, will never be varied in its object ... to engross all the wealth, power and influence of the state."
Plutocracy, once established, will corrupt the legislature so that laws will be made in its favor, and the administration of justice, to favor the rich.
The men behind the Bank of North America - Alexander Hamilton, Robert Morris, and the Bank's President, Thomas Willing - did not give up.
Only six years later, Hamilton - then Secretary of the Treasury - and his mentor,
Morris, rammed a new privately-owned central bank through the new Congress.
Called the First Bank of the
10. THE CONSTITUTIONAL CONVENTION
In 1787, colonial leaders assembled in
Bank of
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
During the debate over the future monetary system, another one of the founding fathers, Gouvenor Morris, headed the committee that wrote the final draft of the Constitution. Morris knew the motivations of the bankers well.
Along with his old boss, Robert Morris, Gouvenor Morris and Alexander Hamilton were the ones who had presented the original plan for the Bank of North America to the
Continental Congress in the last year of the Revolution.
In a letter he wrote to James Madison on July 2, 1787, Gouvenor Morris revealed what was really going on:
"The rich will strive to establish their dominion and enslave the rest. They always did. They always will.... They will have the same effect here as elsewhere, if we do not, by [the power of] government, keep them in their proper spheres."
Despite the defection of Gouvenor Morris from the ranks of the Bank, Hamilton, Robert Morris, Thomas Willing, and their European backers were not about to give up.
They convinced the bulk of the delegates to the Constitution Convention not to give Congress the power to issue paper money. Most of the delegates were still reeling from the wild inflation of the paper currency during the Revolution. They had forgotten how well Colonial Scrip had worked before the War. But the Bank of England had not. The Money
Changers could not stand to have
Many believed the Tenth Amendment, which reserved powers to the States which were not delegated to the federal government by the Constitution, made the issuance of paper money by the federal government unconstitutional, since the power to issue paper money was not specifically delegated to the federal government in the Constitution. The Constitution is silent on this point. However, the Constitution specifically forbade the individual States to "emit bills of credit" (paper money).
Most of the framers intended the Constitution's silence to keep the new federal government from having the power to authorize paper money creation. Indeed, the journal of the Convention for August 16 reads as follows:
"It was moved and seconded to strike out the words 'and emit bills of credit,' and the motion...passed in the affirmative."
But Hamilton and his banker friends saw this silence as an opportunity of keeping the government out of paper money creation which they hoped to monopolize privately. So both bankers and anti-banking delegates, for opposing motives, supported leaving any federal government authority for paper money creation out of the Constitution, by a four to one
margin. This ambiguity left the door open for the Money Changers, just as they had planned.
Of course, paper money was not itself the main problem, fractional reserve lending was the greater problem since it multiplied any inflation caused by excessive paper currency issuance by several times. But this was not
understood by many, whereas the evils of excessive paper currency issuance were.
In their belief that prohibiting paper currency was a good end the framers were well advised. Prohibiting all paper currency would have severely limited the fractional reserve banking then practiced, since the use of checks was minimal and would, arguably, have been prohibited as well. But bank loans, created as
book entries, were not addressed, and so were not prohibited.
As it happened, the federal and state governments were widely regarded as prohibited from paper money creation, whereas private banks were not - it being argued that this power, by not being specifically prohibited, was reserved to the people (including legal persons, such as incorporated banks).
The contrary argument was that bank corporations were instruments or agencies of the states which incorporated them and so were prohibited from "emitting bills of credit" as were the states themselves. This argument was ignored by the bankers, who proceeded to issue paper bank notes based on fractional reserves, and it lost all force once the U.S. Supreme Court ruled that even the federal government could charter a bank (the 1st BUS) which could issue paper money.
In the end, only the states were prohibited from issuing paper money, not the federal government, and neither private banks nor even municipalities were prohibited from issuing paper money (as happened in c. 400 cities during the Great Depression).
Another error not often understood concerns the authority given the federal government "to coin money" and "to regulate the value thereof." Regulating the value of money (that is to say its purchasing power, or value relative to other things) has nothing to do with quality or content (e.g. so many grains of gold or copper, etc.), but has to do with its quantity - the supply of money. It is quantity that determines
its value, and never has Congress legislated any total
quantity of money in the
Legislating a total money supply (including currency, checks and all bank deposits) would, in fact, regulate the value (purchasing power) of each dollar. Legislating the rate of growth of the money supply would then determine its future value. Congress has never done either, though it clearly has the constitutional authority to do so. It has left this function to the Fed and the 10,000+ banks which create our money supply.
[3rd American Central Bank War (1791-1811); 1st BUS; 20 years duration]
11. FIRST BANK OF THE UNITED STATES
In 1790, less than three years after the Constitution had been signed, the Money Changers struck again. The newly-appointed first Secretary of the Treasury, Alexander Hamilton proposed a bill to the Congress calling for a new privately-owned central bank. Coincidentally, that was the very year that Meyer
Rothschild made his pronouncement from his flagship
bank in
"Let me issue and control a nation's money and I care not who writes its laws."
Alexander Hamilton was a tool of the international
bankers. He wanted to create another private
central bank, the Bank of the
To win over
Interestingly, one of
will be to us a national blessing." A blessing to whom?
After a year of intense debate, in 1791, Congress
passed
"Never was a great historic event followed by a more feeble sequel. A nation arises to claim for itself liberty and sovereignty. It gains both of these by immense sacrifice of blood and treasure. Then, when victory is gained and secure, it hands the nation's credit - that is to say a national treasure - over to private individuals, to do as they please with."
- Alexander Del Mar, historian
The first Bank of the
given authority to print currency and make loans, based on fractional reserves, even though 80% of its stock would be held by private investors. The other 20% would be purchased by the U.S. Government, but the reason was not to give the government a piece
of the action, it was to provide the initial capital for the other 80% owners.
As with the old bank of
Like the Bank of England, the name of the Bank of the
"Under the surface, the Rothschilds long had a
powerful influence in dictating American financial laws. The law records show that they were the power in the old Bank of the
The Bank was promoted to Congress as a way to bring
stability to the banking system and to eliminate inflation. So what happened? Over the first five years, the
"I wish it were possible to obtain a single amendment to our Constitution - taking from the federal government the power of borrowing."
President Adams denounced the issuance of private bank notes as a fraud upon the public. He was supported in this view by all conservative opinion of his time. Why continue to farm out to private banks, for nothing, a prerogative of government?
Millions of Americans feel the same way today. They watch in helpless frustration as the Federal government borrows the American taxpayer into oblivion; borrowing from private banks and the rich the money the government has the authority and duty to issue itself, without debt.
So, although it was called the First Bank of the
It was a scam, plain and simple. And they wouldn't be able to get away with it
for long, but first we have to travel back to
12. NAPOLEON'S RISE TO POWER
Here in
He declared that when a government is dependent upon bankers for money, the bankers, not the leaders of the government are in control:
"The hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency: their sole object is gain."
He clearly saw the dangers, but did not see the proper
safeguards or solution. Back in
In 1800, Thomas Jefferson narrowly defeated John Adams
to become the third President of the
would give Napoleon $3,000,000 in gold in exchange for
a huge chunk of territory west of the Mississippi River - the
With that three million dollars, Napoleon quickly
forged an army and set off across
all went heavily into debt in a futile attempt to stop Napoleon.
Four years later, with the main French Army in Russia,
30-year-old Nathan Rothschild - the head of the London office of the Rothschild
family - personally took charge of a bold plan to smuggle a much-needed
shipment of gold right through France to finance an attack by the Duke of
Wellington from Spain. Nathan later
bragged at a dinner party in
13. DEATH OF THE FIRST BANK/THE WAR OF 1812
In 1811, a bill was put before Congress to renew the
charter of the Bank of the
The press corps of the day attacked the Bank openly, calling it "a great swindle", a "vul-
ture", a "viper", and a
"cobra". Oh, to have an
independent press once again in
A Congressman named P.B. Porter attacked the bank from the floor of Congress, prophetically warned that if the bank's charter were renewed, Congress,
"will have planted in the bosom of this Constitution a viper, which one day or another will sting the liberties of this country to the heart."
Prospects didn't look good for the Bank. Some writers have claimed that Nathan
Rothschild warned that the
But it wasn't enough. When the smoke had cleared, the renewal bill was defeated by a single
vote in the House and was deadlocked in the Senate. By now,
Within 5 months, as Rothschild was said to have
predicated,
It is interesting to note that during this war, the Treasury printed some government paper money, not bearing interest, to fund the war
effort. This was not repeated until the Civil War.
Though the Money Changers were temporarily down, they were far from out. It would take them only another two years to bring a fourth private central bank back - bigger and stronger than before.
14.
But now let's return for a moment to Napoleon. This episode aptly demonstrates the cunning
of the Rothschild family in gaining control of the British stock market after
In 1815, a year after the end of the War of 1812 in
In March of 1815 Napoleon equipped an army which
Why would a central bank finance opposing sides in a war? Because war is the biggest debt - generator of them all. A nation will borrow any amount for victory. The ultimate looser is loaned just enough to hold out the vain hope of victory, and the ultimate winner is given enough to win. Besides, such loans are usually conditioned upon the guarantee that the victor will honor the debts of the vanquished. Only the bankers cannot lose.
On June 18, 1815, 74,000 French troops met 67,000
troops from
British stock and bond market. Following is the account the Rothschilds hotly dispute:
Rothschild stationed a trusted agent, a man named
Rothworth, on the north side of the battlefield - closer to the
Once the battle had been decided, Rothworth took off
for the Channel. He delivered the news
to Nathan Rothschild a full 24 hours before
took up his usual position in front of an ancient pillar.
All eyes were on him. The Rothschilds had a legendary
communication network. If
Myths, legends, you say? One hundred years later, the New York Times ran a story which said that Nathan's grandson had attempted to secure a court order to suppress a book with this stock market story in it. The Rothschild family claimed the story was untrue and libelous. But the court denied the Rothschilds' request and ordered the family to pay all court costs.
What's even more interesting about this story is that some authors claim that the day after the Battle of Waterloo, in a matter of hours, Nathan Rothschild and allied financial interests came to dominate not only the bond market, but the Bank of England as well (an interesting
feature of some Consols was that they were convertible to Bank of England stock).
Intermarriage with the Montifiores, Cohens and
Goldsmiths, banking families established in
Whether or not the Rothschild family and their financial allies seized outright control in this manner of the Bank of England -- the first privately-owned central bank in a major European nation, and the wealthiest -- one thing is certain, by the mid-1800s, the Rothschilds were the richest family in the world, bar none. They dominated the new government bond markets and branched into other banks and industrial concerns worldwide. They also dominated a constellation of secondary, lesser families such as the Warburgs and Schiffs, who allied their own vast wealth with that of the Rothschilds'.
In fact, the rest of the 19th century was known as the "Age of Rothschild." One author, Ignatius Balla, estimated their personal wealth in 1913 at over two billion dollars. Keep in mind, the purchasing power of the dollar was over 1,000% greater then than now. Despite this overwhelming wealth, the family has generally cultivated an aura of invisibility. Although the family controls scores of banking, industrial, commercial, mining and tourist corporations, only a handful bear the Rothschild name. By the end of the 19th century, one expert estimated that the Rothschild family controlled half the wealth of the world.
Whatever the extent of their vast wealth, it is reasonable to assume that their percentage of the world's wealth has increased dramatically since then, as power begets power and the appetite therefor. But since the turn of the century, the Rothschilds have carefully cultivated the notion that their power has somehow waned, even as their wealth and that of their financial allies increases and hence their control of banks, debt-captive corporations, the media, politicians and nations, all through surrogates, agents, nominees and interlocking directorates, obscuring their role.
[4th American Central Bank War (1816-1836); 2nd BUS; 20 years duration]
15. SECOND BANK OF THE
Meanwhile, back in
another privately-owned central bank - the fourth American Bank War had begun.
This bank was called the Second Bank of the
Just as before, the primary stockholders remained secret. But it is known that, at a minimum, the largest single block of shares - about one-third of the total - was held by foreigners. As one observer put it:
"It is certainly no exaggeration to say that the
Second Bank of the
rooted as deeply in
So by 1816,
some authors claim the Rothschilds and their allies, some by now related by
marriage, had taken control over the Bank of England and backed the new
privately-owned central bank in
16. ANDREW JACKSON
After about a decade of monetary manipulations on the
part of the Second Bank of the U.S., the American people, once again, had had
just about enough. Opponents of the Bank
nominated a famous senator from
To the
surprise and dismay of the Money Changers,
vice. He fired 2,000 of the 11,000 employees of the federal government.
In 1832, with his re-election approaching, the Bank
struck an early blow, hoping
the American government towards its citizens - rich and poor.
"It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners... It is easy to conceive that great evils to our country and its institutions might flow from such a concentration of power in the hands of a few irresponsible to the people.
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?... Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence... would be
more formidable and dangerous than a military power of the enemy...
It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes... If [government] would confine itself to equal protection, and, as Heaven does its rains, shower its favor alike on the high and the
low, the rich and the poor, it would be an unqualified blessing...
In the act before me there seems to be a wide and unnecessary departure from these just principles... Many of our rich men have not been content with equal protection and equal benefits, but have
besought us to make them richer by act of Congress...
If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.
I have now done my duty to my country. If sustained by my fellow-citizens, I shall
be grateful and happy; if not, I shall find in the motives which impel me ample
grounds for contentment and peace. In
the difficulties which surround us and the dangers which threaten our
institutions there is cause for neither dismay nor alarm. For relief and deliverance let us firmly rely
on that kind
"If Congress has the right to issue paper money, it was given them to be used by themselves, and not to be delegated to individuals or corporations."
Later that year, in July 1832, Congress was unable to
override
Incredibly (unless one understands who funds
university endowment funds and research dollars), some modern historians have
completely overlooked this war between
The National Republican Party ran Senator Henry Clay
against
Despite his presidential victory, Jackson knew the
battle was only beginning: "The hydra of corruption is only scotched, not
dead," said the newly-elected President Jackson ordered his
new Secretary of the Treasury, Louis McLane, to start removing the government's
deposits from the Second Bank of the U.S. and to start placing them in state
banks. McLane refused to do so.
Taney did as told and withdrew government funds from
the bank, starting on October 1, 1833.
Its head, Nicholas Biddle, used his influence to get the Senate to reject Taney's nomination. Then, in a rare, public display of arrogance, Biddle threatened to cause a national economic depression if the Bank were not re-chartered. He declared war:
"This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. He is mistaken."
Next, in an unbelievable fit of honesty for a central banker, Biddle admitted that the bank was going to make money scarce in order to force Congress to restore the Bank:
"Nothing but widespread suffering will produce any effect on Congress.... Our only safety is in pursuing a steady course of firm [monetary] restriction - and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the Bank."
What a stunning revelation! Here was the pure truth, revealed with
shocking clarity. Biddle intended to use
the money contraction power given to the Bank to cause a massive depression
until
So much for the importance to the common good of central bank independence (or so-called "autonomy") from political accountability and control.
Nicholas Biddle made good on his threat. The Bank sharply contracted the money supply
by calling in old loans and refusing to extend new ones. A financial panic ensued, followed by a deep
economic depression. Predictably, Biddle
blamed
Newspaper editors blasted
sembled in what was called the "Panic Session."
Six months after he had withdrawn funds from the bank,
dent had ever been censured by Congress.
"You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out."
Then something close to a miracle occurred. The Governor of Pennsylvania, where the 2nd BUS was headquartered, came out supporting the President and strongly criticized the Bank. On top of that, Biddle had been caught boasting in public about the Bank's plan to crash the economy. Suddenly the tide shifted.
In April of 1834, the House of Representatives voted 134 to 82 against re-chartering the Bank. This was followed up by an even more lopsided vote to establish a special committee
to investigate whether the Bank had caused the crash.
When the investigating committee arrived at the Bank's
door in
On January 8, 1835, eleven years after taking office
A few weeks later, on January 30, 1835, an assassin by
the name of Richard Lawrence tried to shoot President Jackson. Both pistols misfired.
The following year, when its charter ran out, the
Second Bank of the
up. The fourth American Bank War had ended in the fourth defeat for the Money Changers.
After his second term as President,
"The bold effort the present bank had made to control the government... the distress it had wantonly produced ... are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
[5th American Central Bank War (1863-1913); National Banks/Federal Reserve Banks; 50 years duration]
17. ABE LINCOLN and the CIVIL WAR
Unfortunately, even
During this time, the principal Money Changers
struggled to regain their lost centralized power and money monopoly, but to no
avail. Finally they reverted to the old
central banker's formula - finance a war, to create debt and dependency. If they couldn't get their central bank any
other way,
One month after the inauguration of Abraham Lincoln,
the first shots of the American Civil War were fired at
Certainly
slavery was a cause for the Civil War, but not the primary cause.
"I have no purpose, directly or indirectly, to interfere with the institution of slavery in the states where it now exists. I believe I have no lawful right to do so, and I have no inclination to do so."
Even after the first shots were fired at
"My paramount objective is to save the
So what was the Civil War all about? There were many factors at play. Northern industrialists had used protective
tariffs to prevent the southern states from buying cheaper European goods.
But there were other factors at work. The Money Changers were still stung by
The central bankers now saw an opportunity to use the North/South divisions to split the rich new nation - to divide and conquer by war. Was this just some sort of wild conspiracy theory? Well, let's look at what a well-placed observer of the scene had to say at the time.
This was Otto von Bismarck, Chancellor of Germany, the man who united the German states in 1871. A few years later, in 1876, he is quoted as saying:
"It is not to be doubted, I know of absolute
certainty,"
Within months after the first shots were fired at
of the Civil War to violate the Monroe Doctrine and
return
No matter what the outcome of the Civil War, it was hoped that a war-weakened America, heavily indebted to the Money Changers, would open up Central and South America once again to European colonization and domination - the very thing America's Monroe Doctrine had forbade in 1823.
At the same time,
defeat of the South. But
In 1861, Lincoln and his Secretary of the Treasury,
Salmon P. Chase, went to
"Why, Lincoln, that is easy; just get Congress to pass a bill authorizing the printing of full legal tender treasury notes... pay your soldiers with them and go ahead and win your war with them also."
When
"The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money ... the stamp of full legal tender by the Government is the thing that makes money good any time, and this will always be as good as any other money inside the borders of our country."
So that's exactly what
tion, he printed up $432,000,000 of the new bills.
In order to distinguish them from private bank notes
in circulation, he had them printed with
green ink on the back side. That's why
the notes were called "Greenbacks." With this new money,
printed at no interest to the federal government.
By now
had. This is how he explained his monetary views:
"The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity... By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest. The financing of all public enterprises, and the conduct of the Treasury will become matters of practical administration. Money will cease to be master and become the servant of humanity."
Meanwhile in
"If this mischievous financial policy, which has
its origin in
Keep in mind, by this time the European monarchs were
already chained to their private central
banks, hence the bankers' concern to preserve their captive monarchs. Within four days of the passage of the law
which allowed Greenbacks to be issued, bankers met in convention in
Seemingly unimportant limitations on the use of Greenbacks (printed on the green back), insisted on by the bankers, forbidding their use to pay import duties and interest on the public debt, were utilized by the banks to slap a surcharge on Greenbacks of up to 185%. This undermined the confidence of the people in Greenbacks and necessitated further concessions to the bankers to obtain more, discounted as the Greenbacks now were.
This scheme was effective - so effective that the next year, 1863, with Federal and Confederate troops beginning to mass for the decisive battle of the Civil War, and the Treasury in need of further Congressional authority
at that time to issue more Greenbacks,
"They persist, they have argued me almost blind -
I am worse off than
This act created "National Banks" (hence the N.A. still in use after National banks' names) and gave them a virtual tax-free status. The new banks also got the exclusive power to create the new form of money - National Bank Notes. Though Greenbacks continued to
circulate, their quantity was limited and no more were authorized after the War.
On June 13, 1863, according to Judge Rutherford's
book, "Vindication" this letter was sent from the Rothschilds'
"Rothschild Brothers, Bankers,
Messrs. Ikleheimer, Morton and Vandergould
No
Dear Sirs:
A Mr. John Sherman has written us from a town in Ohio, U.S.A., as to the profits that may be made in the National Banking business under a recent act of your Congress, a copy of which act accompanied his letter. Apparently this act has been drawn upon the plan formulated here last summer by the British Bankers Association and by that Association recommended to our American friends as one that if enacted into law, would prove highly profitable to the banking fraternity throughout the world.
Mr. Sherman declares that there has never been such an opportunity for capitalists to accumulate money, as that presented by this act, and that the old plan of State Banks is so unpopular, that the new scheme will, by contrast, be most favorably regarded, notwithstanding the fact
that it gives the National Banks an almost absolute control of the National finance.
'The few who can understand the system,' he says, 'will either be so interested in its profits, or so dependent of its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantages that capital derives from the system, will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests.'
Please advise fully as to this matter and also state
whether or not you will be of assistance to us, if we conclude to establish a
National Bank in the City of
the information he furnished, we will, of course, make due compensation.
Awaiting your reply, we are
Your respectful servants,
Rothchild Brothers"
From this point on, the
doubling their interest income. As historian John Kenneth Galbraith explained:
"In numerous years following the war, the Federal government ran a heavy surplus. It could not [however] pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply."
Predictably, the new National Banks quickly applied pressure to Congress to have state bank notes taxed out of existence. Congress complied. Thus the fifth American Bank War progressed in small stages in favor of the Money Changers, culminating in passage of the Federal Reserve Act of 1913 and the National Bank Act of 1935.
In 1863,
central banks), eventually they would turn on
So, the Czar gave orders that if either
Further, the Czar was still in a revengeful mood from
Victorious in
the Civil War, had he lived, as his statements quoted above and following make
abundantly clear,
November 21, 1864, he wrote a friend the following:
"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the republic is destroyed."
Shortly before
"My agency in promoting the passage of the National Banking Act was the greatest financial mistake in my life. It has built up a monopoly which affects every interest in the country."
On April 14, 1865, 41 days after his second
inauguration, and five days after Lee surrendered to Grant at
"The death of
United States great enough to wear his boots..."
the height of the Great Depression which was ravaging
McGeer had obtained
evidence deleted from the public record, provided to him by Secret Service
agents, from the trial of John Wilkes Booth, after Booth's death. McGeer said it showed that Booth was a
mercenary working for the international bankers. According to an article in the
"Abraham Lincoln was assassinated through the
machinations of a group representative of the international bankers, who feared
the United States President's national credit ambitions... There was only one group in the world at that
time who had any reason to desire the death of
Interestingly, McGeer claimed that
"They were the men interested in the
establishment of the gold standard and the right of the bankers to manage the
currency and credit of every nation in the world. With
The U.S.
Supreme Court, in Julliard v. Greenman (110
"Congress is authorized to establish a national currency, either in coins or in paper, and to make that currency lawful money for all purposes, as regards the national government or private individuals."
Nevertheless, not since
In another act of folly and ignorance, the 1994 Reigle
Act actually authorized the replacement of
Why was silver bad for the bankers and gold good? Simple. Because silver was plentiful in the
18. RETURN OF THE GOLD STANDARD
With
bottle - the public was becoming accustomed to government-issued, debt-free money.
Despite the European central bankers' deliberate attacks on the Greenbacks, they contin-
ued to circulate in the
"Right after the Civil War there was considerable
talk about reviving
It is clear that the reality of
backs. They may
have killed
On April 12, 1866, nearly one year to the day of
Authors Theodore R. Thoren and Richard F. Warner explained the results of the money
contraction in their book on the subject, The Truth in Money Book:
"The hard times which occurred after the Civil War could have been avoided if the Greenback legislation had continued as President Lincoln had intended. Instead, there were a series of 'money panics'- what we call 'recessions' - which put pressure on Congress to enact legislation to place the banking system under centralized control. Eventually the Federal Reserve Act was passed on December 23, 1913."
In other words, the Money Changers wanted two things: 1) the re-institution of a privately-owned central bank under their exclusive control; and, 2) an American currency issued by them and backed by their gold.
Their strategy was two-fold: first, to cause a series of panics to try to convince the American people that the existing decentralized banking system did not work and that only centralized control of the money supply could provide economic stability; and secondly, to remove so much money from the system that most Americans would be so desperately poor that they either wouldn't be patient enough to fight for true reform, or would be too weak to oppose the bankers, who would offer them relief if the bankers' plans were approved: in short, to convince Americans it was worth the long-term risk to freedom to obtain short-term economic relief.
In 1866, there was $1,800,000,000 in currency in
circulation in the
bankers. Incredibly, only $14.60 per capita remained in circulation.
Ten years later, the money supply had been further reduced to only $400,000,000, even though the population had boomed. The result was that only $6.67 per capita remained in circulation, an 84% decline in just 20 years. The people suffered terribly in a protracted, severe depression.
Today, bank-funded economists try to sell the idea that recessions and depressions are a natural part of something they call the "business cycle." One economist actually tried to explain business cycles with reference to sun spots! The truth is, our money supply is completely manipulated now, just as it was
after the Civil War, just as it was by Nicholas Biddle and the 2nd BUS.
How did money become so scarce? Simple - bank loans were called in and no new ones were given. In addition, Greenbacks were retired by the millions and silver coins were melted down.
On March 13, 1868, James Rothschild wrote to his
On March 18, 1869, Congress, at these bankers' bidding, passed the Credit Strengthening Act which provided that U.S. bonds purchased during the Civil War with greenbacks the bankers had discounted on receipt to as little as $.35 on the dollar, would be repaid, in gold at full value. By this means the Treasury paid the bankers some $500 million more than they had paid for the bonds, plus the interest due. A colossal sum, equivalent to well over 5 billion dollars today, was thus transferred from the Treasury to the Money Changers. Thereafter, their power
over the
In 1872, a man named Ernest Seyd was given ?100,000
(about $5,000,000 then) by the Bank of England and sent to
In fact, Rep. Samuel Hooper, who introduced the bill in the House acknowledged that Mr. Seyd actually drafted the legislation. But it gets worse than that. In 1874, Seyd himself admitted who was behind the scheme:
"I went to
The international bankers accomplished the same
demonetization of silver in
But the contest over control of
That year, Congress created the United States Silver
Commission to study the problem. Their report clearly blamed the monetary
contraction on the National Bankers. The
report is interesting because it compares the deliberate money contraction by
the National Bankers after the Civil War, to the Fall of the
"The disaster of the Dark Ages was caused by
decreasing money and falling prices... Without money, civilization could not have had a beginning, and with a
diminishing supply, it must languish and unless relieved, finally perish. At the Christian era the metallic money of
the
Despite this report by the Silver Commission, Congress
took no action. The next year, 1877,
riots broke out from
"It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money... To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders. See your Congressman at once and engage him to support our interests that we may control legislation."
As political pressure mounted in Congress for change, the bank-influenced press tried to turn the American people away from the truth. The New York Tribune put it this way on January 10, 1878: "The capital of the country is organized at last [i.e. the National Banks],
and we will see whether Congress will dare to fly in its face." But it didn't work entirely.
On February 28, 1878, Congress passed the Sherman Law
allowing the minting of a limited number of silver dollars, ending a 5-year
hiatus. This did not end gold-backing of
the currency, however. Nor did it
completely free silver. Previous to
1873, anyone who brought silver to the
awhile and the post-Civil War depression was finally ended.
Three years later, the American people elected
Republican James Garfield President.
"Whoever controls the volume of money in any country is absolute master of all industry and commerce... and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."
19. FREE SILVER
Under the National Banking Act the Money Changers were gathering strength fast. They began a periodic fleecing of the flock by creating economic booms with easy money and loans, followed by busts caused by tight money and loans fewer, so they could buy up thousands of homes and farms for pennies on the dollar on foreclosure.
In 1891, the Money Changers prepared to take the
American economy down again and their methods and motives were laid out with
shocking clarity in a memo sent out by the American Bankers Association (ABA),
an organization in which most bankers were members. Notice that this memo called for bankers to
create a depression on a certain date three years in the future. Here is how it read in part (note the telling
reference to
"On Sept, 1, 1894, we will not renew our loans
under any consideration. On Sept. 1st we
will demand our money. We will foreclose
and become mortgagees in possession. We
can take two-thirds of the farms west of the
These depressions could be controlled if the National
Banks coordinated their contraction, and more easily because
By 1896, the issue of more silver money had become the
central issue in the Presidential campaign. William Jennings Bryan, a Senator from
"We will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."
The bankers lavishly supported the Republican candidate, William McKinley, who favored the gold standard. The resulting contest was among the most fiercely contested Presidential races in American history.
"The right to coin and issue money is a function of Government. It is a part of sovereignty and cannot, with safety, be delegated to private individuals."
The McKinley campaign got manufacturers and
industrialists to inform their employees that if
Some authors believe, and the course of history
supports them, that under the bankers'
President, McKinley, before the summer of 1897, the
This was, de facto, an agreement surrendering American independence into a worldwide alliance (France being a minor partner) to dominate the world, presided over by the Money Changers who dominated the Bank of England from The City, in London, and through it, the British government.
Almost immediately, in 1898, the Spanish-American War
was begun. Later, the
During the 1912 Democratic Convention,
Although William Jennings Bryan never gained the
Presidency, his efforts delayed the Money Changers for seventeen years from
attaining their next goal - a new, privately-owned central bank for
"That is the one thing in my public career that I regret - my work to secure the enactment of the Federal Reserve Law."
20. J.P. MORGAN & the CRASH OF 1907/
ROCKEFELLER
Now it was time for the Money Changers to get back a
new, private central bank for
A major final panic would be necessary to focus the nation's attention on the supposed need for a central bank. The thin rationale offered was that only a central bank can prevent widespread bank failures and stabilize the currency. The critically important feature of
who would own and control it was an issue carefully avoided.
Before the Civil War, the Rothschilds had previously
used, as principal agents in the
George Peabody, an American bond salesman, traveled to
In 1857 Junius was the recipient of a ?800,000 loan from the Bank of England at a time of financial crisis when many other firms were denied such loans. Junius Morgan be-
came the Union's financial agent in
In the post-Civil War period the connection between Morgan and the Rothschilds was certainly well known in financial circles. As one writer noted:
"Morgan's activities in 1895-1896 in selling
After his father's death, J.P. Morgan took on a
British partner, Edward Grenfell, a long-time director of the Bank of
England. There is speculation the
Morgans became the Rothschilds'
principal agents in the
Early in this century, in U.S. finance, the press and in politics, all lines of power converged on the financial houses of J.P. Morgan (J.P. Morgan Company; Bankers Trust Company; First National Bank of New York; Guaranty Trust), the Rockefellers (National City Bank of New York; Chase National Bank; Chemical Bank); Kuhn, Loeb & Company (a representative of the Rothschild banks; National City Bank of New York) and the Warburg's (Manhattan Corp. bank).
Morgan was clearly the most powerful banker
in
Interestingly, though reputedly
John D. Rockefeller and his brother William used their enormous profits from the Standard Oil monopoly to dominate the National City Bank, merged in 1955 with Morgan's and Kuhn, Loeb & Company's First National Bank of New York, which resulted in Citibank (Citicorp). In 1998 Citicorp merged with Traveler's Group, resulting in the giant Citigroup.
Similarly, John D. bought control of Chase National Bank, and merged it with Warburg's Manhattan bank, resulting in the Rockefeller-dominated Chase Manhattan bank, recently
merged with the Rockefeller-controlled Chemical Bank.
The combination of the Rockefeller-controlled Chase Manhattan/ Citicorp banks gives them majority control over the New York Fed (52%), which completely dominates the Federal Reserve System. But the New York Fed was controlled by Rockefeller long before any majority ownership was reached.
By these mergers, the Rockefellers gradually replaced
the Morgans, Schiffs and Warburgs as the principal Rothschild allies in the
David
Rockefeller, retired Chairman, was the point man for the Rockefellers in recent
decades. One wag described the Rockefellers' seventy-five palatial Pocantico
Hills residences (on over 4,000 acres) in
kind of place God would have built if he had had the money."
In
Rothschilds and have not seriously challenged them.
The relationship between the Rothschilds and Rockefellers was initially one of debtor/creditor, as the Rothschild's provided the seed money for J.D. Rockefeller to monop-
olize the
Subsequently, the relationship entered into measured competition here (local wars between subordinates sometimes resulting) and cooperation there, but like the competition between the other banks, this too has resolved into a power sharing arrangement.
The centers of power are not easy to identify and remain to a large extent hidden through carefully concealed and interlocking directorships, off-shore accounts, nominee holdings, private foundations, trusts and the rest. But the top international bankers are vested with the last word in economic and political power.
Most commentators are of the opinion that the Rothschilds are definitely the dominant partner; citing for example, the 1950's appointment of J. Richardson Dilworth, partner of Kuhn, Loeb & Co. ( a satellite of the Rothschild family) who left to take control of the Rockefeller family purse strings, where he managed the investments of Rockefeller descendants in as many as 200 private foundations.
However, the operative relationship described by Georgetown historian Carroll Quigley is "feudalistic", that is, analogous to the relationships between a feudal king and the aristocracy consisting of dukes, earls, barons, etc., all mutually supportive, while safe-guarding their own turf and "independence", expanding it when permitted without violating the fundamental hierarchical relationships - violations can result in wars.
Lesser members of this "feudalistic" international banking plutocracy include or have included, the Sassoon's (in India and the Far East); Lazard Freres (France); Mendelsohn (Netherlands); Israel Moses Seif (Italy); Kuhn, Loeb (U.S.); Goldman Sachs (U.S.) Lehman Bros. (U.S.); Schroeders (Germany); Hambros (Scandinavia), the Bethmanns, Ladenburgs, Erlangers, Sterns, Seligmans, Schiffs, Speyers, Abs, Mirabauds, Mallets, Faulds, and many others.
The ruling clique in most nations now, excepting a portion of the Muslim world and a few so-called "rogue" states, are equivalent to
local barons, subservient to the higher banking dukes, earls, etc.
This generally reaches right down to the city level, where the dominant local bankers are usually the petty aristocracy, affiliated through
banking and commercial relationships with their banking "barons" and so on.
As
"Their secret is that they have annexed from governments, monarchies, and republics the power to create the world's money on debt-terms requiring tribute both in principal and interest."
Unfortunately, rather than benevolent rulers, this international banking plutocracy has taken the Malthusian position that the world is over-populated with serfs, and, at the highest levels, they are deadly serious about correcting this
"threat" and "imbalance", whatever the cost in human misery and suffering.
To return to 1902: President Theodore Roosevelt
allegedly went after Morgan and his friends by using the Sherman Anti-Trust Act
to try to break up their industrial monopolies. Actually,
For example,
Thomas Nast who referred to the bankers as the "Money Trust."
By 1907, the year after Teddy Roosevelt's re-election, Morgan decided it was time to try for a central bank again. Using their combined financial muscle, Morgan and his friends were able to crash the stock market.
Thousands of small banks were vastly over-extended. Some of Morgan's principal competitors went under. Some had reserves of less than one percent (1%), thanks to the fractional reserve banking technique.
Within days, runs on banks were commonplace across the nation. Now Morgan stepped into the public arena and offered to prop up the faltering American economy by supporting failing banks with money he generously offered to create out of nothing.
It was an outrageous proposal, worse than even fractional reserve banking, but, in a panic, Congress let him do it. Morgan manufactured $200 million worth of this completely reserveless, private money and bought things with it,
paid for services with it, and sent some of it to his branch banks to lend out at interest.
His plan worked. Soon, the public regained confidence in money in general and quit
hoarding their currency. But in the interim, many smaller banks failed and banking power
was further consolidated into the hands of a few large banks. By 1908 the arranged panic was over and
Morgan was hailed as a hero by the president of
man by the name of Woodrow Wilson, who naively wrote:
"All this trouble could be averted if we appointed a committee of six or seven public-spirited men like J.P. Morgan to handle the affairs of our country."
Economic textbooks would later explain that the creation of the Federal Reserve System was the direct result of the panic of 1907, quote: "with its alarming epidemic of bank failures: the country was fed up once and for
all with the anarchy of unstable private banking."
But Minnesota Congressman Charles A. Lindbergh, Sr., the father of the famous aviator, "Lucky Lindy," later explained that the Panic of 1907 was really just a scam:
"The Money Trust caused the 1907 panic... those not favorable to the Money Trust could be squeezed out of business and the people frightened into demanding
changes in the banking and currency laws which the Money Trust would frame."
Since the passage of the National Banking Act of 1863,
the National Banks that Act established as a cartel, had been able to
coordinate a series of booms and busts. The purpose was not only to fleece the American public of their
property, but later to claim that the decentralized banking system was
basically so unstable that it had to be further consolidated and control centralized
into a central bank once again, as it had been before
The supremely critical economic issue of private vs. state ownership and control was
carefully skirted, as was the fractional reserve banking fraud causing the booms and busts.
21.
After the crash, Teddy Roosevelt, in response to the Panic of 1907, signed into law a bill creating something called the National Monetary Commission. The Commission was to study the banking problem and make recommendations to Congress. Of course, the Commission was packed with Morgan's friends and cronies.
The Chairman was a man named Senator Nelson Aldrich
from
As soon as the National Monetary Commission was set
up, Senator Aldrich immediately embarked on a two-year tour of Europe, where he
consulted at length with the private central bankers in
man. The total cost of his trip to the taxpayers was $300,000 - a huge sum in those days.
Shortly after his return, on the evening of November
22, 1910, seven of the wealthiest and most powerful men in
strictest secrecy journeyed to
With Aldrich and three Morgan representatives was Paul
Warburg. Warburg had been given a
$500,000 per year salary to lobby for passage of a privately-owned central bank
in
Schiff, as, we'll later find out, was in the process of spending $20 million to finance the overthrow of the Czar of Russia. These three European banking families, the Rothschilds, the Warburgs, and the Schiffs were interconnected by marriage down through the years, just as were their American banking counterparts, the Morgans, Rockefellers and Aldrichs.
Secrecy was so tight that all seven primary
participants were cautioned to use only first names to prevent servants from
learning their identities. Years later
one participant, Frank Vanderlip, president of Rockefeller's National City Bank
of
"I was as secretive - indeed, as furtive - as any conspirator... Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress."
The participants came together to figure out how to solve their major problem - how to bring back a privately-owned central bank - but there were other problems that needed to be addressed as well. First of all, the market share of the big national banks was shrinking fast.
In the first
ten years of the century, the number of
"Before passage of this Act, the
ate the bank reserves of the entire county."
Therefore, something had to be done to bring these new banks under their control. As John D. Rockefeller put it: "Competition is a sin." Actually, moralists agree that monopoly abuse is a sin. But why quibble when there's money to be made.
Secondly, the nation's economy was so strong that corporations were starting to finance their expansion out of profits instead of taking out huge loans from large banks. In the first 10 years of the new century, 70% of corporate funding came from profits. In other words, American industry was becoming
independent of the Money Changers, and that trend had to be stopped.
All the participants knew that these problems could be hammered out into a workable
solution, but perhaps their biggest problem was a public relations problem - the name of the new central bank. That discussion took place in one of the many conference rooms in the sprawling hotel now known as the Jekyll Island Club.
Aldrich believed that the word "bank" should not even appear in the name. Warburg wanted to call the legislation the National Reserve Bill or the Federal Reserve Bill. The idea here was to give the impression that the purpose of the new central bank was to stop bank runs, but also to conceal its monopoly character. However, it was Aldrich, the ego-
tistical politician, who insisted it be called the Aldrich Bill.
After nine days at
national currency and create that money out of nothing.
How does the Fed "create" money out of nothing? It is a four-step process. But first a word on bonds. Bonds are simply promises to pay - or government IOUs. People buy bonds to get a secure rate of interest. At the end of the term of the bond, the government repays the principal, plus interest (if not paid periodically), and the bond is destroyed. There are about 3.6 trillion dollars worth of
these bonds at present. Now here is the Fed moneymaking process:
Step 1. The Fed Open Market Committee approves the purchase of U.S. Bonds on the open market.
Step 2. The bonds are purchased by the New York Fed Bank from whoever is offering them for sale on the open market.
Step 3. The Fed pays for the bonds with electronic credits to the seller's bank, which in turn credits the seller's bank account.
These credits are based on nothing tangible. The Fed just creates them.
Step 4. The banks use these deposits as reserves. They can loan out ten times the amount of their reserves to new borrowers, all at interest.
In this way, a Fed purchase of, say a million dollars worth of bonds, gets turned into over 10 million dollars in bank deposits. The Fed,
in effect, creates 10% of this totally new money and the banks create the other 90%.
Actually, due to a number of important exceptions to the 10% reserve ratio, many loans require no (0%) reserves, making it possible for banks to create many times more
than ten times the money they have in "reserve".
To reduce the amount of money in the economy, the process is just reversed - the Fed sells bonds to the public, and money flows out of the purchaser's local bank. Loans must be reduced by ten times the amount of the sale. So a Fed sale of a million dollars in bonds, results in 10 million dollars less money in the economy.
So how did the Federal Reform Act of 1913 benefit the
bankers whose representatives huddled at
1st - it totally misdirected banking reform efforts from proper solutions.
2nd - it prevented a proper, debt-free system of
government finance - like
3rd - it delegated to the bankers the right to create the great bulk of our money supply - based on only fractional reserves - new money which they could loan out at interest.
4th - it centralized overall control of our nation's money supply in the hands of a few men.
5th - it established a new private
has been enhanced since then, through additional amendments.
In order to fool the public into thinking the government retained control, the plan called for the Fed to be run by some titular 'public' heads - a Board of Governors appointed by the President and approved by the Senate - a facade to render a deceptive public appearance disguising a completely privately owned system of banks. But all the bankers had to do was to be sure that their men got appointed to the Board of Governors. That wasn't hard. Bankers have money, and money buys influence over politicians.
Once the participants left
bank. Woodrow
Wilson at
But the bankers' subterfuge didn't work. The Aldrich Bill was quickly identified as a
bankers bill - a bill to benefit only what had become known as the "Money Trust." As Congressman Lindbergh put it during the Congressional debate:
"The Aldrich Plan is the Wall Street Plan. It means another panic, if necessary, to intimidate the people. Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead."
Seeing they didn't have the votes to win in Congress, the Republican leadership never brought the Aldrich Bill to a vote. President Taft would not back the Aldrich bill. The bankers quietly decided to move to track two, the Democratic alternative.
They began financing Woodrow Wilson as the Democratic
nominee. He was considered far more
tractable than
To increase
"Issue of currency should be lodged with the government and be protected from domination by Wall Street...We are opposed to the Aldrich Bill because its provisions would place our currency and credit system in private hands."
This was certainly correct, and it helped draw votes
from Taft and got
22. FED ACT OF 1913
During the Presidential campaign, the Democrats were careful to pretend to oppose the Aldrich Bill. As Rep. Louis McFadden, himself a Democrat as well as chairman of the House Banking and Currency Committee, explained it 20 years after the fact:
"The Aldrich bill was condemned in the platform ... when Woodrow Wilson was nominated... The men who ruled the Democratic party promised the people that if they were returned to power there would be no central bank established here while they held the reins of government. Thirteen months later that promise was broken, and the Wilson administration, under the tutelage of those sinister Wall Street figures who stood behind Colonel House, established here in our free country the worm-eaten monarchical institution of the 'king's bank' to control us from the top downward, and to shackle us from the cradle to the grave."
Once
In fact, so vehement were the Democratic denials of similarity to the Aldrich Bill that Paul Warburg - the father of both bills - had to step in privately to reassure his paid friends in Congress that the two bills were virtually identical:
"Brushing aside the external differences affecting the 'shells,' we find the 'kernels' of the two systems very closely resembling and related to one another."
But that admission was for private consumption
only. Publicly, the Money Trust trotted
out Senator Aldrich and Frank Vanderlip, the president of the
Morgan/Rockefeller dominated National City Bank of
Years later, however, Vanderlip admitted in the Feb. 9, 1935 (p.25) Saturday Evening Post that the two measures were virtually identical:
"Although the Aldrich Federal Reserve Plan was defeated when it bore the name Aldrich, nevertheless its essential points were all contained in the plan that finally was adopted."
As Congress neared a vote, they called
noted the similarities between the Aldrich Bill and the Glass-Owen Bill:
"The ... bill grants just what Wall Street and the big banks for twenty-five years have been striving for - private instead of public control of currency. It [the Glass-Owen bill] does this as completely as the Aldrich Bill. Both measures rob the government and the people of all effective control over the public's money, and vest in the banks exclusively the dangerous
power to make money among the people scarce or plenty."
Exactly. During the debate on the measure, Senators complained that the big banks were using their financial muscle to influence the outcome. "There are bankers in this country
who are enemies of the public welfare," declared one Senator. What an understatement!
Despite the charges of deceit and corruption, the bill was finally rammed through the House and Senate on December 23, 1913, after many Senators and Representatives had left town for the Holidays, having been assured by the leadership that nothing would be done until long after the Christmas recess. On the day
the bill was passed, Congressman Lindbergh prophetically warned his countrymen that:
"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 people may not know it immediately, but the day of reckoning is only a few years removed... The worst legislative crime of the ages is perpetrated by this banking bill."
On top of all this, only weeks earlier, Congress had finally passed a bill legalizing the income tax. Why was the income tax law important? Because bankers finally had in place a system which would run up a virtually unlimited federal debt. How would the interest on this debt be repaid, never mind the principal? Remember, a privately-owned central bank creates the principal out of nothing. The federal government was small then. Up to then, it had subsisted merely on tariffs and excise taxes.
Just as with the Bank of England, the interest payments had to be guaranteed by direct taxation of the people. The Money Changers knew that if they had to rely on contributions from the states, eventually the individual state legislatures would revolt and either refuse to pay the interest on their own money, or at least bring political pressure to bear to keep the debt small.
It is interesting to note that in 1895 the Supreme Court had found a similar income tax law to be unconstitutional. The Supreme Court even found a corporate income tax law unconstitutional in 1909. As a result, in October, 1913 Senator Aldrich hustled a bill through the Congress for a constitutional amendment allowing income tax.
The proposed 16th Amendment to the Constitution was then sent to the state legislatures for approval, but some critics claim that the 16th Amendment was never passed by the necessary 3/4s of the states. In other words, the 16th Amendment may not be legal. But the Money Changers were in no mood to debate the fine points. Without the power to tax the people directly and bypass the states, the Federal Reserve Bill would be far less useful to
those who wanted to drive
A year after passage of the Federal Reserve Bill, Congressman Lindbergh explained how the Fed created what we have come to call the "business cycle" and how they use it to their advantage:
"To cause high prices, all the Federal Reserve Board will do will be to lower the rediscount rate..., producing an expansion of credit and a rising stock market; then when...business men are adjusted to these conditions, it can check ... prosperity in mid-career by arbitrarily raising the rate of interest.
It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation, and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down.
This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed.
They know in advance when to create panics to their advantage. They also know when to stop panic. Inflation and deflation work equally well for them when they control finance..."
Congressman Lindbergh was correct on all points. What he didn't realize was that most European nations had already fallen prey to the private central bankers decades or even centuries earlier. But he also mentions the interesting fact that only one year later, the Fed had cornered the market in gold: According to Lindbergh, "Already the Federal Reserve banks have cornered the gold and gold certificates..."
But Congressman Lindbergh was not the only critic of the Fed. Congressman Louis McFadden, the Chairman of the House Banking and Currency committee from 1920 to
1931 remarked that the Federal Reserve Act brought about:
"A super-state controlled by international bankers and international industrialists
acting together to enslave the world for their own pleasure."
Notice how McFadden saw the international character of the stockholders of the Federal Reserve. Another chairman of the House Banking and Currency Committee in the
1960s, Wright Patman from
"In the United States today we have in effect two governments ... We have the duly constituted Government ... Then we have an independent, uncontrolled and uncoordinated government in the Federal Reserve System, operating the money
powers which are reserved to Congress by the Constitution."
Even the inventor of the electric light, Thomas Edison, joined the fray in criticizing the system of the Federal Reserve:
"If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also... It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the userers and the other helps the people."
Three years after the passage of the Federal Reserve Act, even President Wilson began to have second thoughts about what he had unleashed during his first term in office.
"We have come to be one of the worst ruled, one of the most completely controlled governments in the civilized world - no longer a government of free opinion, no longer a government by ... a vote of the majority, but a government by the opinion and duress of a small group of dominant men.
Some of the biggest men in the
Before his death in 1924, President Wilson realized
the full extent of the damage he had done to
"I have unwittingly ruined my government."
So finally, the Money Changers, those who profit by
creating and manipulating the amount of money in circulation, had their
privately-owned central bank installed again in
the matter was that now depressions could be scientifically initiated.
By bribery, deceitful political manipulation and abuse
of their press influence and ownership, they had usurped the monetary function
of government. The
As Mr. James Rand, former President of Remington Rand, Inc. well said:
"No government should permit such coercive power over its own credit to be held by any one group or class as the privately
owned Federal Reserve System holds today.
No government should delegate to private interests the control over the purchasing power of money.
The issue must be faced and settled. There can be no complete restoration of confidence until the conflict between private and government control over money is ended."
The 5th American Bank War ended in victory for the
Money Changers and the defeat of the American people. In the interim, the Money Changers' grip has
gradually tightened, hiding this history, propagandizing our people to support
their various nefarious activities through their media control, and choking our
liberties by degrees. Whether
23. MORGAN/WORLD WAR I
Economic power was now centralized to a tremendous extent. Now it was time for a war - a really big war - in fact, the first World War. Of course, as the central bankers knew, nothing creates debts like warfare.
war for 56 years. And much of the remaining time, she'd been preparing for war.
In World War I, the German Rothschilds loaned money to
the Germans, the British Rothschilds loaned money to the British, and the
French Rothschilds loaned money to the French. It was all highly profitable. In
In fact, six months into the war, Morgan became the
largest consumer on earth, spending $10 million a day. His offices at
Other Rothschild allies in the
But profits were not the only motive. There was also revenge and power. The Money Changers never forgave the Czars
for their opposition nor for supporting
Three years after World War I broke out, the Russian Revolution toppled the Czar. Jacob Schiff of Kuhn, Loeb & Company bragged from his deathbed that he had spent $20 million towards the defeat of the Czar. But the truth was that much of that money funded the communist coup d'etat replacing the democratically elected Kerensky regime, which had replaced the Czar months earlier.
The bankers were not so much enemies of the Czar, as
they were intent on seizing power in
But would some of the richest men in the world financially back communism, the system that was openly vowing to destroy the so-called capitalism that made them wealthy? Communism, like plutocracy, is a product of capitalism. Researcher Gary Allen explained it was this way:
"If one understands that socialism is not a share-the-wealth program, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool for power-seeking megalomaniacs. Communism or more accurately, socialism, is not a movement of the downtrodden masses, but of the economic elite."
As W. Cleon Skousen put it in his 1970 book, The Naked Capitalist:
"Power from any source tends to create an appetite for additional power... It was almost inevitable that the super-rich would one day aspire to control not only their own wealth, but the wealth of the whole world. To achieve this, they were perfectly willing to feed the ambitions of the power-hungry political conspirators who were committed to the overthrow of all existing governments and the establish-
ment of a central world-wide dictatorship."
But what if these revolutionaries get out of control and try to seize power from the Money Changers? After all, it was Mao Tse-tung who in 1938 stated his position concerning power:
"Political power grows out of the barrel of a gun."
The
"The state does not function as we desired. The car does not obey. A man is at the wheel and seems to lead it, but the car does not drive in the desired direction. It moves as another force wishes."
Who was behind it? Rep. Louis T. McFadden, the Chairman of the House Banking and Currency Committee throughout the 1920s and into the Great Depression years of the 1930s, explained it this way:
"The course of Russian history has, indeed, been
greatly affected by the operations of international bankers... The Soviet Government has been given United
States Treasury funds by the Federal Reserve Board ... acting through the Chase
Bank.
In other words, the Fed and the Bank of England, along with their controlling stockholders, the Rothschilds, Roc ht. Rockefellers, Morgans, Schiffs, Warburgs, etc., were creating a monster, one which would fuel seven decades of unprecedented Communist revolution, warfare, and most importantly - debt.
The Soviet Union was also a useful counterbalance to
Such balance-of-power arrangements assure that the Money Changers cannot be overthrown worldwide by a political revolt in any single country. In that case, they simply shift support to the counter-balanced country. Additionally, the inevitable military rivalry between roughly balanced powers results in massive expenditures and so more national borrowing and debt.
In case one thinks there is some chance that the Money
Changers got communism going and then lost control - keep in mind that even in
the socialist paradise, Rockefeller's National City Bank (now Citigroup) in
openly in the
However, setbacks, some major, did occur. For instance, it is likely the bankers early
on preferred the more compliant Mensheviks to the more independent Bolsheviks,
but Lenin got the upper hand. But both
groups had the same end and so this was not a fundamental division. However, it did lead to a serious problem
when Lenin died, as an even more independent sort - Stalin - squeezed out the
bankers' candidate - Leon Trotzky (real name: Bronstein; whose wife was linked
to the Warburgs) - and took control of Soviet Communism. Even then Stalin continued to fear Trotzky's
powerful connections, and so had him tracked down and eventually assassinated
in
To pressure Stalin back into the ranks, as C.G.
Rakovsky explained, the bankers financed Hitler, who was an avowed enemy of
communism and openly advocated invading the
Hitler did
indeed put the pressure on Stalin, nearly overturning the bankers' schemes in
the process, until the
In 1992, The Washington Times reported that Russian President Boris Yeltsen was upset that most of the incoming foreign aid was being siphoned off "straight back into the coffers of Western banks in debt service." Much of that debt was incurred under the prior
communist regimes, which were heavily in debt to the Money Changers.
Similarly, once in power, Mao Tse-Tung spread his wings and expelled the Soviets from Red China leading to the Sino-Soviet rift of the 1960's. In response, the U.S. and the U.S.S.R. initiated an encirclement policy of China including: heavy Soviet troop concentrations and border provocations in Manchuria; drawing North Korea and Mongolia tightly into the Soviet camp; placing nuclear weapons in Manchuria; arming Tibetan freedom fighters and Taiwanese troops; and establishing important U.S. (now Soviet) air and naval bases in Vietnam (such as Cam Rahn Bay) while beefing up U.S. forces in Guam, Japan, Laos and Thailand, all under the pretext of the Vietnam War.
Under this growing pressure, Mao first responded with internal political purges just as Stalin had done, but with the failure of the Great Leap Forward and with the U.S./U.S.S.R. noose tightening, Mao blinked and Kissinger was sent in to strike the deal.
Still, Mao's price for China's cooperation and integration in the bankers' one-world scheme was obviously high, here is the result: the encirclement ended, including U.S. abandonment of South Vietnam and Laos; China got Taiwan's U.N. seat (and doubtless a pledge of eventually getting Taiwan itself); a free hand in Tibet; Hong Kong; gigantic bribes in the form of Western development of China. Chinese dominance over the planned Asian-Pacific Union was, no doubt, also guaranteed.
This left the Bankers with few obstacles worldwide:
Muslim fundamentalism here and there, Indian and Pakistani nuclear development,
and the weak remnants of Western nationalism (concentrated in the large [but
rapidly shrinking]
To overcome these, the Russian Empire was dismembered
into fifteen nations; the U.K,
The bankers' three main regional groupings: the European Union (with dominance over Africa as well), the proposed American Union in the Western hemisphere, and Chinese dominance in Asia over the emerging Asian-Pacific Union, are rapidly bringing to life Orwell's three virtually identical world nations set forth in his book 1984: Eurasia, Oceania and East Asia - all set to engage in perpetual war (WWIII) with its attendant debt, population reduction and war-time controls, all under the hidden guidance of the bankers' global government.
Wars are complex things with many causative factors. But on the other hand, it would also be equally foolish to ignore as a prime cause of World Wars I and II, and of future wars, those who would profit the most from war, both financially and politically.
Senator Nye of
It is also interesting to note that the most belligerent pro-war hawk surrounding President Wilson was a man named Colonel Edward Mandell House, the son of a man commonly believed to be a Rothschild agent, who was himself closely associated with Wall Street and European bankers.
The role of the Money Changers is no wild conspiracy theory. They had a motive - a short-range, self-serving motive as well as a long-range, political motive of advancing totalitarian government, with the Money Changers maintaining the financial clout to
control whatever politicians might emerge as the leaders.
Next, we'll see what the Money Changers' political goal for the world is.
24. ROARING 20s/GREAT DEPRESSION
Shortly after World War I, the overall political
agenda of the Money Changers began to be clear. Now that they controlled national economies individually, including that
of the
The new world government proposal was given top
priority at the Paris Peace Conference after World War I. It was called the
Nationalism
still beat strong in the human breast. For example, Lord Curzon, the British foreign secretary, called the
"a good joke," even though it was the stated policy of the British government to support it.
To the humiliation of President Wilson, the U.S.
Congress wouldn't ratify the League. Despite the fact that it had been ratified by many other nations,
without
After World War I, the American public had grown tired of the internationalist policies of Democrat Woodrow Wilson. In the Presidential election of 1920, Republican Warren Harding won a landslide victory with over 60% of the vote.
Harding was an ardent foe of both Bolshevism and the
Despite the fact that the war had brought
In the early 1920s, the Governor of the Federal Reserve Bank of
land to its former undisputed position of dominance in world finance.
On top of that, rich with gold, the American economy might get out of control again, just as it had done after the Civil War. During the next eight years, under the presidencies of Harding and Coolidge, the huge federal debt built up during World War I was cut by 38%, down to 16 billion dollars, the greatest per-
centage drop in
During the election of 1920, Warren Harding and Calvin Coolidge ran against James Cox, the Governor of Ohio, and the little-known Franklin Delano Roosevelt (of the Delano banking family), who had previously risen to no higher post than President Wilson's Assistant Secretary of the Navy.
After his inauguration, Harding moved quickly formally
to kill the
Harding's successor, Coolidge, was no friend of the Money Changers either. Coolidge has been accused in international bankers circles of being directly responsible for the rebirth of nationalism at that time, which derailed their plans and led them to foment WWII.
When Coolidge took over, he continued Harding's domestic economic policy of high tariffs on imports while cutting income taxes. As a result, the economy grew at such a rate that net revenue still increased. Now that had to be stopped. So just as they'd done before, the Money Changers decided it was time to crash the American economy. The Federal Reserve began flooding the country with money. They increased the money supply by 62% during these years. Money was plentiful. This is why it was known as the "Roaring Twenties."
Before his death in 1919, former President Teddy
Roosevelt warned the American people what was going on. As reported in the March 27, 1922 edition of
the New York Times,
"These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or drive out of office public officials who refuse to do the bidding of the
powerful corrupt cliques which compose the invisible government."
Just one day before the New York Times article quoted Roosevelt, John Hylan, Mayor of New York City, blasted those he saw as
taking control of
"The real menace of our republic is the invisible government which, like a giant octopus, sprawls its slimy length over our city, state and nation. At the head is a small group of banking houses generally referred to as 'international bankers.' This little coterie of powerful international bankers virtually run our government for their own selfish ends."
Why didn't people listen to such strong warnings and demand that Congress reverse its 1913 passage of the Federal Reserve Act? Because remember, it was the 1920s. The Fed was flooding the country with money - over $10 billion in new money in six years (1924-29) once multiplied by fractional reserve banking. In other words, just as it is today, in
times of prosperity no one wants to worry about economic issues.
But there was a dark side to all this prosperity. Businesses expanded and became strung out on credit. Speculation in the booming stock market became rampant. Although everything looked rosy, it was just a castle made of sand.
When all was in readiness, in April of 1929, Paul Warburg, the father of the Federal Reserve, sent out an advisory warning his friends that a collapse and nationwide depression was certain. In August of 1929, the Fed began to tighten money.
It is not a coincidence that the biographies of all the Wall Street giants of that era, John D. Rockefeller, J.P. Morgan, Bernard Baruch, etc., all marvel that they got out of the stock market just before the crash and put all their assets in cash, bonds or gold.
On October 24, 1929, the big
market tumbled and that day was known as "Black Thursday."
According to John Kenneth Galbraith, writing in The Great Crash, 1929, at the height of the selling frenzy, Bernard Baruch brought Winston Churchill into the visitors' gallery of the New York Stock Exchange to witness the panic and impress him with his power over the wild events down on the floor.
Congressman Louis McFadden, chairman of the House Committee on Banking and Currency from 1920 to 1931 knew whom to blame. He accused the Fed and the international bankers of orchestrating the Crash:
"I think it can hardly be disputed that the
statesmen and financiers of Europe are ready to take almost any means to
reacquire rapidly the gold stock which Europe lost to
Curtis Dall, a broker for Lehman Brothers, was on the
floor of the New York Stock Exchange the day of the crash. In his 1970 book FDR: My Exploited
Father-In-Law, he explained that the Crash was triggered by the planned sudden
shortage of call money in the
"Actually, it was the calculated 'shearing' of the public by the World-Money powers triggered by the planned sudden shortage of call money in the New York Money Market."
Within a few weeks, $3 billion of wealth simply seemed to vanish. Within a year $40 billion had been lost. Eventually the total reached over $200 billion, principally wrung out of the farming and middle class in foreclosures. It effectively ended the debt-free (and therefore independent) American middle class. Instead of owning their homes and farms as they did before the Depression, in our day, at age 65, over 90% of Americans own nothing - zero net wealth (i.e. after deducting their debts).
But did wealth really disappear? And what did the Federal Reserve do? Instead of moving to help the economy out by quickly lowering interest rates to stimulate the economy, the Fed continued brutally to contract the money supply further, deepening the depression. Between 1929 and 1933, the Fed reduced the money supply by an additional 33%.
But, as economist Irving Fisher noted, total money in circulation dropped from $800 billion in 1929 to $400 billion in 1933, a 50% drop, due to the widespread hoarding of money as the public reacted to the small-to-medium bank failures.
Although most Americans have never heard that the Fed
was the cause of the Great Depression, this is well known among top
economists. Milton Friedman, the
Nobel-Prize-winning economist, now of the Hoover Institution at
in a National Public Radio interview in January of 1996.
"The Federal Reserve definitely caused the Great depression by contracting the amount of currency in circulation by one-third from 1929 to 1933."
But the money lost by most Americans during the
Depression didn't just vanish. It was
just redistributed into the hands of those who had gotten out just before the
Crash and had purchased
But
Eight years before Hitler would invade
"After World War I, German fell into the hands of the German international bankers. Those bankers bought her and they now own her, lock, stock, and barrel. They have purchased her industries, they have mortgages on her soil, they control
her production, they control all her public utilities.
The international German bankers have subsidized the present government of Germany and they have also supplied every dollar of the money Adolph Hitler has used in his lavish campaign to build up a threat to the government of Bruening. When Bruening fails to obey the orders of the German International
Bankers, Hitler is brought forth to scare the Germans into submission...
Through the Federal reserve Board...over $30 billions of American money ... has been pumped into Germany... You have all heard of the spending that has taken place in Germany...modernistic dwellings, her great planetariums, her gymnasiums, her swimming pools, her find public highways, her perfect factories. All this was done on our money. All this was given to Germany through the Federal Reserve Board.
The Federal Reserve Board ... has pumped so many billions of dollars into Germany that they dare not name the total."
In his last year in office, Hoover put forward a plan to bail out the failing smaller banks, but he needed support from the Democratic Congress and that was not to be had. That same year, Franklin D. Roosevelt was swept into office during the 1932 presidential election. Once Roosevelt was in office, however, sweeping emergency banking measures were immediately announced which did nothing but increase the Fed's power over the money supply. Then, and only then, did the Fed finally began to loosen the purse strings and feed a little new money out to the starving American people.
25. FDR/WORLD WAR II/ FORT KNOX
At first Roosevelt railed against the Money Changers as being the cause of the depression. Believe it or not, this is what he said on March 4, 1933 in his inaugural address:
"Practices of the unscrupulous Money Changers stand indicted in the court of public opinion, rejected by the hearts and minds of men... The Money Changers have fled from their high seats in the temple of our civilization."
But two days later, Roosevelt declared a bank holiday and closed all banks. Later that year, Roosevelt outlawed private ownership of all gold bullion and all gold coins (with the exception of rare coins). Most of the gold in the hands of the average American was in the form of gold coins. The new decree was, in effect, a confiscation. Those who didn't comply risked as much as ten years in prison and a $10,000 fine - the equivalent of $100,000 today.
Out in small-town America, some people didn't trust Roosevelt's order. Many were torn between keeping their hard-earned wealth or obeying the government. Those who did turn in their gold were paid the official price for it: $20.66 per ounce.
So unpopular was the confiscation order that no one anywhere in government would take credit for authoring it. No Congressman claimed it. At the signing ceremony, President Roosevelt made it clear to all present that he was not the author of it and publically stated that he had not ever read it! Even his Secretary of the Treasury said he'd never read it either, saying it was "what the experts wanted." Guess whose experts.
Roosevelt convinced the public to give up their gold by saying that pooling the nation's resources was necessary to get America out of the depression. But the gold was not used to
back new money. In fact the Fed kept the money supply tight.
On May 12, 1933, led by heroic Senator Elmer Thomas of Oklahoma, Congress passed the Thomas Amendment which authorized the President to have $3 billion of U.S. Notes issued, just like Lincoln's greenbacks. Roosevelt signed the Act into law. The bankers were apoplectic. They demanded Roosevelt not issue the Notes. He readily complied.
Senator Thomas complained:
"Anytime Wall Street wants a bill passed, they send a suggestion down to Washington and we are kept here sometimes until midnight to pass the bill. But if Wall Street is opposed to legislation, it cannot be gotten before the Senate for consideration and it has no chance of passing."
With great fanfare, Roosevelt ordered a new bullion depository built to hold the mountain of gold the U.S. government was confiscating. By 1936, the U.S. Bullion Depository at Fort Knox was completed, and in January, 1937, the gold began to flow into it. The rip-off of the ages was about to proceed.
In 1935, once the domestic gold had all been turned-in, the official price of gold was suddenly raised to $35 per ounce. But the catch was, only foreigners could sell their gold at the new higher price.
The Money Changers, who had heeded Warburg's note and gotten out of the stock market before the Crash and bought gold at $20.66 per ounce, then shipped it to London, could now bring it back and sell it back to the
government nearly doubling their money while the average American starved.
Approximately $1.3 billion in U.S. gold was thus sold and shipped to Europe in the year before the price rise, and was shipped back to the U.S. in the following year, sold to the U.S. Government for $35 per ounce.
The Fort Knox Bullion Depository sits in the middle of the Fort Knox military reservation,
thirty miles southwest of Louisville, Kentucky, some 600 miles from the nearest shoreline.
The four-acre grounds immediately surrounding the building are guarded by an electrified steel fence, an open moat and four machine-gun-armed guard pillboxes at the structure's corners.
The central core vault, where most of the gold was supposedly kept, is in the basement, and can only be reached by means of a very slow, screw-driven elevator. The elevator opens up on a massive, twenty-ton stainless steel vault door. The subterranean vault
casing is said to give off poison gas under the flame of an acetylene torch.
When the gold began arriving on Jan. 13, 1937, there was unprecedented security. Thousands of official guests watched the arrival of a nine-car train from Philadelphia, guarded by armed soldiers, postal inspectors,
Secret Service men and guards from the U.S. Mint.
The first shipment was met by Mrs. Nellie Taylor Rose, then director of the Mint, wearing a full-length mink coat with an enormous cape-collar. Reports enthusiastically stated that
the vast gold hoard being assembled would "outshine the Temple of Solomon."
It was all great theater - America's gold supply from across the land had been pooled, supposedly for the public benefit, and then safely tucked into Fort Knox. But all that security would soon be breached by the government itself.
Now the stage was set for another big war - one which would pile up debt far beyond that of World War I. For example, in 1944 alone, the U.S. national income was only $183 billion dollars, yet $103 billion was spent on the war. This was 30 times the spending rate during World War I. In fact, the American taxpayer picked up 55% of the total allied cost of the war.
But equally important, virtually every nation involved in World War II greatly multiplied their debt. In the U.S., for example, federal debt went from $43 billion in 1940, up to $257 billion in 1950; an increase of 598%. Between 1940 and 1950, Japanese debt swelled
1,348%; French debt grew 583%; and Canadian debt soared 417%.
As Antony C. Sutton has documented in his "Wall Street" trilogy, the Rockefeller-controlled Vacuum Oil Company prominently assisted in the creation of Bolshevik Russia, and subsequently in the military build-up of Nazi Germany, while backing Roosevelt's socialist New Deal. Money trails from other Wall Street sources can be traced to the same recipients. Here is evidence of high finance
backing communism, nazism and socialism - a war was the inevitable result.
The fact is, that the power behind the scenes which manipulated the main players in World War II, was the Wall Street financial establishment, specifically the banks of J.P. Morgan, Jr., the Rockefeller-controlled Chase Manhattan Bank, and earlier (before merging their Manhattan bank with Chase Bank), the Warburgs. This banking elite, which has its
own motives, which are contrary to the good of the people of all nations, controls America.
After the war, the world was divided into two economic camps, both controlled by the Money Changers - communist command economies on the one hand, versus monopoly capitalists on the other, set to fight it out in one seemingly perpetual and highly-profitable arms race.
But the bankers have done this very cautiously and gradually, aware of the French
aphorism concerning bankers printing money too fast with too great an inflation rate:
"After the printing press, the guillotine."
The post-war situation and installation of two-party or multi-party democracies, made political manipulation of the nations mere child's play. Tight money, and so hard times (or busts), always lead to a movement "to the left", to revolutionary solutions and change, as occurred in 1896 and in the Great Depression, worldwide.
Plentiful money, and so good (or boom) times, always leads to movement "to the right", to conservative movements, and against rocking the happy boat.
Lesser shifts in national economies result in lesser political shifts - to mere party changes (e.g. Republican to Democrat, Conservative to Labor, or visa versa).
The international bankers had it in their power to cause booms or busts by simply increasing or decreasing the money supply in given nations, whether by a little or a lot. Given that financial power, and their media
control, the manipulation of "democracies" (actually disguised plutocracies) was easy.
With all significant opposition in the industrialized West taken care of, it was finally time for the central bankers to embark in earnest on their three-step plan to centralize the economic systems of the entire world and finally bring about their global government, or New World Order. The steps of this plan were:
* One: Centralize national economic control through central bank domination of national economies, worldwide.
Two: Centralize regional economic control through organizations such as the European Monetary Union and transnational economic unions such as NAFTA and the EEC.
* Three: Centralize world economic control through a World Central Bank (i.e. the B.I.S., I.M.F. and World Bank), a world money under its control (SDRs), and ending national independence through abolition of all tariffs by treaty (GATT) under an international bureaucracy (WTO), while removing national authority over transnational corporations operating in their countries (MAI - Multilateral Agreement on Investments).
Step One was completed long ago, with a few minor exceptions. Steps Two and Three are far advanced- nearing completion.
David Rockefeller celebrated the regional NAFTA's passage by stating:
"Everything is in place - after 500 years - to build a new world in the Western Hemisphere."
In 1994 the GATT Treaty created the World Trade Organization (WTO), another
milestone towards formal, banker-dominated World government.
Since World War II, the resulting international banker-controlled governments of the West (formerly "Christendom"), have been engaged in a fifty year confiscation-by-degrees of what wealth remained to their citizens after the Great Depression/World War II period.
This is done by a deliberate policy of inflation, which transfers the people's savings to the money creators doing the inflating (i.e. the Fed [10%] and private banks [90%]), while reducing the purchasing power of wages, salaries and fixed incomes, as it increases taxes through "bracket creep". As British economist and Bank of England Director, John Maynard Keynes put it:
"By a continuous process of inflation, government can confiscate secretly, and unobserved, an important part of the wealth of its citizens."
This was no idle remark. Since the Fed's creation in 1913, the U.S. has experienced over a 1,000% inflation, destroying over 90% of the dollar's purchasing power. The same has occurred in Europe.
But the governments profited little. A handful of private banks, which create fractional reserve bank loans, profited enormously, so enormously that the middle class is now in thrall to the banks as debt-slaves, owning neither land, nor "their" homes, cars, nor anything else, being a "middle class" only at the sufferance of the banks which do not call their loans. Few have escaped this debt trap.
The only difference now between the middle class and the poor in America, is that banks are willing to make loans to the middle class based on their employment/income generating abilities, and not to the poor. But neither group, taken as a whole, has any net wealth.
Lord Keynes revealed the bankers' rationalization for this terrible injustice as being temp-
orary in nature - a necessary step to a better, banker-controlled world:
"For at least another hundred years, we must pretend to ourselves and to everyone that fair is foul, and foul is fair; for foul is useful and fair is not. Avarice
and usury and precaution must be our gods for a little longer still."
What about gold? Doesn't America own enough to solve this debt problem? Among central banks, the largest holder of gold is now the International Monetary Fund. It and Central Banks now control 2/3rds of the world's gold supply, giving them the ability to prevent its use as a competition to its planned world money, or to use gold as the backing for
it, or both, according to the Money Changers' golden rule: "He who has the gold, makes the rules."
Most Americans still believe that all that gold is still at Fort Knox. At the end of World War II, Fort Knox contained 701.8 million ounces of gold, an incredible 70% of all the gold in the world. How much remains? No one knows. Despite the fact that Federal law requires an annual physical audit of Fort Knox gold, the Treasury has consistently refused to conduct one. The truth is that a reliable audit of whatever remains here has not been con-
ducted since President Eisenhower ordered one in 1953.
Where did America's gold in Fort Knox go? Over the years it was sold off to European-based Money Changers at the $35 per ounce price. Remember, this was during a time when it was illegal for Americans to buy any of their own gold from Fort Knox. In fact, there was an infamous case in which the Firestone family set up a string of dummy corporations to purchase Fort Knox gold and keep it in Switzerland. They were eventually caught, however, and successfully prosecuted.
Finally, by 1971, all the pure gold had been secretly removed from Fort Knox - much of it drained back through the Fed to the Bank of England. Once the gold was gone from Fort Knox, President Nixon closed the gold window by repealing Roosevelt's Gold Reserve
Act of 1934, finally making it legal once again for Americans to buy gold.
Naturally, gold prices immediately began to soar. Nine years later, gold sold for $880 per ounce, 25 times the price for which what the gold in Fort Knox was sold.
One would think that eventually someone in the government would get wind of what was happening and blow the whistle. The largest fortune in the history of the world stolen. Shades of the old James Bond film, Goldfinger. Well, as a matter of fact, Ian Fleming, the author of the James Bond series was head of the British counterintelligence service, MI-5. It is widely believed in the intelligence community that he wrote much of his fiction as a warning, as many authors of fiction do.
If the removal of all the "good delivery" gold from Fort Knox can be viewed as a deliberate raid on the U.S. Treasury, then such an operation might well have been years in the planning - namely 40 years - certainly time enough for Fleming to get wind of it and try to
prevent it.
So just how did the story about the disappearance of Fort Knox gold get out? It all started with an article in a New York periodical in 1974. The article charged that the Rockefeller family was manipulating the Federal Reserve to sell off Fort Knox gold at bargain basement prices to anonymous European speculators. Three days later, the anonymous source of the story, Louise Auchincloss Boyer, mysteriously fell to her death from the window of her 10th floor apartment in New York. How would Mrs. Boyer have known of the Rockefeller connection to the Fort Knox gold heist? She was the longtime secretary of Nelson Rockefeller.
For the next 14 years, Ed Durell, a wealthy Ohio industrialist, devoted himself to a quest for the truth concerning the Fort Knox gold. He wrote thousands of letters to over 1,000 government and banking officials, trying to find out how much gold was really left and where the rest of it had gone.
Edith Roosevelt, the granddaughter of President Teddy Roosevelt questioned the
actions of the government in a March 1975 edition of The New Hampshire Sunday News:
"Allegations of missing gold from our Fort Knox vaults are being widely discussed in European financial circles. But what is puzzling is that the Administration is not hastening to demonstrate conclusively that there is no cause for concern over our gold treasure - if indeed it is in a position to do so."
Unfortunately, Ed Durell never did accomplish his primary goal, a full audit of the gold reserves in Fort Knox. It's incredible that the world's greatest treasure has had no accounting or auditing in decades. This gold belonged to the American people, not the Federal Reserve and their foreign owners.
One thing is certain, the government could blow all this speculation away in a few days with a well-publicized audit under the searing lights of media cameras. It has chosen not to do so. One must conclude that it is afraid of the truth such an audit would reveal.
What is the government so afraid of. Here's the answer. When President Ronald Reagan took office in 1981, his conservative friends urged him to study the feasibility of returning to a gold standard as the only way to curb government spending. It sounded like a reasonable alternative, so President Reagan ap
pointed a group of men called the Gold Commission, to study the situation and report back.
What Reagan's Gold Commission reported back to Congress in 1982 was the following shocking revelation concerning gold. The Treasury owned no gold at all. All the gold that was left in Fort Knox was now owned by the Federal Reserve - a group of private bankers - as collateral against the national debt. Much of the rest of it was still in the U.S., in the vaults beneath the New York Federal Reserve Bank, but held there for its bank and foreign owners.
The truth of the matter is that never before has so much money been stolen from the hands of the general public and put into the hands of a small group of private schemers - the Money Changers.
26. WORLD CENTRAL BANK
The headquarters of the International Monetary Fund is located in Washington, D.C. Across the street is the headquarters of the World Bank. What are these organizations and who controls them?
Let us step back in time for a moment to the aftermath of World War I. People were tired of war. So, under the guise of peacemaking, the international bankers devised a plan to consolidate power even further. Claiming only an international government would stem the tide of world wars, the Money Changers pushed forward a proposal for world government which stood on three legs: a world central bank, to be called the Bank for International Settlements (BIS); a world judiciary, to be called the World Court, located in the Hague, the Netherlands; and a world executive and legislature, to be called the League of Nations.
As President Clinton's mentor, Georgetown historian Carroll Quigley wrote in his 1966 book "Tragedy & Hope":
"The growth of financial capitalism made possible a centralization of world economic control and a use of that power for the direct benefit of financiers
and the indirect injury of all other economic groups...
The powers of financial capitalism had [a] far-reaching [plan,] nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.
This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.
The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.
Each central bank ... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
Quigley continued:
"It must not be felt that these heads of the world's chief central banks were substantive powers in world finance. They were not. Rather, they were technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were
perfectly capable of throwing them down.
The substantive financial powers of the world were in the hands of these investment bankers (also called 'international' or 'merchant' bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks."
Despite intense pressure from the international bankers and the press, a handful of U.S. Senators, including Senator Henry Cabot Lodge, kept the U.S. out of these schemes (though the World Court was approved in 1930 as part of the Young Plan). Without U.S. participation, the League was doomed.
Incredibly, even though the U.S. rejected the proposed World Central Bank also set up in 1930 (the BIS), the New York Federal Reserve Bank ignored its government and arrogantly sent representatives to Switzerland to participate in the central banker's meetings
right up until 1994, when the U.S. was finally officially dragged into it.
Until 1977 the BIS hid itself from the world. BIS bankers told visitors to go to Frey's Chocolate Shop (in Basel, Switzerland)
and enter the unmarked entrance of the former hotel next door. More shades of James Bond.
The Fed and other central banks keep reserves on deposit with the BIS - a convenient way to keep secret the way they are managing their nations' reserves.
It now occupies a new eighteen story circular skyscraper known as the "Tower of Basel". The building is completely self-contained, with its own nuclear-bomb shelter, a triply redun-dant fire-extinguishing system, a private hospital and twenty miles of subterranean archives.
Ten times a year the heads of the Bank of England, the Fed, the Bank of Japan, the Swiss National Bank and the German Bundesbank and other central banks meet to coordinate and try to control all monetary activity in the industrialized world, implementing global
economic strategy, independently of their national governments.
Their world government schemes temporarily thwarted, the bankers resorted to the old formula - another war to wear down the resistance while affording opportunities to redirect political and economic matters as they desired in the confusion of war, while reaping handsome profits.
"The chaos precipitated by war of necessity brings about the repressive
controlled environment that power brokers thrive upon."
"Geopolitics, the study of the struggle for space and power, forms a well-developed science with an extensive bibliography, which conclusively impeaches the superficial fabrication, with which the American people in particular have been implanted with consummate cunning, that the great World Wars are caused by brutal attacks upon world law and order, instead of being the fully anticipated consequences of the most diabolical double dealing and plan-
ning..." - E.C. Knuth, The Empire of 'The City'
After 1945 the freedom of the rich to rob the poor was powerfully bolstered by the Cold War - an arrangement whereby the Western populations were terrorized into subsidizing arms production including massive increases in both conventional and nuclear forces, sharply increased taxation, and mobilization of the entire society through fear and terror "to stop communism", empowering the aggressive global economic designs of the Money
Changers. But even before World War II was over, world government was back on track.
In 1944, at Bretton Woods, New Hampshire, the International Monetary Fund and the World Bank were approved, with full U.S. participation. The Second League of Nations, renamed the United Nations, was approved in 1945. All effective opposition to these international bodies before the War had evaporated in the heat of war, just as planned.
Modeled on the sovereign status of The City in London,
"The fund (IMF) shall have immunity from judicial process...[its] property and assets, wherever located...shall be immune from search, requisition, confiscation, expropriation, or any other form of seizure by executive or legislative action...officers and personnel shall be immune from legal process...no taxation of any kind shall be levied..." [similar treaties apply to the World Bank and the BIS].
These new organizations simply repeated, on a world scale, what the National Banking Act of 1863, the Federal Reserve Act of 1913, and the Bank Act of 1935 had collectively established in the U.S. - centralized, privately controlled banking. They created a banking cartel, composed of the world's central banks which gradually assumed the power to dictate credit policies to national banks.
Here is Chase Manhattan's Walter E.
Shipley on this point:
"The same thing is true on the international front. The world clearly needs the global equivalent of the Federal Reserve. That's what the role of the IMF is."
For example, just as the Federal Reserve Banks were authorized to create a new national currency called Federal Reserve Notes (FRNs), the IMF has been given the authority
to issue a worldwide credit called Special Drawing Rights (SDRs).
To date, the IMF has created in excess of 30 billion dollars (U.S.) worth of SDRs. Member nations are being pressured to make their currencies fully exchangeable for SDRs.
In 1968 Congress approved laws authorizing the Fed to accept SDRs as reserves in the U.S., and to issue Federal Reserve Notes in exchange for SDRs. What does that mean? It means that in the U.S., SDRs are already a part of our lawful money. Once SDR's gain acceptance in all the major nations, they will effectively become the world's currency. In fact, since dollars are now fully convertible or exchangeable for SDRs, they are already the world's reserve money.
And what about gold? SDR's, often called paper gold, are already partially backed by gold, and with much of the gold of Fort Knox now in the hands of central banks, the Money Changers can go about structuring the world's
economic future in whichever way they deem most profitable to them.
Keep in mind, just as the Fed is controlled by its Board of Governors, the IMF is controlled by its Board of Governors which are the either the heads of the different central banks, or the heads of the various national treasury departments dominated by their central banks. Voting power (combined with political and economic pressure) in the IMF gives the U.S. and the U.K. - that is to say the Fed and the Bank of England - effective control.
The Bank of England/Fed (i.e. Rothschild/ Rockefeller) alliance is one of which they are proud. In a 1995 N.Y. Fed pamphlet entitled "Central Bank co-operation" one reads:
"The Federal Reserve Bank of New York and the Bank of England still continue to co-operate closely ... the close links ... are clearly of great value and will continue into the future."
Just as by action of the Fed the money supply in the United States can be expanded or contracted at will, likewise, by actions coordinated through the BIS, the IMF and the World Bank, (which have worldwide power, like the Fed's in the U.S., merely divided up into three coordinated parts) the money supply of most of the world can be created, destroyed, expanded or contracted at the whim of those few bankers who dominate this world central bank.
So we see the repetition of the old goldsmith's fraud, replicated on the national scale with central banks like the Fed, and on the international scale by the three arms of the World Central Bank.
Is this organization of the BIS, the IMF, and the World Bank which we refer to collec-
tively as the World Central Bank, presently expanding or contracting world credit? Yes.
Regulations proposed by Paul Volcker of the Fed and by the Bank of England, put into effect in 1988 by the BIS, called the Basle Capital Adequacy Accord, required the world's bankers to raise their capital and reserves to 8% of liabilities by 1992. Increased capital requirements put an upper limit to fractional reserve lending similar to the way cash reserve requirements do. What has this seemingly insignificant regulation made in a Swiss city ten years age meant to the world?
It means that one centralized bank can now alter the worldwide supply of money by a single change to a single regulation. That means coordinated, worldwide economic control is in the hands of a mere handful of central bankers who control the BIS, IMF and World Bank.
If one man dominated this small group, as either has or will inevitably occur, it means one man can now control the world economy, in terms of monetary control. This is an awe-
some, terrible power to put in the hands of one, corruptible man.
It also means those nations with the lowest bank reserves in their systems have already felt the terrible effects of this credit contraction as their banks scrambled to raise money to increase their reserves to 8%. To raise the money, they had to sell stocks which depressed their stock markets and began the depression first in their countries.
Japan, which in 1988 had among the lowest capital and reserve requirements (and which included their unrealized capital gains on stocks as part of their capital), and thus was the most effected by the regulation - has experienced a financial crash which began almost immediately, in 1989, which has wiped out a staggering 50% of the value of its stock market since 1990, and 60% of the value of its commercial real estate.
Each time the Japanese stock market falls, it reduces their banks' capital which makes it harder for Japanese banks to make new loans, which in turn limits economic growth, which makes the stock market plunge farther - an economic 'death spiral'. The Bank of Japan has lowered its interest rates to one-half of a percent - practically giving money away to resurrect the economy, but still the depression worsens. Government bonds now actually carry a negative interest rate.
Recently (1998), Japanese Prime Minister Hashimoto told Asian leaders that Japan could no longer be the "locomotive" to pull Asia's other ailing economies out of their collapse, adding that he feared a worldwide recession touched off by Japan's depression and was trying to avert that.
Due to the $26 billion U.S. bailout of Mexico the financial collapse in that nation is already known here. Yet despite the bailout, the economy continues to be a disaster. One huge debt after another is rolled over, as new loans are being made simply to enable Mexico to pay the interest on the old loans. In the south of Mexico, the desperate poor have been in open revolt as every spare peso is being siphoned out of the country to make interest payments.
It is important to note that a radical transfer of power is taking place as nations become subservient to a supra-national World Central
Bank controlled by a mere handful of the world's most powerful bankers.
"The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries." - David Rockefeller, June 1991, Bilderberger meeting in Baden Baden, Germany
As Carroll Quigley noted, the "elite" intellectuals and politicians invited to share in this power do so entirely at the sufferance of the top international bankers, as do the lesser members of the banking elite itself.
"They give political or financial positions only to intermediaries ... bankers and politicians are only men of straw...even though they occupy very high places and are made to appear to be the authors of the plans which are carried out." - C.G. Rakovsky
This penetration of independent, sovereign nations (i.e. those still exercising the 'national autodetermination' mentioned above) by the Money Changers follow a long-standing pattern: partly fictitious loans to dishonest government and the building up of a heavy interest burden on the people.
As the IMF gradually creates more SDRs by the tap of a keyboard on IMF ledgers, more and more nations borrow them, or make IMF loans, to pay interest on their mounting debts, and gradually fall under the control of the faceless bureaucrats of the World Central Bank. Currency "raids" and financial manipulation, most recently in Southeast Asia, force governments into this trap.
IMF SAPS (Strategic Adjustment Programs) then sap the sovereignty and wealth away from the hapless IMF debtor states. As money, and so power, is further consolidated worldwide, this will give the World Central Bank the power of economic life and death over more and more nations. It will decide which nations will be permitted to receive further loans of SDRs, and which nations will starve, beginning with the helpless children of the poor.
"Structural adjustment is also a policy to continue colonial trade and economic patterns developed during the colonial period, but which the Northern powers want to continue in the post-colonial period. Economically speaking, we [former colonies] are more dependent on the ex-colonial countries than we ever were. The World Bank and IMF are playing the role that our ex-colonial masters used to play." - Martin Khor, Director, Third World Network, Malaysia
Despite all the rhetoric about loans for development and the alleviation of poverty, the result of IMF and World Bank loans is a steady transfer of wealth from the debtor nations to the Money Changers' central banks which control the BIS, the IMF and the World Bank. For example, in 1992, the 3rd World debtor nations which borrowed from the World Bank paid $198 million more to the World Bank and central banks of the developed nations for world bank-funded purposes than they received from the World Bank. More loans only increase their permanent debt in exchange for temporary relief of poverty caused by prior borrowings.
Leo Tolstoy's comment on this sort of situation comes to mind:
"I sit on a man's back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back."
Every month (from 1982) 3rd World debtor countries pay to foreign creditor banks an average of $6.5 billion in interest payments alone; if principal payments are included, the total rises to $12.5 billion per month: more than the entire 3rd World spends each month on health and education.
Already these repayments exceed the amount of new loans. During the 1980's Latin America paid $418 billion in interest on original loans of $80 billion. By 1992, Africa's external debt had reached $290 billion, 2.5 times greater than in 1980, resulting in skyrocketing infant mortality rates and unemployment, deterioration of schools, housing and in the general health of the people, prompting an African head-of-state to ask:
"Must we pay for these debts with the lives of our children?"
Tragically, the Money Changers' answer is - yes.
In 1997, a mere 441 billionaires owned as much of the world's wealth as the poorer 1/2 of mankind - 2.4 billion people. The entire world faces the immeasurable suffering already destroying the third world and now Japan, all for the benefit of a few Money Changers. As one prominent Brazilian politician put it:
"The Third World War has already started. It is a silent war. Not, for that reason, any less sinister. The war is tearing down Brazil, Latin America, and practically all the Third World. Instead of soldiers dying, there are children. It is a war over the Third World debt, one which has as its main weapon, interest, a weapon more deadly than the atom bomb, more shattering than a laser beam."
Now that the Southeast Asian nations have been put in thrall to the IMF, following in the footsteps of eastern Europe and Russia, the ongoing, increasing IMF loans to China are gradually tightening the noose on the only substantial power some say is not directly ruled by the Money Changers. But their influence has steadily increased ever since Mao ended the isolation of China he initiated in the early 1960's by expelling the Russians.
That independence ended in 1972 when Mao blinked to Kissinger/Nixon over China's increasing encirclement by the Money Changer-controlled-governments of the U.S. and U.S.S.R.
In any case, their buildup of Red China, perhaps as a counter-balance to the U.S., is certainly not in our interests, and we may pay a terrible price for it in the decade ahead.
27. CONCLUSIONS
"They cease to hate, who cease to be ignorant." - Tertullian
Although it would be absurd to ignore the pivotal role played by influential families, such as the Rothschilds, Warburgs, Schiffs, Morgans and Rockefellers in any review of the history of central banking and fractional reserve banking, keep in mind, by now central banks and the largest commercial banks are up
to three centuries old and deeply entrenched in the economic life of many nations.
These banks are no longer dependent on cunning individuals, such as a Nathan Rothschild. Years ago, the question of ownership was important, but less so now. For example, both the Bank of England and the Bank of France were "nationalized" after World War II and changed nothing - the
new laws were carefully crafted by the bankers to assure their continued control.
They endure and continue to grow, their autonomy from government control now
protected by numerous laws, paid politicians and mortgaged media, untouched by the changing of generations.
Three centuries have given them an aura of respectability - the old school tie is now worn by the sixth generation banker's son, who has been raised in a system that he may never question as he is named to serve on the governing boards of countless corporations and "philanthropic" organizations.
Likewise, among the hordes of bureaucrats working in the World Bank, central banks and international banks, only a tiny fraction have any idea of what's really going on. No doubt they'd be horrified to learn that their work is contributing to the terrible impoverishment and gradual enslavement of mankind to a few incredibly rich plutocrats.
To focus attention today on individuals or families, or to attempt to sort out the current holders of power, serves relatively little useful purpose and could be a distraction from the cure. The economic problem is far bigger than that. It is the corrupt banking system that was, and is being used to consolidate vast wealth into fewer and fewer hands that is our current economic problem.
The world is being increasingly governed by a "process", a "system", bigger than its individual "rulers". Change the names of the main players now, and the problem will neither go away, nor even miss a beat. However, no process or system stands on its own feet. It is invariably built on the basic outlook of the men who construct and run it. Therefore, any cure
must include changing that basic materialistic outlook.
Utopian socialist share-the-wealth schemes can never work and only further impoverish the majority. As one historian of socialism once put it, in the extreme case, if the wealth of the world were evenly divided at dawn of day one, by sunset the lazy man will have squandered some of his wealth and the indus-
trious man gained it. Of course, massive bank fraud is a different matter altogether.
Nevertheless, all societies must have a natural and orderly hierarchy of authority, culture and tradition simply to function. It is precisely this which has been the target of the unremitting attacks of misguided communists and socialists utopians, insane dreamers, rebels and miscreants. In the communist world, the result has been tyranny, misery and inhumanity; in the non-communist 3rd world, the result of monopoly capitalism has been privileged elites and suffering, impoverished masses.
We must work to establish a just balance, and things are horribly out of balance right now thanks to the corrupting influence of wealth, hiding under a candy coating of "democratic" government, which is easily manipulated by the Money Changers' mass media. The apparent response of "democratically" elected leaders to the will of the public is illusory. The reality is that modern democracies are stage-managed plutocracies, and the will of the people is carefully conditioned to conform to the will of the plutocrats.
The answers to these problems will be found in the gradual return and continual restoration of those principles of justice and virtue upon which all civilizations have been built. The purpose and perfection of a society is to aim at and attain that for which it was formed. To fall away from its primal constitution is disease; to go back to it is recovery.
Reform must be effected at those points, apparently insignificant, in which a reversal of present trends may be begun, even if only sporadically at first, beginning with the reform-
ation of the individual morals of the persons who comprise society.
The ancient Chinese philosopher Mencius drew a direct link between individual morality and good government:
The men of old...first set up good government in their own states; wanting good government in their states, they first established order in their own families; wanting order in the home, they first disciplined themselves; desiring self-discipline, they rectified their own hearts; and wanting to rectify their own hearts they sought precise verbal definitions [i.e. complete and uncompromising honesty]...; wishing to attain precise verbal definitions, they set out to extend their knowledge to the utmost.
Therefore, in response to the question: What can one do?: the answer is as simple as it is disconcerting: we can, each of us, work to put our own inner house in order, beginning with the practice of the simple virtues: prudence, (enlightened by truth), justice, fortitude, and temperance.
That clarified, let us proceed to the conclusions in the spirit Lincoln declared:
"With malice towards none, with charity towards all."
At the start of this video we asked a number of troubling questions. Let's be sure we've answered them.
What's going on in America today? Why are we over our heads in debt? Why can't the politicians bring debt under control?
Why are we over our heads in debt? Because we're laboring under a debt-money system, in which all our money is created in parallel with an equivalent quantity of debt, that is designed and controlled by private
bankers for their benefit. They create and loan money at interest; we get the debt.
Now some will argue that the Federal Reserve System is a quasi-governmental agency. But the President appoints only two of the seven members of the Federal Reserve Board of Governors every four years - and he appoints them to 14-year terms - far longer than his.
The Senate does confirm those appointments, but the whole truth is that the President wouldn't dare appoint anyone to that board of whom his backers or Wall Street does not approve. Of course, this does not preclude the possibility that some honorable men may be appointed to the Board of Governors, but the fact is that the Fed is specifically designed to operate independently of our government, as are nearly all other central banks.
Some argue that the Fed promotes monetary stability. The current head of the Bank of England, Eddie George, claimed this was the most important role of a central bank. In fact, the Fed's record of stabilizing the economy, like the Bank of England's, shows it to be a miserable failure in this regard. Within the first 25 years of its existence, the Fed caused three major economic downturns, including the Great Depression, and for the last 50 years has
shepherded the American economy into a period of unprecedented inflation.
Again, this is not mere theory. It's a well-known fact among top economists. As Nobel-Prize-winning economist Milton Friedman put it:
"The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe [monetary] contractions of 1920-21, 1929-33, and 1937-38. No other 20-year period in American history contains as many as three such severe contractions.
This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System ... and that the severity of each of the major contractions- 1920-21, 1929-33, and 1937-38- is directly attributable to acts of commission and omission by the Reserve authorities...
Any system which gives so much power and so much discretion to a few men, [so] that mistakes -- excusable or not -- can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic -- this is the key political argument against an independent central bank...
To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers."
We must learn from our history before it is too late. Why can't politicians control the federal debt? Because all our money is created in parallel with an equivalent quantity of debt. Again, it's a debt-money system. Our money is created initially by the sale of U.S. Bonds. The public buys bonds, the banks buy bonds, foreigners buy bonds, and when the Fed wants to create more money in the system, it buys bonds but pays for them with brand new Federal Reserve Notes (or book entries) which it creates out of nothing. Then, whatever new money the Fed creates is multiplied by at least a factor of ten by the private banks, thanks to the fractional reserve principle. Actually, exceptions to the reserve ratios allow a much greater multiplier (in practice, U.S. reserves average 1.65%).
So, although the banks don't create currency, they do create checkbook money, or deposits, by making new loans. They even invest some of this created money. In fact, over one trillion dollars of this privately-created money has been used to purchase U.S. Bonds on the open market, which provides the banks with roughly 50 billion dollars in interest, risk free, each year, less the much lower interest they pay some depositors. In this way, through fractional reserve lending, banks create far in excess of 90% of the money (c. 98.35%), and therefore cause over 90% of our inflation (approximately 98.35%).
What can we do about all this? Fortunately, viewed purely as a technical problem there's a way to fix the problem fairly easily (theoretically), speedily, and without any serious financial problems. We can get our country totally out of debt in 1-2 years by simply paying off U.S. bonds with debt-free U.S. Notes (or Treasury Department Deposits convertible to U.S. Notes) - just like Lincoln issued. Of course, that by itself would create tremendous
inflation since our currency is presently multiplied by the fractional reserve banking system.
But here's the ingenious solution advanced in part by Milton Friedman, and others, to keep the money supply stable and avoid inflation and deflation while the debt is retired. As the Treasury buys up its bonds on the open market with U.S. Notes, the reserve requirements of your hometown local bank will be proportionally raised so the amount of money in circulation remains constant.
As those holding bonds are paid off in U.S. Notes, they will deposit this money, thus making available the currency then needed by the banks to increase their reserves. Once all the U.S. bonds are replaced with U.S. Notes, banks will be at 100% reserve banking, instead of the fractional reserve system currently in use.
From that point on, the former Fed buildings will only be needed as central clearing houses for checks, and as vaults for U.S. Notes. The Federal Reserve Act will no longer be necessary, and could be repealed. Monetary power would be under government control. There would be no further creation or contraction of money by banks.
By doing it this way, our national debt can be paid off in a single year or so, and the Fed and fractional reserve banking abolished without national bankruptcy, financial collapse, inflation or deflation, or any significant change in the way the average American goes about his business.
To the average person, the primary difference would be that for the first time since the Federal Reserve Act was passed in 1913, taxes would begin to go down and inflation would cease, preserving the value of their savings, wages and fixed incomes. Now there's a real
national blessing for you, rather than for Hamilton's banker friends.
Without their awful money-creating power, the Money Changers would gradually lose their political control and clout. Of course, their mass media control is another issue, but even it depends on their massive money-creating power.
Now, let's take a look at these proposals in more detail. We have drafted a proposed Monetary Reform Act, which follows at the end of this text. Of course, variations with the same results would be equally welcome.
ELEMENTS OF MONETARY REFORM
1. Pay off the national debt with debt-free U.S. Notes (or Treasury department credits convertible to U.S. Notes). As Thomas Edison put it, if the U.S. can issue a dollar bond, it can issue a dollar bill. They both rest purely on the good faith and credit of the U.S. This amounts to a simple substitution of one type of government obligation for another. One bears interest, the other doesn't. Federal Reserve Notes could be used for this as well, but could not be printed after the Fed is abolished, as we propose, so we suggest using U.S. Notes instead, as Lincoln did.
2. Abolish Fractional Reserve Banking. As the debt is paid off, the reserve requirements of all banks and financial institutions would be raised proportionally at the same time to absorb the new U.S. Notes and prevent inflation, which would be deposited and become the banks' increased reserves. At the end of the first year, or so, all of the national debt would be paid, and we could start enjoying the benefits of full-reserve banking. The Fed would be obsolete, an anachronism. This same approach would work equally well in
Canada, England and in virtually all debt-based, central bank controlled economies.
3. Repeal of the Federal Reserve Act of 1913 and the National Banking Act of 1864. These acts delegate the money power to a private banking monopoly. They must be repealed and the monetary power handed back to the government (in the U.S., the Department of the Treasury), where they were initially, under President Abraham Lincoln. No banker or person in any way affiliated with financial institutions should be allowed to regulate banking. After the first two reforms, these Acts would serve no useful purpose anyway, since they relate to a fractional reserve banking system.
4. Withdraw the U.S. from the IMF, the BIS and the World Bank. These institutions, like the Federal Reserve, are designed to further centralize the power of the international bankers over the world's economy and the U.S. must withdraw from them or lose its sovereignty and independence. Their harmless, useful functions such as currency exchange can
be accomplished either nationally, or in new organizations limited to those functions.
In theory, neither international banks, nor international bodies such as a U.N. should be unreasonably opposed as "evil" or harmful to the common good - in fact, they can all be helpful servants of humanity, PROVIDED that their authority and functions do not im-
pinge on national sovereignty nor expose the peoples of the world to tyranny.
Few would seriously argue against the necessity and inevitability in our time of organizing juridically the community of nations, in a manner proportionate to and protective of their national unity. This is due to their interdependence and transcendent bonds which unite all human societies and the wider common goods which may be achieved.
In the Middle Ages, Christendom was such a society of nations, based on a common religion; little by little the many and varied differences that divided them were diminished and their quarrels extinguished. Here is one definition of such a body:
"A stable, fruitful international organization such as is desired by men of good will, an organization which, respecting the rights of God, will be able to assure the reciprocal independence of nations big and small, to amiably regulate their differences, to impose fidelity to agreements loyally agreed upon, and to safeguard the sound liberty and dignity of the human person in each one's efforts towards prosperity for all." - Pope Pius XII
It is necessary to preserve national sovereignty in order to struggle with common problems, tasks and development in common with men of like interests, mentality, character, sentiment, aspirations, historical and cultural solidarity and so on, in the various, unique geographical sections of the world successfully, for the good and harmony of the whole world. Each nation is "chosen" in that sense for some such unique task.
In other words, nations are necessary to attain numerous benefits needed by men available neither to individual nor to universal organization. Thus the loss of unique, sovereign nations would be a terrible loss for all mankind, similar to the destruction of the family, for nations are quasi-families. The benefits of families are incalculable and essential to the development and well-being of man.
Obviously, the present structure of international banks, the U.N. and related bodies, such as the World Court and the W.T.O., do impinge on national sovereignty, are deliberately designed to lead to a worldwide tyranny of the top bankers, and contain woefully inadequate safeguards to prevent this. Therefore, they should either be abolished, or fundamentally reformed. Considering their present structure, it would surely be by far the more prudent and safer course to abolish them and propose international bodies to address legitimate international issues, with proper safeguards and limitations. But practically, it is possible only to fight to reform them little by little.
Thus, to work for an international, social and political milieu organized on the basis of peace and cooperation is entirely consistent with national patriotism. Indeed, since the would-be world tyrants collaborate internationally, so must patriots. But this must not compromise avoiding that noxious and detestable internationalism or international imperialism in financial affairs, which holds that where a man's fortune is, there is his country.
The worldwide diffusion of industry with its attendant concentration of capital, has allowed the bankers' economic control to penetrate every nation - no nation, no family does not feel its repercussion.
Domestically, a Monetary Reform Act, such as that following, would guarantee that the amount of money in circulation would stay very stable, causing neither inflation, nor deflation, and would end the national tribute to bankers. Remember, for the last four decades the Fed has doubled the American money supply every ten years. That fact, and fractional reserve banking, are the real causes of inflation and the reduction in our buying power - a hidden tax. These and other taxes are the real reasons both parents now have to work just to get by. The family is thus under siege.
The money supply should increase slowly to keep prices stable, roughly in proportion to productivity and to population growth - about 3% per year - not at the whim of a group of bankers meeting in secret. All future decisions on how much money will be in the American economy should be made based on a fixed, non-discretionary rule, such as a fixed number (e.g. 0, 1, 2 or 3%) or on statistics of population growth, productivity, and/or the price level index. The precise rule chosen is less important than having one - fixed and non-discretionary. (See Endnote 5 to the Monetary Reform Act in Appendix c.)
George Washington wrote in 1787 that:
"The wisdom of man, in my opinion, cannot at this time devise a plan by which credit of paper money would be long supported; consequently, depreciation keeps pace with the quantity of the emission, and articles for which it is exchanged rise in a greater ratio than the sinking value of the money."
This was a sagacious analysis of both the problems of a fiat currency and the state of knowledge of banking techniques at that time, but no longer. A fixed, non-discretionary rate of monetary growth, such as that described
above (coupled with full reserve banking), precisely addresses Washington's concern.
As a report of the Columbia University Commission correctly stated:
"It is an entirely fallacious notion that paper [money] standards are uncontrollable."
Examples of a controlled, paper, fiat currency without inflationary excess are numerous, including England in the periods 1797-1821 and 1914-25. But fixed, non-discretionary rules are essential to secure this effect on a lasting basis.
Monetary regulators in the Treasury Department - perhaps called the Monetary Committee - should have absolutely no discretion over monetary growth, except in time of declared war. This would insure a steady, stable money growth resulting in stable prices, and no sharp changes in the money supply. All deliberations should be public, not secret, as meetings of the Fed's Board of Governors, are today.
How do we know this will work? Because these steps remove the two major causes of economic instability - the Fed and fractional reserve banking manipulating the quantity of money, and the newest, third one as well, the World Central Bank. But most importantly, the danger of a severe depression would be eliminated. Let's listen to Milton Friedman on the single cause of severe economic depressions:
"I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money, and equally of no sharp decline in the stock of money that was not accompanied by a severe depression."
Issuing debt-free currency, not tied to bond issues, is not a radical solution. It's been advocated in its parts by Presidents Jefferson, Madison, Jackson, Van Buren and Lincoln. It's been used at different times in Europe as well. One current example is one of the small islands off the coast of France in the English Channel. Called Guernsey, it has been using
debt-free money issues to pay for large building projects for nearly 200 years.
Guernsey is an example of just how well a debt-free money system can work. In 1815, a committee was appointed to investigate how best to finance a new market. The impoverished island could not afford more new taxes, so the State's fathers decided to issue their own paper money. They were just colorful paper notes, backed by nothing, but the people of this tiny island agreed to accept them and trade with them.
To be sure they circulated widely, they were declared to be "good for the payment of taxes." Of course this idea was nothing new. It was exactly what America had done before the American Revolution and there are many other examples throughout the world. But it was new to Guernsey, and it worked. The market is still in use, and remember, it was
built with no debt to the people of this island state.
But what if we follow Guernsey's example? The resulting advantages would include: no more bank runs; bank failures would be very rare (on the rare massive theft); the national debt would be entirely paid-off; the monetary, banking, and tax system would be more efficient and simplified; significant inflation and deflation would be eliminated; booms and busts would be reduced to insignificance;
banker control of our industry and political life would end.
How would the bankers react to these reforms? Certainly the international bankers' cartel will oppose reforms that do away with their control of the world's economies, as they have in the past. But it is equally certain that Congress has the Constitutional authority and responsibility to authorize the issuance of debt free money - U.S. Notes, just the same as Lincoln's Greenbacks, and to reform the very banking laws it ill-advisedly enacted.
Undoubtedly, the bankers will claim that issuing debt-free money will cause severe inflation or make other dire predictions, but remember, it is fractional reserve banking which is the real cause of over 90% of all inflation - not whether debt-free U.S. Notes are used to pay for government deficits. The simultaneous transition to full reserve banking will absorb the new notes, thus preventing
inflation, while stabilizing banking and the economy.
In the current system, any spending excesses on the part of Congress, are turned into more U.S. debt bonds. The 10% of the bonds purchased by the Fed (in order to provide the high-powered money liquidity in the capital markets needed to purchase of the rest of the new bonds), are then multiplied ten times over by the bankers, causing over 90% of all inflation.
Our fractional reserve and debt-based banking system is the main economic problem. If reform does ever begin, we must ignore its inevitable resistance to reform and remain firm until the cure is complete. As Director of the Bank of England in the 1920's, Sir Josiah
Stamp, put it, referring to this modern, fractional reserve banking system:
"Banking is conceived in iniquity and born in sin. Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with the flick of a pen they will create enough money to buy it back again. Take this great power away from the bankers and all great fortunes like mine will disappear, and they ought to disappear, for this would be a better and happier world to live in. But if you want to continue the slaves of bankers and pay the cost of your own slavery, let them continue to create money and to control credit."
A few Americans are beginning to figure this out. Today, over 3,200 cities and counties have endorsed the proposal of a non-profit organization called Sovereignty.
The Sovereignty Movement calls for Congress to authorize the Secretary of the Treasury to issue 90 billion dollars per year of U.S. Notes (or credits) - not debt-based bonds - to loan, interest-free, to cities, counties and school districts for needed capital improvements. Remarkably, and to their praise, the Community Bankers' Association of Illinois, representing 515 member banks, has endorsed this Sovereignty Proposal. Under our present system small banking is a very risky affair, and one upsetting to honest bankers who realize
they do not have the means to honor all their promises to pay, should there be a bank run.
In some candid testimony before the Senate, even the Chairman of the Fed Board of Governors, Alan Greenspan, when asked by Senator Paul Sarbanes to confirm if he favored a sunset provision in the authorization of the Fed so that it would cease to function unless periodically affirmatively continued by vote of Congress (thereby returning some measure of control over the Fed to Congress), replied: "That is correct, sir."
That brings us to another one of our questions posed at the first of this tape. Are we headed into an economic crash of unprecedented proportions? If so, can we prevent it? And what can we do to protect our families.
As Milton Friedman pointed out, no severe depression can occur without a severe contraction of money. In our system, only the Fed, the Bank for International Settlements (with U.S. bankers' cooperation) or a combination of the largest Wall Street banks could cause a severe depression. In other words, our economy is so huge and resilient, a depression just can't happen by accident.
Unless we reform our banking system, a handful of bankers will always have that power. They can pull the plug on our economy any time they choose. The only solution is to abolish the Fed, fractional reserve banking and withdraw from the BIS, the IMF and the World Bank. Only that will break the power of the international bankers over our economy.
And keep in mind, a stock market crash itself cannot cause a severe depression. Only the severe contraction of our money supply can cause a depression. The Stock Market crash of 1929 only wiped out market speculators, mostly the small-to-medium ones, resulting in 3 billion dollars in wealth changing hands. But it served as a smoke screen for a 33% contraction in credit by the Fed over the next 3 years which ultimately resulted in over 200 billion dollars in wealth from American farmers and the middle class being transferred to the big banks.
Then, despite impotent howls of protest from a divided Congress, the independent Fed kept the money supply contracted for a full decade. Only World War II ended the terrible economic suffering the Fed inflicted on the American people.
In a depression, the little remaining net wealth of the debt-burdened American middle class would be wiped out by unemployment, declining wages, and the resulting foreclosures.
If we start to act to reform our monetary system, the Money Changers may do what they did in 1929 and then the 1930s - crash the Stock Market and use that as a smokescreen while contracting the money supply, or, perhaps this time they will cause hyperinflation, as in post-World War I Germany. But if we are determined to fight to regain control over our money, we can come out of it fairly quickly - perhaps in only a very few months as U.S. Notes begin to circulate and replace the money withdrawn or multiplied by the bankers. The longer we wait, the greater the danger we will permanently lose control of our nation, if we have not already.
But some still wonder why the international bankers may want to cause a depression? Wouldn't that be killing the goose that is currently laying all those golden interest eggs? Remember what Larry Bates said at the first of
the video tape: "during a depression, wealth is not destroyed, it is merely transferred." But,
of course, some money is destroyed, by banks calling loans and the Fed selling bonds.
Do we have any hints as to what the Money Changers have in store for us? Here's what David Rockefeller, then-chairman of Chase Manhattan bank, then the largest Wall Street bank, had to say:
"We are on the verge of a global transformation. All we need is the right major crisis and the nation will accept the New World Order."
So they believe a crisis is needed to fulfill their plans. The only question is when the crisis will occur.
But whether or not they decide to cause a crash, or a creeping depression through relentless increases in taxes and the loss of hundreds of thousands of jobs being sent overseas thanks to trade agreements such as GATT and NAFTA, the remaining American middle class is an endangered species.
On an inflation-adjusted basis, the typical American worker is earning less than he or she did in the 1970s. The average hourly wage in December, 1997 was $12.48, eleven percent (11%) less in purchasing power than in December, 1973. The savings rate is the lowest in fifty-eight (58) years and household debt is nearly a third greater than in the 1960s. A record 1.3 million Americans filed for bankruptcy in 1997 - a boom year for the rich.
Cheaper labor, including slave labor in Red China, which Harry Wu has heroically documented, is being used to compete with American labor. In other words, money is being consolidated in fewer and fewer hands as never before in the history of this nation, or the world.
Without reform, the American middle class will soon be extinct, leaving only the very rich few and the very many poor, as has already occurred in most of the world.
We have not used arguments from religious authority because it is not acknowledged by some whom we shouldn't want to exclude from considering the history presented, the hidden economic problem, nor the solutions proposed herein, which can be deduced from natural reason alone.
Likewise, we have limited this discussion to financial (money and banking) and political events and considerations, from an American perspective, largely limited to the last 300 years. We have not gone into the even more important philosophical and theological considerations, nor the role of religion in this problem nor that of tax-exempt private foundations, the international drug cartel, think tanks, the Council on Foreign Relations, secret societies, nor a host of other related matters, as such matters would require whole books properly to develop, and there already exist a number of books addressing those areas.
But a proper historical perspective requires noting that just as we've been warned of all this by Congressmen, Presidents, industrialists and economists down through the years, religious leaders too have recognized the problem. At the time of William Jennings Bryan, Pope Leo XIII put it this way:
"On the one side there is the party which holds the power because it holds the wealth; which has in its grasp all labor and all trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is powerfully represented in the councils of the State itself. On the other side there is the needy and powerless multitude, sore and suffering.
Rapacious usury, which, although more than once condemned by the Church, is nevertheless under a different form but with the same guilt, still practiced by avaricious and grasping men ... so that a small number of very rich men have been able to lay upon the masses of the poor a yoke little better than slavery itself."
More recently, during America's Great Depression, Pope Pius XI spoke of the same problem:
"In our days not alone is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few.... This power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for this reason supplying, so to speak, the life-blood to the entire economic body, and grasping, as it were, in their hands the very soul of the economy so that no one dare breathe against their will."
PERSONAL STRATEGIES
But now, let's get back to our original questions. What can we do to protect our families during a depression?
First of all, get out of debt, if you can. Otherwise, you stand to lose everything that is debt financed. Most Americans heavily in debt, are so due to borrowing to purchase homes and cars which greatly exceed their
needs. This is partly due to conditioning by advertising.
Secondly, if you are in debt, and lack the cash to get out of it, get liquid to get out of debt. Consider reducing some of your wealth to more liquid forms. Consider reducing your real estate assets, for example. But keep in
mind, cash and bank deposits are subject to continuing depreciation by inflation.
If you own your home outright, then fine. If not, then consider selling other assets to pay it off, or consider getting a smaller house, debt free.
Reduce your expenses to get and stay out of debt, even if it means lowering your standard of living. Be content with frugal living. Supply by economy and thrift for want of means.
For a worst-case scenario, some writers suggest putting a little of your assets into old silver coins. Pre-1965 silver coins are 90% silver. From 1965 on they are not. It's been said that during a severe depression, a single silver dollar may be able to buy your family groceries for a month. Why might old silver dollars become so valuable? Because most people are familiar with them. They know they are of an assured weight and purity. In that extreme worst-case, owning just 20-30 silver dollars might mean the difference between your family making it or not through what is likely to be the worst time in U.S. history.
Other forms of precious metals, particularly gold, are usually a good way to protect extra assets during a depression, too. But gold is a poor hedge against major inflations and is an ineffective hedge against yearly commodity price increases, however, it does appreciate in major deflationary periods and maintains its purchasing power over long periods of time. Silver's value reacts similarly, if less reliably. But gold has been very volatile of late, with a declining price, due to central bank sales.
Help your family and others to escape the debt trap. Pay them early what is owed to them, and use your surplus to help them get out of debt.
There are other things you can do. You might consider foreign currency funds. The Swiss practice 20% reserve banking in some types of accounts. Swiss banks are some of the most solid in the world. Consider opening a Swiss or other foreign bank account, or a foreign-currency denominated bank account in a U.S. bank. A mix of inflation-indexed ("TIPS") and non-indexed U.S. government bonds might be a prudent split.
If you are heavily invested in the stock market, considered putting a portion of that into a mutual fund that shorts the market (i.e. bets on it going down).
If you can afford to diversify into all of the above, consider doing so. Diversification, when possible, is usually a prudent approach to uncertainty.
Keep in mind that the Money Changers' have pursued a fifty-year policy of inflation to seize your wealth, increase your taxes and reduce your wages, salaries and fixed-income in small steps, not by the big and potentially risky tactic of another severe depression, ex- cept in Japan, and recently in Southeast Asia and Russia. Inflation is easily manageable, but deflation is much less so.
Absent inside information from the schemers, it is difficult and risky to predict either when, or even if, they will cause another severe depression. So diversification in various types of property is probably the most prudent approach in order to be prepared, at least in some measure, for any eventuality.
Educate yourself and your friends: read.
"When you know a thing to recognize that you know it, and when you do not, to know that you do not know - this is knowledge." - Confucius
Our country needs a solid group who really understand how our money is manipulated and what the solutions are, because if a depression comes, there will be those who will come forward advancing solutions framed by the international bankers.
Beware of calls to return to a gold standard. Why? Simple. Because never before has so much gold been so concentrated outside of American hands. And never before has so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund. In fact, the
IMF now holds more gold then any central bank. Further, adopting a gold standard, in itself, does not in any way address the larger problem of fractional reserve banking. It would merely change the form of high-powered money from Federal Reserve Notes to gold or gold-backed notes.
The Swiss have a gold-backed currency, but still practice fractional reserve banking, with the result that the vast majority of their money supply is not gold-backed, only their currency is.
But more fundamentally, as the productive power of our technology increases, it makes less and less sense to restrict the distribution of its products in relation to the amount of one particular metal, such as gold, especially considering, as French economist Alexandre St. Pahlle wrote:
"Money must be in keeping with production and goods in circulation in order to result in a stable economy and price level. This is easily possible with government-issued money, not with gold, which has fixed quantity not easily or quietly adjusted."
The Swiss are under intense pressure from the Money Changers to dispose of their gold. This is most likely either a prelude to the complete demonetization of gold (like silver before it), or to its monopolization and remonetization by the Money Changers.
Therefore, to return to a gold standard would almost certainly be a false solution in our case. As was repeated in the Great De-
pression: "In gold we trusted; by gold we're busted."
In any case, whenever a huge crisis arose in human affairs such as war (e.g. WWI, WWII) or economic collapse (e.g. Great Depression) nations on a gold-standard found it impossible to maintain or adequately adjust and so were forced to return to a recognition of the reality of what money is.
The gold standard and other sacred cows were put aside since they serve only to hypnotize mankind and to keep it under the yoke of the Money Changers. Ultimately, these experiences drove home the lesson, and all nations have, rightly, abandoned such an unworkable commodity money system.
Another red herring revolves around the notion that all we need do to reform our monetary system is define, by law, that a dollar shall equal so many grains of silver (such as the 371.25 grain standard established by the Coinage Act of 1792) or of gold. But this would do nothing to reform the fundamental fraud of fractional reserve banking.
It also entirely misses the point that it is not the value that each unit (e.g. dollar) of the currency is defined as that stabilizes the price level, rather, it is how many of such units are in circulation. For example, leaving aside foreign exchange rates for the moment, if the government defined the dollar to equal 1 oz. of gold and issued 1,000,000 units of such dollars in one year, the purchasing power of such currency would eventually settle at some level, such as, say, $1,000 (in our current values). Then, if the government issued 1,000,000 more of such "dollars" the next year, the price level would roughly double, meaning that the purchasing power of each such "dollar" would drop by fifty percent (50%) to about $500 (in our current values). This is true even if the government also doubled its gold reserves.
Thus, it is not by means of such a definition of what an individual unit of currency is that determines its purchasing power, but, rather, what the overall quantity of such units in circulation is.
The reason gold standards sometimes result in relatively stable prices is simply that gold's available quantity is usually relatively stable. But observe what happened when nations lost gold reserves through foreign trade losses (deficits): the amount of gold-backed domestic currency dropped; the money in circulation dropped; and the price level dropped; resulting in recession or depression.
When gold (or silver) levels increased through trade surpluses or new mines or improved mining techniques increased the supply, the result was reversed: more money and thus increased price levels - inflation.
Again, it is not the defined value of each dollar or unit of money that matters in terms of stabilizing the price level, rather, it is the stability of the overall quantity of money that counts. Whether it is backed by gold or some other commodity is irrelevant to price level stability.
Likewise, the notion that inflation is only caused by debt is similarly flawed. It is true, of course, that debt creates a demand for money in order to pay interest, and so loans are made to obtain the extra funds needed, thereby increasing the overall money supply, resulting in inflation. Likewise, debt service increases industries' costs which ultimately must be reflected in higher prices for their products.
But imagine a nation with a government-issued, interest-free money in circulation. In such a case, were the government to double the money supply in a given year, the price level would gradually rise to double its prior level resulting in 100% inflation, thus demonstrating that it is not debt alone (or even principally) that determines price stability (inflation), as some maintain.
Certainly debt alone could increase costs and demand for money and for loans (which increases the money supply in a fractional reserve banking system), but again, it is precisely the increase in that overall quantity of money that determines the stability of the price level. More money in circulation results in inflation (absent productivity gains), with or without debt (increases in productivity averaged roughly one percent [1%] annually in the U.S. for the last three decades).
Beware of any plans advanced for a regional or world currency - this is another international banker's Trojan Horse - a deception to open the national gates to more international control.
Educate your member of Congress. It only takes a few persuasive members to make the others pay attention. Most Congressmen just don't understand the system. Some understand it, but are influenced their bank stock ownership or by bank PAC contributions to ignore it, not realizing the gravity of their neglect. Obviously, there is little chance for significant monetary reform at present. But if an opportunity ever does present itself, perhaps in a crisis, at least they will have been given the information to avoid merely floundering in banker-inspired confusion as did many sincere reform-minded Congressmen in the Great Depression.
We hope we have made a useful contribution to the national debate on monetary reform. It remains for each man to do his duty, consistent with his state in
life. May God give us the light to help reform our nation, and ourselves. We say ourselves, because ultimately vast multitudes of men are going to be driven more and more to desperation by the accumulation of the world's wealth in fewer and fewer hands. Men will be tempted more to become like their oppressors, selfish and greedy. Rather, let's keep in mind a warning not to lose sight of greater things. As Pope Pius XI put it:
"For what will it profit men that a more prudent distribution and use of riches make it possible for them to gain even the whole world, if thereby they suffer the loss of their own souls?
What will it profit to teach them sound principles in economics, if they permit themselves to be so swept away by selfishness, by unbridled and sordid greed, that "hearing the Commandments of the Lord, they do all things contrary?"
* *
POSTSCRIPT
PEELING THE ONION
One reviewer has described this presentation as "the history of the struggle for control of the nations", and so it is. But like any such effort, it is a very limited history (principally financial [i.e. money and banking] and secondarily political [limited to the last three hundred years, primarily in the United States.]), written with the further limitations of a video presentation in mind, from only one perspective.
If one accepts the vastly important role of conspiracies in history, then a metaphor helps to explain the perspective selected for The Money Masters. Given the existence and importance of hidden conspiratorial groups and their motives, viewing modern history is something like peeling an onion. Each layer cannot be understood until the next, deeper layer is exposed, and so on, down to the core. One cannot simply view the surface, or outer layer, and understand.
Indeed, Prof. Carroll Quigley, the late Georgetown macro-historian, suggested this metaphor in his book Tragedy & Hope, A History of the World in Our Time. There (p. 580, et seq.) he gives the example of four layers of motivations for British relations with Germany in 1938-39, preceded by yet a fifth:
In general, motives became vaguer and less secret as we move our attention from the innermost circles of the [British] government outward. As if we were looking at the layers of an onion, we may discern four points of view: (1) The anti-Bolsheviks at the center, (2) the 'three-bloc-world' supporters close to the center,(3) the supporters of 'Appeasement', and (4) the 'peace at any price' group in the peripheral position.
Each of these layers was, in fact, simply a disguise or cover developed by the next deeper layer to conceal motivations thought to be repugnant to the British people, who were being lied to and manipulated for the benefit of increasing smaller, more hidden, more powerful groups with more selfish and morally abhorrent motives.
Similarly, C.G. Rakovsky, a founding member of communism in the U.S.S.R., in his interrogation by Stalin agent G.B. Kusmin in 1938, informed Kusmin that he (Kusmin) was ignorant of deeper layers under communism:
I see that you are only acquainted with elementary Marxism, i.e. the demagogic, popular one ... Listen to me by way of the completely confidential. With Marxism, you get the same results as with the ancient esoteric religions. Their adherents had to know only that which was the most elementary ... insofar as by this one provoked their faith ... both in religion and in the work of revolution. No ... Marxism, before being a philosophical, economic and political system, is a conspiracy for the revolution.
One is reminded of the similar deception of the American people in the recent Gulf War in which then-President Bush gave, over time, five completely different, contradictory reasons for the necessity of American servicemen going to Saudi Arabia for war with Iraq, beginning with the ridiculous claim that democracy had to be defended in Kuwait (a despotic, anti-democratic emirate).
When a few politicians and members of the press questioned his logic, Bush simply shifted to the next deeper layer of motivation, doubtless hoping this would suffice, but he had to do so five times before they got enough of the picture to lay off.
But President Bush never revealed the layer Prof. Quigley revealed on page 324 of his book (quoted in our chapter 26, above), the fifth motivation for Anglo/German relations mentioned above - worldwide economic and political domination by the top international bankers, the Money Changers. To do so would have meant his job, if not more.
That layer of the onion is the one we presented in this text, briefly, within the limitations mentioned above.
But, lest we mislead the reader, it must be stated that there are deeper layers still, each more perverse, until the last. There are some excellent books that probe deeper layers. In fact, the best book addresses the deepest layer, and reveals this about the ultimate conspiracy:
...we are not fighting against people made of flesh and blood, but against persons without bodies - the evil rulers of the unseen world, those mighty satanic beings and great evil princes of darkness who rule this world; and against huge numbers of wicked spirits in the spirit world.
So use every piece of God's armor to resist the enemy whenever he attacks, and when it is all over, you will still be
standing up... Pray at all times...
- Ephesians 6:12-13, 18
Implicit in this advice from the Apostle is: that evil's power is only superficial since it is subject to certain defeat if properly resisted; that what is apparent is not what is true; that modern times are more dominated by Satan and this conflict with hell cannot be engaged in successfully by men alone, even the most clever; and that, in the end, by God's power, the good will be victorious.
However, short of that ultimate victory, and absent extraordinary Divine intervention, it must be said that the task of monetary reform (or even broader political reform) under the present circumstances, which are due to forces with now over 300 years of momentum in their favor, is a task almost impossible of achievement.
Hilaire Belloc noted that fact back in 1936 when conditions for reform were far more favorable than today, paraphrased here:
If monetary reform were 'quite' impossible of achievement it would not be worth while wasting breath or ink upon it. It is not 'quite' impossible of achievement; at least, it is not quite impossible to start the beginnings of a change. But the odds against a reconstruction of economic justice in a society which has long acquired the practice and habit of debt slavery is difficult beyond any other political task.
I do not know whether it be possible to start even the beginnings of a change. I doubt heavily that it is possible to plant successfully even the small seed-
lings of a return to economic justice in the West today.
What I certainly know is that, failing such a change, our usurer dominated society must necessarily end in the restoration of slavery. The choice lies between reform and the restoration of economic justice on the one hand and slavery, public or private, on the other. There is no third issue.
Since Belloc's time, the light has further receded, and twilight is yielding to the darkening night.
Writing of the current state of America, author Arthur Gurudas writes:
America today exists in a twilight zone, not a democracy or a republic, but not yet a police state. America has become an elitist corporate oligarchy.
There is a core truth, hidden beneath the deepest, most perverse layer of the onion we mentioned above, God's providence. It must be admitted, that however hopeless any particular good may seem of obtaining (such as monetary or political reform), ultimately this life is about a higher good, life eternal, and God is certainly able to draw good out of the most grievous injustices of this life. He is able to draw eternal life out of temporal injustice - that is surely a great good.
God allows such evils as we have written about here only for this reason - to draw forth a greater good. God is sovereign over all. The example of Joseph is instructive. Sold into slavery by his brothers, the patriarchs of the tribes of Israel, from malice and for a wicked purpose, nevertheless Joseph insists on attributing all to God's providence:
God sent me before you into Egypt to save life . . . God sent me before you to preserve a remnant for you in the land, and to deliver you in a striking way. Not you but God sent me here, and made me a father to Pharoah, lord of all his house, and ruler over all the land of Egypt.
It should reassure us in pondering the present evils in society that God, the Sovereign Good, is guided in all His actions by His most profound wisdom for holy and supernatural purposes.
* * *
A NOTE ON THE FIVE AMERICAN "BANK WARS"
Historians are generally well aware of the "Bank War" waged between President Andrew Jackson and Nicholas Biddle, head of the 2nd Bank of the United States. However, the high drama and centrality of that struggle, which led Jackson when asked what his most important accomplishment had been, to answer: "I killed the Bank", has been ignored or minimized.
That "Bank War" as it was called, was actually the fourth of five such struggles, pitting the schemers pulling the strings of high finance against those relatively few American statesmen and patriots, such as William Findley, James Madison, Thomas Jefferson and Andrew Jackson, who recognized the grave dangers to the Republic of handing over the money power of government to private special interests. At stake was who creates and controls America's money: the government, or a private group (with the inherent danger of tyranny.)
The five "Bank Wars" we have described more specifically as "American Central Bank Wars" as follows:
American Central Bank War# Year Central Bank Name Duration
1st American Central Bank War 1764-1776 Bank of England 12 years
2nd American Central Bank War 1781-1785 Bank of North America 4 years
3rd American Central Bank War 1791-1811 1st Bank of the U.S 20 years
4th American Central Bank War 1816-1836 2nd Bank of the U.S. 20 years
5th American Central Bank War 1863-1913 National Banks/ 50 years
Federal Reserve Banks
The dates above are somewhat arbitrary, as, like all wars, many minor events and circumstances preceded the more dramatic or noteworthy major events. We have settled on dates that initiated the major stages of conflict, or resolved them - usually formal Acts of government - even if not the first or last chronologically.
Thus, the 1st American Central Bank War we date from passage of the Currency Act of 1764, which initiated the intense and increasingly violent stage of the conflict between the Bank of England and the American Colonial Scrip issuers (including some colonial governments), which Ben Franklin identified as the prime cause of the Revolutionary War. The Declaration of Independence resolved, not the war itself, but the Colonial response to the Currency Act - it was formally repudiated as was the British government that passed and attempted to enforce it. Yorktown (1781), and the resulting Treaty of Paris (1783), was merely the denouement.
The 2nd, 3rd and 4th American Central Bank Wars are easy to date by legislative enactment chartering an American Central bank, and the subsequent repeal or expiration of the charter.
The 5th, and possibly final, American Central Bank War was formally initiated by passage of the National Banking Act of 1863 (though a case could be made for 1861, the start of the Civil War) and, depending on one's appraisal of the situation, either continues to the present time, or was concluded when President Wilson signed the Federal Reserve Act into law at 6:02 p.m. on December 23, 1913, thereby establishing the 5th American Central Bank - the deceptively-named Federal Reserve System.
TOWARDS IDEAL MONETARY REFORM LEGISLATION
An Introduction to Monetary Reform Principles
by Patrick S.J. Carmack, B.B.A., J.D.
Why draft model reform legislation with little to no chance of enactment under the present circumstances? Nobel Laureate in Economics, Milton Friedman, offers two reasons:
...it is worth discussing radical changes, not in the expectation that they will be adopted promptly but for two other reasons. One is to construct an ideal goal, so that incremental changes can be judged by whether they move the institutional structure toward or away from that ideal.
Similarly, Pope John Paul II mentions another yardstick for measuring economic reform proposals:
[by] determining their conformity with or divergence from the lines of the Gospel teaching...
Friedman continues:
The other reason is very different. It is so that if a crisis requiring or facilitating radical change does arise, alternatives will be available that have been carefully developed and fully explored.
Further, modern history is replete with instances in which the Hegelian dialectic has been applied to the political and economic orders to manipulate or soften-up governments to change in ways contrary to the public good. This method usually involves the artificial (i.e. coldly calculated) initiation of conflict of some kind after careful conditioning of the elements of the society who could either obstruct or implement the planned change; followed by a crisis (e.g. an economic or political anomaly such as the stock market crash of 1929 or the oil crises of 1974 and 1979); which is then "interpreted" by controlled mass media to direct the responses to the crisis into pre-planned avenues and away from correct responses such as careful analysis of the causes and criminal indictment of the perpetrators (Manipulation on the personal/psychological order follows a similar pattern of stress, emotion, counseling). Orwell noted this in 1984:
In governing the populace, unrest cannot be averted. Therefore, it must be channeled and cultivated.
The following quotation of David Rockefeller, (then-Chairman of Chase Manhattan bank, founder of the Trilateral Commission, who shares power with the Rothschilds in the Bilderberg group) speaking at the June, 1991 Bilderberger meeting in Baden Baden, Germany (a meeting attended by then-Governor Bill Clinton) is illustrative of the media control mentioned above:
We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. He went on to explain: It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity
during those years. But, the world is more sophisticated and prepared to march towards a world government. The supernational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries.
In light of such scheming, it surely makes sense to attempt to anticipate the dangers involved and to prepare means of escaping them. If man lets himself rush ahead without foreseeing in good time the emergence of new social problems, they will become too grave for a peaceful solution to be hoped for.
- Pope Paul VI
Also, such a discussion can encourage the development of authentic reform movements based on the conclusions reached, which would otherwise have no focus or rallying point. Finally, though the mass media would blind us to the sufferings of the 3rd, and now 4th, world by ignoring it and redirecting our interests to sports and fantasy and our compassion to seals and snail darters, nevertheless we will always have the poor with us on this planet, those who suffer the ravages of extreme poverty while we dwell in relative plenty.
The number of unemployed people has grown rapidly around the world and was estimated by the International Labor Organization to be over one billion by 1994. In fact, the present debt-based monetary system inevitably results in vast accumulations of wealth in fewer and fewer hands, which necessitates extreme poverty for vast numbers of mankind.
In 1997, 200 corporations controlled twenty-eight percent (28%) of all global economic activity, had a combined revenue of $7.1 trillion - almost twice the income of 4/5ths of mankind, and yet employ less than 1/3rd of 1% of the world's people.
Also in 1997, 441 billionaires owned as much of the world's wealth as the poorer one-half (50%) of mankind (2.4 billion people). Similarly, in the U.S. the richest one percent (1%) now own fifty percent (50%) of all wealth and control ninety percent (90%).
Consistent with one's state-of-life, we must come to the aid of the increasing multitudes of our impoverished fellow men.
Let us all set to work, for at this time a grave duty is imposed upon the consciences of all; a duty for all, employers and employees, citizens and farmers, moralists, pastors and their flocks, to help resolutely in the solution of the economic problem that distresses us. Universal suffering puts it in the front rank and bestows upon it a character of sacredness.
These words of French Cardinal Verdier during the Great Monetary Contraction (a.k.a. the Great Depression) are fully apropos to the situation in over four-fifths of the world today, where extreme poverty is ubiquitous and deepening very rapidly. There children are born into a Great Depression which only worsens as they grow up in it.
[Consider] the reality of an innumerable multitude of people - children, adults and the elderly, in other words real and unique persons, who are suffering under the intolerable burden of poverty. There are many millions who are deprived of hope due to the fact that, in many parts of the world, their situation has worsened. Before these tragedies of total indigence and need, in which so many of our brothers and sisters are living, it is the Lord Jesus
himself who comes to question us...
Pope John Paul II- (Cf. Mt.25:31-46)
Even in the U.S. and Canada the middle class is rapidly being squeezed down into poverty as the poor increase in numbers daily, despite the employment of both spouses now, often holding second and even third jobs, being forced to warehouse their children in institutions.
The philosophers' ideal of secure, modest wealth widely diffused to all classes is being supplanted by the two extremes, both harmful to mans' spiritual development, of extreme wealth or extreme poverty. As Mahatma Gandhi noted: Materialism and morality have an inverse relationship - when one increases the other decreases.
We are very rapidly becoming a world composed exclusively of the very few, very rich, and the very many, very poor. The middle remaining cannot hold. Modern technology and mass media has vastly increased the ability of the super-rich to sustain this process to historically unprecedented orders of magnitude. However, some of the effects of this growing disparity in wealth even have the super-rich concerned enough to propose novel "solutions" such as National Security Council Study Memorandum 200 which defines a program aimed at reducing the populations of 13 nations targeted for their raw materials needed to maintain the ruling elite's lifestyle, including Brazil, India, Columbia, Mexico, Ethiopia and Egypt:
How much more efficient expenditures for population control might be than [expenditures for] raising production through direct investments in additional irrigation
and power plants and factories ... (NSSM 200, April, 1974).
Reducing targeted populations to a bare subsistence level by withholding investments, in effect forces less expensive population control on them while reducing to a minimum the labor costs of producing raw materials. Interestingly, since the passage of NAFTA, despite the transfer of hundreds of thousands of U.S. jobs to Mexico, Mexican labor wages have fallen by nearly fifty percent (50%).
There has also been afoot for some time the "debt-for-nature" scheme proposed at the 4th World Wilderness Conference held in Denver, Colorado in 1987 of forcing nations to transfer national parks and undeveloped areas (up to 30% of the world's wilderness - 12 billion acres) to a World Wilderness Trust or similar U.N. agencies (and thereby effectively losing sovereignty over part of their national territory) which would function as a collection agent for the IMF, the World Bank and private banks and would operate as follows:
1. Creditor banks transfer 3rd world debt to the World Conservation Bank (a new bank with a "soft" name) thereby relieving the debtor nations of their debt to the original banks;
2. at full book value (even though these loans now have market values as low as 6-25 cents on the dollar and cost the banks nothing to create due to fractional reserve banking - the legally required reserve ratio on such loans being typically 0%);
3. in return for such debt relief, the debtor nations would transfer to the World Wilderness Trust natural resource assets of equivalent value (World Heritage sites such as the Amazon basin or the gold-laden hills around Yellowstone will likely be included at some point);
4. the World Wilderness Trust will eventually allow development by the World Conser-vation Bank in order to pay the private banks full value for the transferred debts.
Obviously, this scheme, which is already being implemented in Bolivia, Costa Rica, Venezuela and Ecuador, simply interposes a new bank to act in the name of the international community (or the U.N.) as collection agent for the private banks and their jointly run banks (e.g. the IMF and the World Bank), thereby obscuring the stark reality of de facto foreclosure proceedings by private banks against whole national territories.
This transforms a politically unpalatable worldwide land grab by private banks into a "conservation transfer" to a body that appears to be a neutral conservation agency of some kind.
One of the remarkable features of such institutions is their immunity to popular influence and their hostility to democracy and human need. Widespread economic exploitation of these transferred territories by the private banks will be authorized by the new bank owners, absent the many inconveniences of national sovereignty, regulation and authentic environmental control.
Similar schemes propose every imaginable means, referred to as "substitutes for war", to exploit or eliminate the poor through coercive forms of demographic control including poverty, famine, forced abortions and sterilization, euthanasia and eugenics, the introduction of new diseases, environmental pollution, etc., and, of course, war itself. A goal of 300-500 million people worldwide (less than 10% of the current world population) is a common theme.
Selected, smaller numbers are far easier to manipulate and control, besides, having reduced those on the bottom to unemployment, total desperation and utter destitution, they have no more material utility and being in unresigned and irreligious poverty are too susceptible to authentic "reactionary" alternatives or disturbance. Obviously, such "solutions" are morally repugnant and sound reform alternatives must be presented, which do not destabilize the entire financial system with the attendant risks of a generalized crisis.
What Christianity forbids is to seek solutions ... by the ways of hatred, by the murdering of defenseless people, by the methods of terrorism ... - Pope John Paul II
The granting of loan extensions, rescheduling, rate reductions or partial remission of debts, though helpful, are at best temporary stop-gap measures merely delaying the day of reckoning. Of course, a debt jubilee (total remission of debts) would entirely solve the problem for the present, but is more than unlikely as few creditors take a broad, selfless or charitable enough view to support such a solution.
Rather, too many creditor banks foist policies on their nations, which assume the shape of a ruthless war on the poorer nations, and on the poor in their nations, financing projects over-priced through the fraudulent complicity of corrupted politicians creating odious debts. For example: during the decade 1980-90 Latin
American countries paid $418 billion in interest on original loans of $80 billion.
By the end of 1990, 3rd World debt had passed $1.3 trillion - over $200 for every living person on earth. This debt had increased by thirty percent (30%) in three years. Debtor nations had total arrears of $26 billion in interest. By 1997 the debt load of developing countries had doubled to a crushing $2.3 trillion.
The Financial Review (October 4, 1990) pointed out that much of the debt was owed to private banks, and that:
...the swelling of arrears has drawn concern from the IMF, where some officials complain that banks are successfully pressing the IMF to become their debt-collection agency...
As Jeffrey M. Herbener, senior follow of the Von Mises Institute has noted:
One condition the IMF has imposed across Asia is for the recipient country [of IMF loans] to establish an 'independent' central bank, i.e., one independent of local political control, and therefore at liberty to harmonize monetary policy with the Federal Reserve.
The IMF also foists austerity measures on the bailed-out economies, fomenting unrest among already poor indigenous workers.
Perhaps the most abhorrent policy that the U.S. imposes on IMF recipients is the forcing down of their minimum wage so U.S. manufacturers can move U.S. factories there with access to plenty of cheap labor.
Heritage Foundation scholars Bryan Johnson and Brett Schaefer, in studying countries that borrowed from the IMF between 1965 and 1995, found that half were no better off, one-third were worse off, and almost all were deeper in debt.
Pope John Paul II recently criticized the IMF for placing:
"unbearable burdens on less-favored countries . . . We thus see a small number of countries growing rich at the cost of the increasing impoverishment of a great number of countries."
According to the World Bank, 40 countries, most of them in Africa, spend more than half of their nations' budgets on debt interest payments.
Mozambique spends more on debt interest payments than on health, education, policing and its justice system. In this extremely poor country, where 200,000 children die every year from the effects of poverty, two-thirds of the money that comes in from foreign donors goes right back out to foreign banks.
Honduras, with $4.2 billion in debt, was expected to pay $450 million in interest in 1998, which equaled the combined total budget for health and education. This debt is truly unpayable.
More than 12 million poor children in the world die every year, mostly from preventable diseases and malnutrition. 1.3 billion people live on less than $1 per day; 3 billion live on under $2 a day; 1.3 billion have no access to sanitation; 2 billion have no access to power.
Nations endowed with power are creating new forms of relationships of inequality and oppression, perverting the use of modern technology and global organizations for this pur-
pose, rather than seeking just revision of loan terms or fundamental reform.
As one monetary reformer recently noted, since most modern money is created by banks as bank loans with an equivalent debt, all nations trade from a position of indebtedness. As a result, nations attempt to export more than they import, deliberately seeking an imbalance of trade, trying to gain a surplus of foreign revenues to reduce their indebtedness. This has caused international trade and foreign
relations, to descend from trade for mutual benefit, to thinly disguised economic warfare.
Ever-mounting debt has pressured agriculture to become dominated by the production, processing and distribution of ever-cheaper food with declining nutritional content, to the increasingly severe detriment of peoples' health and contrary to clear consumer preference. Large businesses with wasteful mass-production techniques and using large scale transport as a competitive marketing strategy are given an advantage in the intensely competitive financial conditions created by debt-finance. This has culminated in the current
ascendancy of huge, bank-dominated multinational corporations.
The developed nations have come to rely on private debt to provide their money. This typically involves massive and mounting housing debt via mortgages. Such mortgage debt prevents the majority of people from outright ownership of a home.
Many potentially prosperous 3rd World nations have had their development distorted by the global debt-based financial system. These nations have been entrapped into endemic debt of a wholly false and illegitimate nature, obligated to multinational banks such as the IMF and World Bank whose guiding principles and policies have been designed to support the export drives of the wealthy, developed nations, themselves forced by debt to maximize export revenues.
The terrible poverty this forces on debtor nations limits the development of their peoples, and their intellectual and cultural development is narrowed to the limited exigencies of their daily struggle for survival. In Africa the 1980s are referred to as "the Lost Decade" because so many women were denied pre-natal care, and young girls were financially forced to withdraw from school due to IMF policies. The 1990s decade will prove far worse.
Absent authentic monetary reform, debtor nations unable to pay their debts will ultimately be left with five (5) options:
1. To increase exports in order to increase foreign exchange revenues.
Where this is possible, it transforms the citizens into de facto workers for foreign banks which siphon the national production out of the country, further impoverishing the people. Increased commodity production saturates markets and reduces prices, partially or wholly defeating the purpose. In any case this is rarely possible, as exports have usually been maximized already.
2. To increase their borrowing and debt to pay prior debt.
This necessitates submitting to the IMF-imposed rape of their national resources and the starvation of their people while surrendering their national sovereignty by degrees.
This is the option recently taken by the Southeast Asian nations (South Korea, Indonesia, Thailand, Philippines). This is, of course, a closed loop back to debt. Of the $123 billion IMF Southeast Asian bailout, Chase Manhat-tan bank is in line to receive $32 billion; J.P. Morgan for $23 billion; Bank of America for $16 billion. This $71 billion will never reach S.E. Asia, as it is transferred from the U.S. Treasury, to the IMF, to the Wall Street banks.
The IMF bailout saves their bad loans to these nations - another handout to corporations to supplement the $170 billion in corporate welfare U.S. taxpayers fund each year (e.g. $11 million to promote the Pillsbury doughboy in Singapore and the Far East) vs. one-third that amount for U.S. social welfare.
One result of these IMF bailouts Jeffrey M. Herbener has predicted is a worldwide financial collapse:
By delaying the day of reckoning with bailouts, the international mountain of dollars and debt grows, making the inevitable collapse all the more devastating.
Courtesy of the U.S. government, some such foreign debt is being transferred ("monetized") to U.S. taxpayers for payment via increased taxes and inflation.
Interestingly, Congressional leaders were told by the Clinton Administration that unless they agreed to fund the IMF bailout of banks which make loans to South Korea, there was danger of invasion of South Korea by North Korea - war blackmail.
Unilaterally to repudiate their foreign debts.
This action incurs the danger of being followed by trade strangulation (necessitating barter agreements in foreign trade, as was successfully conducted by the Axis powers and later by Rhodesia), and military invasion (e.g. witness the fate of these defaulter nations: Haiti, Somalia, Iraq, the former Yugoslavia [Bosnia et al.] invaded by U.S. and U.N. armed forces acting as unwitting, de facto armed collection agents);
Tote dat bar! Lif dat bale!
Try to buck the system, and you land in jail!
It is no easy task to break free of debt, nor of the international banking system. Lacking preponderant military strength, a well-armed populace (like the Swiss) is a necessary precaution to exercise this option successfully, if indeed it is still possible.
To seek legal repudiation of their foreign debts, based on the doctrine of "odious debts" or national bankruptcy.
This is an established international law principle permitting debt repudiation when a government incurs a debt without the informed consent of its people, and which is not used in the legitimate interest of the State.
Ironically, this doctrine was first used by the U.S. to repudiate Cuba's debts after the U.S. took Cuba from Spain. The jurist who coined the phrase "the doctrine of odious debts", held that debts incurred to subjugate a people or to colonize them should also be considered odious. This doctrine shifts responsibility to the lenders for corrupting and utilizing corrupted politicians and governments to initiate loans, and allows collection from despots who waste the borrowed funds - both desirable changes.
Of course, an independent, uncorrupted judiciary is a prerequisite to obtaining legal repudiation with this legal theory, which is extremely unlikely when corrupted politicians appoint politically subservient judges to the World Court who would hear such cases. A national legal repudiation on this ground would be a good start though, and could be at least legally valid, but might be a practical nullity, resulting in the same consequences as a unilateral repudiation without a recognized legal basis (#3., above).
Many nations, including the U.S., have recognized the legitimacy of protecting debtors,either wholly or partially, from rapacious creditors due to the high social costs of debtors' prisons, such as the former Kilmainham Jail established by the British in Dublin for debtors. There men, women and children were locked up together in an area over-crowded as well as unhealthy and rat infested, in a deteriorating prison. The debtors were obliged to pay for rent and food - usually by begging from their impoverished families. Today we call the surviving debtors' prisons, unchanged from the description above, 3rd world nations.
Surely, the same sense of justice that abolished debtors' prisons in the U.S. and the U.K. ought to apply to whole nations in the thrall of debt, by means of the recognition of a nationally right of bankruptcy (complete with provisions similar to Chapter 7 - debt termination; and for Chapter 11 "reorganization" with generous exemptions from foreclosure on various classes of debtors' property, such as tools (nationally: factories), food (farms), clothes (crops), homes (government property and parks), while leaving their independence wholly intact. This would be a recognized, legal form of repudiation, once reasonable economic and legal criteria are met, just as in U.S. Bankruptcy Court.
However, it should come as no surprise to the reader to learn that the bankers have been actively attacking the existing bankruptcy laws
in the U.S. and Congress has recently passed a bill (now in conference) seriously weakening its protections.
Nevertheless, the logic and social utility of recognizing such an international legal theory of debtor protection cannot reasonably be denied. This is consistent with the conclusions of the Pontifical Commission Justitia Et Pax which states:
. . . creditors cannot demand contract (with a reasonable minimum wage) while fulfillment by any and all means, especially if the debtor is in a situation of extreme need . . . Each country has to be left adequate financial leeway for its own growth, which at the same time will help further reimbursement of its debt.
. . . In the case of disagreements, arbitration procedures could be requested . . . an international code of conduct, with norms of ethical value, would be useful as a guideline of expectations.
Such guidelines might include: a minimum economic growth rate not to be denied a debtor country (which would, at a bare minimum, be equal to population growth and productivity gains), an environmentally sensitive "ability-to-pay" standard; a reasonable "social needs" standard; while safeguarding national sovereignty and independence, including an adequate government and national defense capability.
To issue sufficient quantities of the national money specifically to retire the international debt.
As monetary reformer Boudewign Wegerif has pointed out, most international loans have to be repaid in dollars or linked hard currencies, which limits the availability of this option to dollar-linked currency nations, or, makes its use amount to a national tax (via inflation) imposed by the government to obtain the resources necessary to purchase national
production sufficient to sell or barter down the international debt.
Since most revenues obtained from foreign loans are shortly spent (often wasted), partly domestically and partly in foreign countries, the results are usually inflationary (in both the country of origin - usually the U.S., and in the recipient country), partially multiplied by private domestic (and foreign) banks through fractional reserve banking loans. Therefore, while issuing sufficient new money to retire foreign debt would work, it would also result in hyperinflation where the foreign debt is great in relation to the economy, particularly due to the subsequent multiplier effect of any high-powered money in a fractional reserve banking system. This ruinous negative effect has been felt by numerous nations which inflated to retire foreign debt.
Of course, the technical solution to avoiding (or minimizing) such hyperinflation lies in the domestic prohibition of fractional reserve banking, coupled with simultaneous, proportionate foreign exchange regulation, which would require the banks to absorb the new money as increased reserves in a transition to full reserve banking.
This response amounts to legislated domestic monetary reform, which is, therefore, not an option "absent authentic monetary reform"
(like the first four options above [i.e. 1-4]) but, rather, is authentic monetary reform.
In short, if nations find the first four options, above, unacceptable, then they will be forced to consider authentic monetary reform, which brings us back to the subject of this article in order to describe this type of reform.
*
Having set forth the rationale for drafting model monetary reform legislation, where does one begin? A careful study of the fundamentals of our economic system and of the reforms proposed by scholars is a logical starting point.
The draft legislation following was influenced by numerous sources including the writings and declarations on this subject of: President Abraham Lincoln; former Congressmen Charles A. Lindberg, Louis T. McFadden, Robert H. Hemphill, Wright Patman, Francis H. Shoemaker, Jerry Voorhis, Henry Gonzales and former Senator Elmer Thomas, all courageous supporters of banking and monetary reform legislation; Thomas A. Edison; Irving Fisher; Henry C. Simons and the old Chicago School of Economics; Nobel Laureate Frederick Soddy, M.A., F.R.S.; Gertrude M. Coogan; G.K. Chesterton and the Distributist school; Rev. Denis Fahey, C.S.Sp.; Major Clifford Hugh Douglas and the Social Credit school; W. Cleon Skousen; Popes Leo XIII, Pius XI, John XXIII, Paul VI, and John Paul II; the Pontifical Commission Justice and Peace; Nobel Laureate Prof. Milton Friedman; Murray N. Rothbard; E.F. Schumacker; Peter Cook; Theodore R. Thoren; Richard F. Warner; Charles and Russell Norburn; George Tolley and a host of others.
Also, influencing the draft was the historical experience of reform legislation in various nations including the U.S. during the Civil War; Britain during WWI; Sweden in the early 1930's; Portugal from 1931 to 1974 (when it had no national debt); Canada in the mid-20th century; the Isle of Guernsey, and many others.
Certain economic reform principles emerge from the study of their proposals. The first and most important is made salient from the fact that there is grave danger to society, worldwide, which must be addressed, when a handful of men hold the power of life and death over national economies as is certainly the present case. As Pope Pius XI pointed out in the Encyclical Quadragesimo Anno (1931):
. . . the power to create money and to expand or contract the money supply at will carries with it too great an opportu-
nity of economic domination [and therefor ultimately of tyranny], to be left to private control without injury to the community at large.
Similarly Prof. Friedman:
The power to determine the quantity of money...is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power ... Any system which gives so much power and so much discretion to a few men, [so] that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank.
Similarly Rev. Dennis Fahey, C.S.Sp.:
If a private group exercise the power to originate the exchange-medium and then manipulates the volume of it, that group becomes a power greater than the government itself. It becomes a super-government, paralyzing the efforts of the lawful government for the common good.
It is perfectly idle to talk about a democracy or a republic when the sovereign power is being exercised de facto by a small group of international bankers not committed to the long-term development of the country, who manipulate public opinion and politicians though their money and media control; the worst of whom seek to arrogate to themselves the exercise of
absolute power. What are nations without justice but bands of robbers. - St. Augustine
And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely. - Lord Acton
Congressman Lindbergh noted this nearly seventy years ago. These Money Changers, he said,
. . . have become bold, aggressive, vindictive and merciless and command the people to support them.
Therefore the first monetary reform principle to emerge is that control over the monetary system must be taken back out of the private hands who have usurped the power of the State by deceit, bribery and intrigue for their selfish or ideological ends, and be resumed by the State. From this it flows that money creation by private persons must be prohibited, thus fractional reserve banking must be prohibited, and full reserve banking mandated by law.
Resolving this danger over the long-term demands that the monetary system be so arranged as to facilitate the production, distribution and exchange of material goods and services in view of supporting the virtuous life
of all of the members of society. This requires a stabilized (i.e. not manipulated) price level, while avoiding the opposite end-of-the-spectrum problem of government favoritism in lending. This summarizes as follows:
Sound monetary reform requires the issuance of all money (legal tender) by the State, exclusively; in amounts calculated to stabilize the general price level; without debt obligation to private persons; with all lending to be performed by private legal persons, exclusively; while safeguarding the widespread ownership of private property.
Let us separate these principles (numeric), with their implicit corollaries (alphabetic):
Monetary Reform
Principles
References to
Monetary Reform
Act Sections
Require the issuance of all money (legal tender)by the State, exclusively; 7.
Corollaries
1. this implies the prohibition of all private money creation; 14.
2. this implies the prohibition of
fractional reserve banking; 14.
3. This implies the requirement of
full reserve banking; 9.
d. this implies withdrawal from
international banks with credit/
reserve-creating authority (such
as the IMF SDRs); 15.
in amounts calculated to
stabilize the general price level; 6.
Corollaries
1. this implies avoiding inflation
and deflation, a condition for
steady and healthy economic
growth, as government policy; 6,7.
b. this implies the abandonment of
a single commodity standard (e.g.
gold) inasmuch as, over time, no com-
modity is available on the
same relative terms as all goods in general
(besides the problems of hoarding,
manipulation through export, etc.); 7.
3. this implies a fixed relationship
or rule between the quantity of
money and goods; 7.
4. this may imply a war-time ex-
ception to #3, below; 8.
e. this implies government policy
to stabilize excessive fluctuation
of exchange rates; 16.
without debt obligation to
private persons; 5.
Corollaries
1. this implies paying off national
debts (not necessarily intra-
government debt); 5.
a. this implies requiring full reserve
banking; 4.
c. this implies the issuance of all
money (legal tender)
by the State; 7.
with all lending to be performed
by private legal persons, exclusively;
Corollaries
1. this implies the prohibition of all
government lending (e.g. contrary
to communist and national
socialist legislation); 7.
2. this implies the prohibition of-
usurious rates of interest, which
defeat or prevent the beneficial
effects of lending and create ob-
stacles to secure ownership of
property; 14.
c. #1, supra., implies that #4
would be limited by the amount
of funds the lender had or
obtains to lend; 9.
safeguarding the widespread
possession of private property.
Corollaries
1. this implies both the secure
(which implies permanent) and
modest possession of private
property by all classes of people; 7,14.
b. this implies a homestead exemp-
tion from property taxation and
bankruptcy protection for debtors;
3. this implies that the power to create
money not be delegated to private
persons for their individual benefit
by the State since this results in
vast concentrations of property; 7.
4. this implies that the right to
private property is subordinated
to the right to common use
where the danger of economic
domination of the community is
too great to leave it in private hands. 7,14.
5. this implies the abolition of usury, de-
fined as charging interest on a loan
which is not productive, however,
this basic, fundamental economic or
financial reform goes beyond the scope
of monetary reform addressed herein.
These principles are consistent with and are required by the increasingly higher principles of subsidiarity, solidarity, justice (i.e. legal, distributive and social) and equity.
Subsidiarity is the principle which states that one should not withdraw from individuals and commit to the community (nor from a lower community to a higher order of community) what they can accomplish by their own enterprise or industry. Negatively put, it states that it is an injustice, a grave evil, and a disturbance of right order for a larger, higher organization or jurisdiction, to arrogate to itself functions (or ownership) which can be performed efficiently by smaller and lower, local bodies. The notion of rational decentralization and the Distributist school derives from this principle.
Subsidiarity is, therefore, that principle which dictates to common sense that each man select his own food, home, job and spouse and not be told which by some capitol (or capital) bureaucrat. It reflects the nature of man and of his unique personality which requires that men be not wholly subject to the will of others, but retain their liberty and freedom from oppression, economic imperialism, bureaucratic control and centralization which dries up the wellsprings of initiative and creativity.
Subsidiarity is also that principle which prohibits government lending since this, unlike money creation, can be efficiently performed privately, at the local level without danger to the common good. Needs are best understood and satisfied by people who are closest to them, who are also capable of perceiving deeper causes and needs due to their more personal contact.
It was unknowing homage to this principle of subsidiarity that led the French philosopher Montesquieu, when comparing the advantages of a small state to a larger one, to write that in a smaller entity: ...the public good is easier perceived, better understood and more within the reach of every citizen.
Unlike subsidiarity, which required some necessary definition here, solidarity, justice and equity are at least commonly understood, if in a vague sense, and these are not on the same level as our consideration here, which is nar-
rowly limited to considering practical monetary reform legislation.
It should be noted here that these principles are entirely consistent with the Social Credit reform program founded by Major Clifford Hugh Douglas, though our draft Monetary Reform Act (see appendix) takes a different tack for pragmatic and practical reasons.
Interestingly, on January 1, 1998, in his Angelus message, Pope John Paul II said,
The process of globalization under way in the world needs to be orientated in the direction of equity and solidarity...it is
indispensable for everyone to strive for justice...
Following these basic principles of sound monetary reform, which are available to common sense enlightened by modest reflection in this area, non-experts are perfectly capable of judging reform proposals such as that following. Indeed, by use of a peculiar esoteric jargon and pure gibberish, central bankers and their economists have intimidated the public from considering this artificially arcane subject area leaving the field to their paid "experts".
Would such reform make monetary policy a plaything for politicians, ending the independence of the Central Bankers? Yes, and so it should be! Quoting Prof. Friedman again: This is an argument for, not against, eliminating the central bank's independence. The economic order is properly subject to the political, not the reverse as is the case presently.
Elected officials with political accountability should run the country, not bankers busily betraying their nation's autonomy and sovereignty, motivated by greed. Further, capital is a mere instrument, a means of production at the service of man and his labor, not the reverse. It should be subject to him, not he to it. This is simply to express the obvious primacy of man over things.
This draft Act has gone through numerous technical revisions based on suggestions from numerous sources, and more are invited. In particular, we are grateful for suggestions received from Prof. Milton Friedman. The principles contained herein are equally applicable to Canadian (or other national) draft mone-
tary reform legislation, though the particulars would vary considerably.
Points of controversy in details will doubtless include the following:
Whether to abolish or fundamentally reform the existing Federal Reserve System;
2. Whether to require banks to have their reserves in the form of cash, government securities, or Treasury deposits;
3. Whether the State, or private persons, ought to purchase the bank liabilities the banks must liquidate in order to transition to full reserve banking;
4. Whether future monetary growth should be partially discretionary (i.e. but based on a known rule) with some national Monetary Authority, or non-discretionary and based on a fixed rate of growth, and if the latter, at what fixed rate (but having any definite and unambiguous rule is more important than which rule is settled upon);
5. Whether bank reserves ought to earn interest or not, and if so, how much;
6. Whether prior bank profits ought to be disgorged, and if so, whether via a nationalization and re-privatization of banks or by confiscation or tax-surcharge.
1. Whether to utilize a Social Credit- type means for distribution of new monetary growth, either partially or exclusively.
The endnotes of the draft Act following, briefly address these points. We regard the
choice of such options regarding these points as non-essential to sound monetary reform.
Novel reform proposals, such as: computerized barter systems based on market pricing; the creation of new forms of private monies; using bearer certificates tied to inflation-indexed and non-indexed bonds, or futures widely indexed to result in a relatively constant stable price; localized or municipal currencies, now in use in sixty U.S. communities (e.g. the "Bread" [Berkeley Region Exchange And Development] labor certificates), which were issued in c. 400 local communities during the Great Depression; the widespread establishment of State-owned banks (e.g. the very successful State-owned Bank of North Dakota); and discounted private organization debit cards; are not considered here as they seem presently too speculative, localized or costly to replace national currency and demand deposits.
That may change before we know it, and these proposals all merit further discussion and refinement. Likewise, the Social Credit school proposals for monetary growth distribution are certainly valid.
Other, non-monetary reforms, such as: increased utilization of credit unions; a new
Homesteading Act, instead of allowing idle farmland and abandoned urban buildings to remain so; single parent's cooperatives to assist them and their children to achieve self-sufficiency; tax incentives for micro-mass transit such as community vans; micro-lending; tax reduction including abolition of property and land taxes; and many other worthy ideas have been put forth, which certainly would help society cope with the problems created by
the present corrupt banking system, but these go beyond our topic here.
The fundamental, basic economic reform needed - the abolition and recriminalization of usury, is closely related to our topic, but beyond its specific scope. Let it suffice here to state that it is usury, defined as: the charging of interest on a loan which is not productive, which is the root cause of the evils of fractional reserve banking and the debt finance system, which are merely "refinements" of it, as is compound interest and money manipulation in general. Usury is not merely the charging of an excessive or unlawful rate of interest. Unless addressed, usury inevitably leads to these other evils, which are our focus here, and to the decay of justice and civilization.
Regarding a gold standard: there is no unanimity as to what type of gold standard to consider. However, except for a true gold standard - in which either gold coin or gold deposit certificates circulate as money - the others are easily manipulated. But even a true gold standard can be manipulated in a variety of ways, as history demonstrates, and has only this appeal: that it would certainly be better than the current state of affairs in that it is one step more difficult to manipulate its quantity than a purely fiat currency.
However, even a true gold standard has numerous problems (including its relative inelasticity in relation to GNP, GDP or similar yardsticks, resulting in, at least in the short-term, inflation and/or deflation) and would not be preferable to true reform as set forth in the
draft Act following, for a number of reasons which we cannot discuss in detail here.
In any case, without the simultaneous abolition of fractional reserve banking (and the retirement of the national debt), adoption of a true gold standard would simply be changing the form of high-powered money from Federal Reserve Notes to gold - a largely meaningless change. Whereas, with the adoption of full reserve banking, including a fixed rate of monetary growth, any commodity standard (e.g. gold) becomes problematic and a potential obstacle to authentic reform. For these reasons, the political support for it is very slight, and was even in the exigencies of the
Great Contraction. This seems unlikely to change.
Concerning implementation: the fundamental causes of the world debt crisis are not economic, but philosophical, theological and moral. We cannot expect economic justice in a society that murders innocent children in the womb and idolizes money. So authentic reform cannot be reduced to a technical or drafting problem, which is, however, our specific focus here. Nothing serious or deep is accomplished exclusively by changing techniques, laws or governments.
It is obvious that no change of system or machinery can avert those causes of social malaise which consist in the egotism, greed, or quarrelsomeness of human nature. What it can do is to create an environment in which those are not the qualities encouraged. It cannot secure that men live up to their principles. What it can do is to establish their social order upon principles to which, if they please, they can live up or not live down. It cannot control their actions. It can offer
them an end on which to fix their minds and, as their minds are, so in the long run,
and with exceptions, their practical activity will be. - R.H. Tawney
The well-being of families, the security of the nation, the happiness of humanity - these can be conceived only in terms of the ordered use by individual persons of their God-given virtues and the objects to which these correspond. There is no such thing (save in metaphor) as a sinful (or "holy") nation or system; there are only nations and systems composed of individual persons either in revolt against nature, right reason, justice and good, or who by reason of their personal virtue are in harmony and union with nature, right reason, justice and God, radiating their personal virtue into the national or systemic life.
As Shakespeare put it:
The oppressors wrong, the proud man's contumely, the pangs of despised love, the law's delay, the insolence of office . . .,
all of these are constant. Only training in moral greatness of soul, of intellect, of will, can equip a young person to bear these unchanging burdens with virtue, maintaining interior peace in their midst. Lacking these virtues prevent many from having the authentic power of peacemakers and so of true reformers.
It is because of the profound inability of retributive justice (vengeance) to effect permanent reconciliation for great injustices, that virtue is so necessary, for only restorative justice, which includes recognition of the former injustice, its termination, and concomitant forgiveness that can avoid the endless cycle of vengeance and revenge otherwise unleashed.
So the reform of society and of systems must begin with the reformation of the individual morals of the individual persons who comprise society. Hopefully, this will be initiated before our remaining freedoms, which are indirectly tied to our economic independence (including our national economic independence and sovereignty) are so far gone as to be irretriev
able and injustice degenerates into irremediable conflicts.
No leader in public economy, no power of organization will ever be able to bring social conditions to a peaceful solution, unless first there triumphs moral laws based on God and conscience. Pope Leo XIII
Institutional reform follows on individual reform, which experience teaches is often predicated on trial or crisis. Crises bring to the surface deeper disorders not otherwise discovered. A better world cannot be built in the midst of crisis, but it is precisely in time of crisis that the anvil is hot for shaping the kind of world peace may provide. Of course, the international bankers know this too, and plan
to create and use crises for their own ends, as mentioned above.
Nevertheless, is very unlikely reform will advance in the U.S. until economic crisis deepens and touches larger numbers of our citizens, either suddenly, in a major upheaval (i.e. a severe economic depression or war) or by gradually spreading impoverishment due to continually increasing inflation/taxation/and interest on debt. The false sense of economic and social security to which our citizens presently cling will be increasingly tested and shaken, either way.
As Aristotle noted in his Politics:
For war compels men to be just and temperate, whereas the enjoyment of good fortune and the leisure that comes with peace tend to make them insolent. Those then who seem to be the best-off and to be in the possession of every good, have special need of justice and temperance.
So realistic opportunity for authentic reform may present itself in the context of an economic/political crisis in which increasing numbers of our citizens, hitherto untouched, personally experience the harsh consequences of the lack of justice and charity in the present economic system, since the changes needed are ultimately of the heart and are therefore personal.
Let us glimpse our future, through the eyes of a Brazilian viewing their present:
The third world war has already started. It is a silent war. Not, for that reason, any less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying, there are children. It is a war over the Third World debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam.
Despite their country's fabulous national wealth, 40% of the Brazilian population go
hungry whilst seven million children work as slaves or prostitutes.
The relentless activity and ceaseless agitation against justice and right order financed by the Money Changers need not unduly discourage us. This apparent vitality masks the restless spirit injustice generates, which seeks to salve the conflicted conscience by resolving, consciously and subconsciously, to justify its actions externally, in a torrent of words and works. Inner conflict thus leads to outer conflicts, where increasingly aggressive (even murderous) forms of coercion are employed against the outer world, and ultimately against themselves (e.g. neurosis, alcoholism, suicide) to bend the truth of justice to their denial of it.
In short, injustice ultimately creates internal conflict in the individuals (and groups) so acting, as well as in their collective efforts, as they attempt to repress those portions of their own consciousness and of their own groups (and others), which condemn their injustice. This repression requires increasingly greater efforts to maintain (as each act of repression increases the injustice, necessitating even more repression), thus diverting their energy to destructive ends and away from the creativity necessary to maintain their position and power. In fact, so draining is this effort that most people are not capable of the deception, the tight-rope walking, the consistent criminality and repression required to maintain a great evil conspiracy.
In contrast, a conscience at peace naturally tends towards an unworried, calm approach to life, yet this is a sign of strength and integrity, not weakness. Of course, complacency, the opposite extreme, is to be avoided.
Walter Wink in his Engaging the Powers, sees the greatest obstacle to reform in "The conviction that we cannot change because we are dependent on what is wrong. But that is the addict's excuse, and we know that it will not do." Wink proposes a 'politics of hope', whereby we envisage the future we want and act as if that future is irresistible.
Whatever the merit of that approach, certainly hope is necessary to all good works, and true reform, and so it is necessary to work simultaneously for the conversion of hearts and for the reform of systems, with the emphasis much on the former. As Pope John Paul II put it:
We are all called, indeed obliged, to face the tremendous challenge ... because the present danger threatens everyone: a world economic crisis, a war without frontiers ... every individual is called upon to play his or her part in this peaceful campaign, a campaign to be conducted by
peaceful means, in order to secure development in peace.
Our part of this development in peace may begin with a prudent, clear-eyed objectivity to determine what actions are appropriate to the real situation before us. This cannot be achieved except by an attitude of 'silent contemplation' of reality, during which the egocentric interests of man are, at least temporarily, silenced. In that silence, the knowledge of truth may be transformed into decisions corresponding to reality. However, it is the province of true religion to define that for those so drawn and to reveal distinctly religious responses to this crisis.
The author, Patrick S.J. Carmack, B.B.A., J.D., practiced corporate law; is a former Administrative Law Judge for the Corporation Commission of the
State of Oklahoma; is a member of the bar of the U.S.
Supreme Court; and is the co-author of the two volume-video, THE MONEY MASTERS, How International Bankers Gained Control of America.
MONETARY REFORM ACT
An Act
To restore confidence in and governmental control over money and credit, to stabilize the money supply and price level, to establish full reserve banking, to prohibit fractional reserve banking, to retire the national debt, to repeal conflicting Acts, to withdraw from international banks, to restore political accountability for monetary policy, and to remove the causes of economic depressions, without additional taxation, inflation or deflation, and for other purposes.1
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that:
Section 1. SHORT TITLE. This Act may be cited as the Monetary Reform Act.
Sec. 2. IMPLEMENTATION. This Act shall be implemented over a one-year transition period, beginning thirty days after the date of the enactment of this Act.
Sec. 3. DEFINITIONS. The definitions of terms shall be those set forth in the Federal Reserve Act of December 23, 1913, as amended. United States Notes as used herein shall mean Treasury issue United Stated currency notes (as defined in 31 U.S.C. Sec. 5115) not bearing any interest, being lawful money and legal tender for all debts, public and private, and which term as used herein shall include Treasury Department Deposits (a.k.a. Treasury Deposits or Treasury book entries) convertible to United States Notes, which may be substituted therefor at the discretion of the Secretary of the Treasury. During the transition period, Treasury Deposits as used herein shall include Federal Reserve Deposits.
Sec. 4. ONE HUNDRED PERCENT (100%) RESERVE REQUIREMENT. Section 19(b)(2)(A-D) of the Federal Reserve Act is hereby amended to raise the Reserve Requirement ratio for financial institutions, in equal monthly increments of eight and one-half percent (8.5%), to one hundred percent (100%), during the said transition period. No existing reserve requirements shall be reduced, but shall be increased as the overall Reserve Requirement ratio incremental increase surpasses them. The initial minimum overall Reserve Requirement ratio shall be fixed at eight and one-half percent (8.5%) for all accounts, effective in one month. United States Notes, Federal Reserve Notes, Treasury Deposits and Federal Reserve Deposits shall be included in Reserve calculations in the transition period. No waivers or exemptions to this section may be granted, and any in existence are hereby repealed.2
Sec. 5. RETIRING THE NATIONAL DEBT. The Secretary of the Treasury is hereby authorized and directed to purchase, in open market operations or otherwise, all outstanding Federal Debt held by the public, with United States Notes; thereby the net National Debt is to be completely retired and
replaced with United States Notes.3 Treasury Deposits are to be created for intra-U.S.
government debt in quantity sufficient to extinguish the remaining National Debt.
Sec. 6. STABLE MONEY SUPPLY. The Secretary of the Treasury is hereby authorized and directed to time and apportion the purchase of United States Bonds and other federal debt securities held by the public, and the issuance of United States Notes and the creation of Treasury Deposits to the rate of the Reserve Requirement ratio increases made pursuant to this Act, in order to keep the money supply (calculated including the monetary substitutions provided for herein) constantly stable, except as is provided in section 7, infra. The Secretary of the Treasury is hereby authorized and directed to purchase such outstanding United States Savings Bonds/Notes during the transition period as may be necessary to accomplish the purposes of this section.4
Sec. 7. FUTURE MONETARY GROWTH. Beginning with the transition year period, and thereafter on an annual basis, the total dollar amount of United States Notes (as defined supra: i.e. the sum of outstanding currency plus Treasury Deposits) outstanding (calculated to include the total amount of outstanding Federal Reserve Notes, i.e. not yet replaced with U.S. Notes) shall be increased by the Treasury Department, steadily, by three per cent (3%) per annum5, which amount shall be paid into the economy by the Treasury Department, first to retire (or purchase) any future war bonds (issued pursuant to section 8. hereof), then any remaining non-marketable federal debt (e.g. Saving Bonds/Notes and fully guaranteed obligations of the government), then, pursuant to appropriation by Congress, to pay for goods, services, or interest. Any such new money not appropriated (i.e. allocated for expenditure) by Congress during any such year, shall be rebated by the Secretary of the Treasury to individual, personal income taxpayers on a fixed percentage basis within thirty (30)days of the close of such year. Except in time of war, no United States government bonds, bills, savings bonds/notes, or other debt obligations may be sold by the government, except as is provided for in this Act. No federal agency or federally-chartered bureau, board or instrumentality may engage in any further lending or borrowing, nor guarantee same, after the date this Act becomes law.
Sec. 8. WAR EXCEPTION. In the case of a formal Congressional declaration of war with a foreign nation, the three percent (3%) monetary growth provided for in section 7., supra, may be exceeded and United States government bonds may be sold or purchased in open market operations by the Treasury Department, pursuant to Congressional authorization. The suspension of the fixed three per cent (3%) monetary growth, and United States government bond sales, shall terminate annually unless renewed by Congress, or upon the cessation of hostilities, or by formal proclamation of the President declaring the war ended, or upon the exchange of ratifications of the treaty of peace. The provisions of this Act shall supersede the provisions of the National Emergencies Act (50 U.S.C. 1601, et seq., Titles I-V, as amended), and any declaration of emergency by any member of the Executive Branch.
Sec. 9. FULL RESERVE BANKS. After the transition period, institutions using the word bank in their name or title, may not engage in lending, except that the capital of the owners may be invested or loaned on the open market, but may charge fees for their services and may invest deposits in Treasury Department Deposit accounts. These: full reserve; one hundred percent (100%) reserve; deposit; check or narrow; banks, as they, exclusively, may also be called, must treat deposits received as trust-funds of money held for depositors. By the end of the transition period, for every dollar deposited, banks must have a dollar of United States Notes on hand or invested in a Treasury Department Deposit account. All bank deposits shall be in demand accounts. Banks shall be free to pay any rate of interest on accounts. Only bank deposits may be transferable by check, credit card, electronic transfer or any substitute therefor. At the beginning of the transition period, entry into such one hundred percent (100%) reserve banking shall be open to all persons having no criminal record, subject to minimal bonding requirements to be established by the Secretary of the Treasury.6
Sec. 10. TREASURY DEPOSITS. Funds placed in Treasury Department Deposits shall be utilized by the Secretary of the Treasury pursuant to appropriation by Congress, to pay for goods, services, or interest needed by the federal government. Any such funds received by the government in excess of federal expenditures not funded by tax revenues shall be rebated to individual, personal income taxpayers on a fixed percentage basis within thirty (30) days of the close of that year. Withdrawals of Treasury Deposits in excess of receipts in any given year shall be funded by future monetary growth as provided in section 7., supra, or should the withdrawals ever exceed monetary growth, by tax increases; in this latter, unlikely event, the Secretary of the Treasury is hereby authorized, in the absence of any other, specific authority, to add a fixed percentage surcharge to income taxes for that period, equal to the sum of excess withdrawals.
Sec. 11. INTEREST. The initial rate of interest payable on Treasury Department Deposits shall be equal to the average yield on three-month Treasury bills during the preceding quarter. Thereafter, it shall be adjusted quarterly in accordance with changes in the average yield of ninety-day commercial paper over the preceding quarter.7
Sec. 12. LENDING INSTITUTIONS. Banks or any other persons may establish separate associations, with or without joint ownership or management, not to be titled banks, such as investment trusts, mutual funds, brokerage or lending houses, to sell stock, to receive, borrow, lend or invest money at interest, but by the end of the transition period only from existing funds (i.e. United States Notes and Treasury Deposits). Contractual provisions must be made by such institutions upon the receipt of any funds with their owners, investors or depositors, that at no time may more funds be subject to demand than are presently idle and one hundred per cent (100%) available on demand. For any funds deposited with such associations payable on demand there must be a dollar of United States Notes on hand or deposited in a Treasury Deposit. No such association may denominate any account a demand account, nor promise immediate availability of any funds which may be invested, deposited or otherwise placed by such association without notice in any instrument or account other than Treasury Deposits. No funds deposited or invested with such associations may be transferred by check, credit card, electronic transfer or any substitute therefor. Owners, investors, lenders and depositors must be advised of the use of their funds, fairly appraised of the risks including the risk of total loss, of the maximum term of the use and of the potential and actual lack of
availability of their funds, and the agreed or expected interest rate or the rate of return.
Sec. 13. REPEAL OF CONFLICTING ACTS. The National Banking Act of 1864 and amendments, and the Federal Reserve Act of 1913 and amendments, are hereby repealed,8 effective at the end of the transition period. All Federal Reserve System monetary authority and Federal Reserve Deposits shall be transferred to the Treasury Department at the end of the transition period. From the effective date of this Act, and during the transition period, the Federal Reserve System and its District Banks shall not engage in open market transactions, nor change the Federal Funds Discount Rate, nor alter any Reserve Requirements, nor otherwise alter any money aggregate, nor transfer, dispose of, nor move any gold or silver in either their physical or legal possession, except as provided for in this Act, contrary provisions of the Federal Reserve Act or other statutes notwithstanding. The paid-in capital of Federal Reserve System member banks shall be credited to their Federal Reserve Deposit accounts at the beginning of the transition period, and the Federal Reserve Banks, employees, assets and liabilities transferred to the jurisdiction and control of the Treasury Department and employed for the purposes of this Act, including continuation of check-clearing and other services not prohibited by this Act. The Secretary of the Treasury is directed to replace gradually all outstanding Federal Reserve Notes with United States Notes, as soon as is practicable. Outstanding Federal Reserve Notes shall remain legal tender for all debts, public and private. Section 602(g)(14) of the Riegle Act of 1994 amending U.S.C. Title 32, insofar as it removed the requirement of reissuing United States currency notes upon redemption, is hereby repealed. Title 31 U.S.C. Section (a)2(b) limiting United States Notes to a total of $300 million and prohibiting their use as reserves, is hereby repealed. Existing legislation in conflict with this Act, whether in whole or in part, is hereby repealed in whole or in part as may be necessary to resolve any conflict with this Act.9
Sec. 14. PENALTIES. After the transition period, no person may loan, create credit or liabilities payable on demand or transferable by check, credit card or electronic transfer, without having one hundred percent (100%) reserves of United States Notes, dollar for dollar, for any such amounts. Violation of this provision will subject the violator to civil penalties for fraud, and to criminal penalties. 18 U.S.C. Crimes and Criminal Procedure §1344. Bank fraud: is hereby amended to include a new subsection (3) as follows: Whoever knowingly executes, or attempts to execute, a scheme or artifice - (3) to engage in fractional reserve banking practices as described and prohibited by the Monetary Reform Act, Section 14, shall be fined not more than three times the total dollar amount of the violation(s), or imprisoned not more than 20 years, or both; but if the amount of the violation does not exceed $1,000, the violator(s) shall be fined treble damages or imprisoned not more than one year, or both.
Sec. 15. WITHDRAWAL FROM INTERNATIONAL BANKS. It is hereby declared as a matter of federal statutory law that membership and/or participation of the United States government, or its agencies, or of the Federal Reserve Board or Reserve Banks or any officer or employee thereof, with the Bank for International Settlements, the International Monetary Fund, the World Bank, and all other international banks, is inconsistent with and in direct conflict with the purposes of this Act of Congress. The President is hereby authorized and directed to take such steps as may be necessary to withdraw the United States from all participation, and membership, in the Bank for International Settlements, the International Monetary Fund, the World Bank, and all other international banks, in any orderly manner, but in a period not to exceed one year from the effective date of this Act, and to recover the original and any subsequent United States subscriptions, contributions and quotas to such organizations, not already fully and lawfully expended, whether in the form of gold, deposits, currency or otherwise; and to enter into negotiations to establish new exchange facilities consistent with the purposes of this Act having no authority to create money or credit in any form, and having no independent authority to establish laws or regulations binding upon the United States or its banks, financial institutions or citizens, and subject to the ongoing, annual budgetary authority and approval of Congress.10
Sec. 16. FOREIGN EXCHANGE. The Secretary of the Treasury is hereby authorized and directed to enact regulations allowing the external rate of exchange freely to fluctuate, as foreign price levels fluctuate (i.e. in accordance with their respective purchasing power), while utilizing the exchange stabilization fund and foreign currency reserves to counterbalance fluctuations in the exchange rate. The Secretary of the Treasury shall enact such regulations in order to: 1. keep the stable, internal domestic price level established by this Act unaffected by foreign exchange rate fluctuations; 2. maintain imports and exports of capital, in equilibrium.. In no event shall foreign exchange rates be allowed to alter the fixed rate of monetary growth set forth in section 7., above.11
In any period in which the exchange stabilization fund and foreign currency reserves are inadequate to maintain equilibrium in capital flow, the Secretary of the Treasury is hereby authorized and directed: to restrict any imbalanced inflow of dollars to an amount equal to the monetary growth rate for such period (as set forth in Section 7., supra), which monetary growth shall be thus funded; and, to prohibit any imbalanced outflow of dollars. Imbalances in excess of such amounts must be chronologically scheduled with and approved by the Secretary of the Treasury for subsequent exchange as soon as the free markets restore the equilibrium necessary for the exchange(s) to occur.
The Secretary shall issue regulations to establish an Advance Foreign Exchange Book, open for public inspection, of all foreign exchange approvals applied for, in order to facilitate the scheduling of such exchanges while maintaining exchange equilibrium. Such foreign exchanges must be assigned by the Secretary on a first-come-first-served basis, in order to guarantee foreign exchange availability, for a one quarter per cent (0.25%) fee. 12
Sec. 17. APPROPRIATIONS. The Secretary of the Treasury is authorized and directed to establish Treasury Department Deposits, convertible to United States Notes on demand, sufficient to accomplish the provisions of this Act. The Federal Reserve Act is hereby amended to add this section: that the Governors of the Federal Reserve System are authorized and directed to establish Federal Reserve Deposits sufficient to accomplish the purposes of this Act, in amounts to be determined by the Secretary of the Treasury. The Director of the Bureau of Engraving is hereby authorized and directed to print a sufficient quantity of United States Notes to accomplish the provisions of this Act. There is hereby authorized to be appropriated, out of any funds not otherwise appropriated, such sums as may be necessary to carry out the purposes of this Act.13
Sec. 18. SEVERABILITY. If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance shall be held to be unconstitutional, the remainder of this Act, the amendments made by this Act, and the application of the provisions of such to any person or circumstance shall not be affected thereby.
END NOTES
1. A draft in 18 sections; last revised 12/4/98, copyright 1998. All rights reserved by Patrick S. J. Carmack, author. For a free copy of the latest revision of the Act, send a SASE to: Monetary Reform Act, Box 114, Piedmont, OK 73078, or call 1-888-THE PLOT (ext. 60) to order the video The Money Masters which has the Act as an insert, or visit https://www.themoneymasters.com. Minor revision is an ongoing process in response to suggestions received.
2. The principal point of this section and of the entire Act is to replace private creation of money by debt-based, bank-book-entry creation (i.e. by bank loans), based on fractional reserves (i.e. high-powered money) which is inherently unstable and unjust, with government creation of money by credit-based Treasury deposits and U.S. Notes (i.e. for government payments or purchases) which are based on full reserves (i.e. not high-powered money),
by definition, for the benefit of all the people, not just for bankers.
Further, as reformer Boudewijn Wegerif noted, the steady raising of reserve requirements will inhibit the ability of banks to manipulate the money supply and price level in order to undermine the government's commitment to stabilize both.
3. The net National Debt (i.e. net of what the government owes itself) is c. $3.7 trillion. C. $400 billion is held by the Fed, and c. $300 billion by financial institutions; paying off these amounts would consist of little more than a Treasury Department book entry, and the balance of merely surrendering and substituting one form of government obligation for another (e.g. interest bearing U.S. bonds for non-interest bearing U.S. currency Notes.). See section 3., supra.
Alternatively, in a less comprehensive but arguably easier reform, full-reserve banks could be required to keep their reserves in either the form of cash or federal debt securities. This would be equivalent to keeping their reserves in interest-bearing Treasury Deposits. Both methods would effectively require banks to substitute existing bank liabilities for the entire marketable government debt in one form or another. Free markets to facilitate this substitution would very rapidly arise and should be allowed to so function. Similarly, Federal Reserve Notes and/or Deposits could be used instead of U.S. Notes and Treasury Deposits, PROVIDED one hundred percent (100%) reserve banking (section 4.) is enacted. The form of the new reserves required for the transition to full-reserve banking is immaterial provided they result in the substitution of government securities for existing bank liabilities, and provided fractional reserve banking is terminated as the reserve requirement is increased to one hundred percent
(100%), scheduled concurrently to avoid any inflationary/deflationary effect.
4. As the net U.S. Debt less Savings Bonds/Notes is c. $3.6 trillion, and commercial bank liabilities, less net assets total c. $3.6 trillion, retiring the National Debt with U.S. Notes or their equivalent would not change the total of the money supply and would provide sufficient funds for the transition to one hundred percent (100%) reserve banking with neither inflation nor deflation. Section 6. also provides the Secretary of the Treasury with the flexibility to purchase the c. $184 billion of Savings Bonds/Notes with U.S. Notes during the transition period as well, should this prove advisable to provide additional funds for reserves; otherwise, this relatively minor debt facility shall be retired out of future monetary growth (see section 7.).
5. The three percent (3%) figure represents the low end of the three-to-five percent (3-5%) range proposed by Prof. Friedman and Mrs. Friedman, for a Constitutional Amendment (see endnote 13. for text) limiting monetary growth, which we support. However, this draft Act takes the practically-easier legislative approach and adds the critical prohibition of fractional reserve banking as well as other related issues. With population growth and productivity increases averaging approximately one percent (1%) each per year for the last thirty years, a three percent (3%) growth figure will insure stable prices within a vary narrow range and would allow for price-level or cost-of-living adjustments (COLAs) in contracts with a predictable effect to address any slight variation in economic activity from the three percent (3%) monetary growth rate.
Further, as perfect fine-turning of monetary growth in a complex economy is not possible, to err on the side of a very slight inflation would at least relieve those burdened by debt of some of the effects of the prior inequity caused by private money creation, whereas to err on the side of deflation would exacerbate such inequity. A fixed rate of growth will provide the needed stability so long lacking in monetary policy, which instability has caused every economic depression in United States history.
Periodic, non-discretionary, fine-tuned adjustments based on widespread indexation of prices, by a Monetary Commission of some sort would be the ideal, but would lack the stability and predictability of a fixed growth rate and are subject to corruption and to manipulation indirectly (e.g. such as by alteration of index definitions, components or base years as has repeatedly occurred with the Department of Labor's Consumer Price Index [CPI]).
In 1931, Sweden established a mixed commodity krona by setting up an official C.P.I., and succeeded in keeping it stable (within 1.75%) for several years, until she had to give up the system under pressure from international bankers to stabilize foreign exchange rates. This example demonstrates both empirical proof of the validity of this ideal approach, and of its susceptibility to failure by political manipulation.
The zero (0%) monetary growth proposal, particularly if tied to freezing high-powered money, lacks the essential feature of abolishing fractional reserve banking. This is particularly important in light of all the exceptions to maintaining any reserve ratio. However, if combined with such an abolition (and allowing for COLAs to address the inevitable deflationary effects), would be acceptable and arguably easier to advance politically due to the Schelling point effect of a figure such as zero, as Prof. Friedman has pointed out.
6. Absent massive fraud or theft, full reserve banks cannot fail, rendering insurance such as F.D.I.C. and F.S.L.I.C. unnecessary. Only a minimal cost to insure against fraud or theft would be necessary. Had full reserve banking been in place before the S & L collapse, this one reform would have saved the U.S. taxpayers over $600 billion.
7. As now, no interest would be paid on currency in circulation - the government benefitting from the seigniorage. However, as Prof. Friedman and George Tolley warn, if the government pays no (0%) interest on reserves, which is the theoretical ideal (or charges banks interest on Treasury-assumed bank liabilities [e.g. on so-called Commercial Bank Conversion Bonds] - a variation of a one-time government take-over of existing reserveless [i.e. factional-reserve-based loans] bank liabilities), this would create a high incentive for private near-monies of various kinds (e.g. new forms of negotiable debt, equity or derivative instruments) to proliferate, particularly in advanced economies such as the U.S.
This would threaten many of the benefits of monetary reform including the stability of the money supply and the prohibition of private fractional reserve money creation. The interest may be viewed as a social cost for the benefits of a stable national money. The private trading (circulation) of futures based on widespread price indices as money offers only speculative, though intriguing, reform possibilities at this time. But, as Paul A. Samuelson noted, the gyrations in the futures
markets tend to belie the notion that monetary stability can be found in that direction.
8. While it would theoretically be easier simply to reform the Federal Reserve System than to abolish it, the experience of the last 300 years in Europe and the last 200 in the U.S. has proven time and again that private banking interests invariably utilize any independence afforded a central bank from government control as an opportunity to exert undue influence over it, often by acquiring outright ownership interests in it, and/or to gain control of it through placement of their employees and experts (schooled in protecting and promoting their private interests who often "retire" to very well-paid positions in private banking) in its key positions at the expense of the public good. This is one reason for the seeming anomaly that private banking interests champion the "independence" of central banks from any effective oversight by politicians generally controlled by them. It simply exposes central banks to even greater private manipulation with less interference from and explaining to have to do to "unreliable" politicians.
Independent central banks concentrate national economic control in a body too removed from accountability and therefor from responsibility to the body politic, at least in the often critical short-term.
The so-called independence or autonomy of central banks from governmental control, such as the Federal Reserve System has in the United States, to whatever degree granted, has in practice meant increased private influence and control to that same degree.
The avowed purpose of central bank independence or autonomy - to reduce political (i.e. private special interest) influence over its functions - something the present independent central banking system utterly fails to achieve but rather enhances, can be accomplished without this danger, by establishing a fixed rate of monetary growth not subject to any discretionary authority or manipulation, as is set forth in section 7.
Of course, this too could be a reform within the present Federal Reserve System, but absent direct accountability to Congress (including for annual budget appropriations - a power now uniquely delegated to the Fed which funds its operations without Congressional budget authorization or audit, from interest it receives on the U.S. bonds it purchases for the cost of the paper, keeping about 6% of the interest [or whatever amount it wishes] before paying the remainder to the U.S. Treasury) the Fed would remain the powerful, effectively independent and dangerous, entrenched banking lobby with virtually unlimited and unaudited funds, constantly working to resist, obstruct and repeal reforms, just as it did during the Great Contraction (i.e. Depression) which it caused.
Further, the current division of responsibility for monetary policy between the Fed and the Treasury has allowed both bodies to shift responsibility to the other for harmful actions. This can only be solved by ending this division.
9. Other conflicting, or partially conflicting Acts, such as the Banking Acts of 1933 and 1935; Federal Securities Act of 1933; Securities Exchange Act of 1934; Margin Requirements Act of 1934; Public Utility Holding Company Act of 1935; Bretton Woods Agreements Act of 1944; Federal Deposit Insurance Act of 1950; Bank Holding Company Act of 1956; Bank Merger Acts of 1960 and 1966; Emergency Loan Guarantee Act of 1971; Electronic Funds Transfer Act of 1978; International Banking Act of 1978; Financial Institutions Regulatory and Interest Rate Control Act of 1978; Depository Institutions Deregulation and Monetary Control Act of 1980; Bank Export Services Act of 1982; Garn-St. Germain Act of 1982; Financial Institutions Reform Recovery and Enforcement Act of 1989, and subsequent amendments, would be repealed in whole or in part where in conflict with this Act.
10. The U.S. Supreme Court, in an increasingly important decision, held that an Act of Congress is on full parity with a treaty (or any lesser agreement), and that when a federal statute which is subsequent in time is inconsistent with a treaty, the statute, to the extent of the conflict, renders the treaty null. Whitney v. Robertson, 124 U.S. 190 (1888); et alia. Cf. Reid v. Covert, 354 U.S. 1 (1957).
11. It is estimated that $200-250 billion in U.S. currency is held outside the U.S. This is high-powered money that would cause hyperinflation if repatriated in large amounts in a short period of time. Additionally, the U.S. presently has a high trade deficit ($1 billion a week with Red China alone), which has been roughly balanced by U.S. bond sales to foreigners, which total approximately $1 trillion at present. Further, currency speculators manipulate and exacerbate temporary exchange fluctuations, which can radically affect internal price stability, as has been recently demonstrated in several of the Southeast Asian nations.
Whoever originates and controls the volume of money, controls every single economic operation. Therefore, it is essential to monetary stability, and so to reform, as well as to maintaining national sovereignty, that the import and export of capital be kept in balance, so that the domestic money supply be not subject to manipulation nor to fluctuation in quantity, beyond the rule fixed in section 7., above.
As Boudewijn Wegerif has noted, 'free trade', including removal of foreign exchange controls, in practice, is about giving free access to the giant transnational corporations who have the marketing, technological and financial clout to manipulate exchange rates enabling them to take over anything of value in any country, at distress prices.
Stability of the internal quantity of money is the only basis on which to obtain a stable price level, and foreign exchange rates must not be allowed to disrupt internal price stability. This can be accomplished, there being no theoretical difficulty. For example, the government of China simply forbids banks from handling large foreign transactions other than those for the purchase of Chinese goods, and also maintains a large exchange stabilization fund to defend the yuan. Chile requires that 30% of capital inflows stay in the country a minimum of one year. As Martin Khor has noted, many developing countries have other checks and balances to regulate the flow of foreign exchange and to restrict the quantity of the local currency that can be traded in international markets.
12. i.e. the so-called Tobin tax, designed to discourage speculative trading in small differentials in interest on exchange rates while being small enough not to interfere with legitimate trade.
13. Prior inequitable and usurious profits accumulated by banks from fractional reserve banking practices are not addressed in this draft Act, which therefor leaves the banks in possession of prior profits of some $360 billion (1996 commercial bank net worth), most of it from such unjust practices. Likewise, prior distribution of profits to bank owners is not addressed. This vast wealth and the economic and political influence it represents, particularly through the control of the media it has purchased, constitutes a standing danger to the Republic and should be addressed, perhaps by some effective form of anti-trust legislation and/or Court action breaking-up the giant banks (and media) into small localized units with separate ownership, or more aggressively by a bank nationalization, break-up into smaller units, and immediate reprivatization by public stock sale pursuant to rules insuring widespread ownership.
But any nationalization Act without an immediate reprivatization clause would create a new and unnecessary danger, as the power to loan does not properly rest with the government, is most effectively handled at the local free market level, and is easily abused for political purposes as was the case with pre-war Germany's Reichbank which granted loans to whomever the government chose for political reasons, as do government banks in communist command economies. The goal is not nationalization of banks, but of money.
By contrast, and by definition, creation of a national currency/money supply can only be effectively and properly handled by a national government, not by local governments or private persons, as reason and experience abundantly prove.
It is primarily for these reasons that we disagree with that portion of the monetary reforms advanced by Messrs. Peter Cook, Theodore R. Thoren and Richard F. Warner, insofar as they advance the notion that the Treasury ought to become a lender to banks and local governments, while we are in general agreement with their reform proposals otherwise (including their rejection of a return to a gold standard). Rather, consistent with the sound reform principle of subsidiarity, the private sector alone ought to engage in the various legitimate forms of lending, as set forth in section 12. herein, with free market supply and demand setting the interest rates.
Government selection of lending proposals for "creditworthiness" or "profound societal impact" etc., or any criteria imaginable, and their evaluation, is inevitably subjective and therefor open to grave abuse by a monolithic lender. As Ms. G. M. Coogan wrote in Money Creators (p. 333-334), for the government to create money as loans is even more vicious than for private banks to create money as loans, carrying with it the power to aid (by granting loans) or destroy (by denying loans) whomever it chooses.
Decentralized, private lending agencies generally tend to loan to any creditworthy applicant, their primary motive being profit (or profit-derived power) which is maximized by making more loans; whereas governments replace this profit priority with political ends such as rewarding their supporters, the political value of which is maximized by restricting loans. So government lending tends to arbitrary discrimination for political motives, an abuse generally avoided in a truly free market lending situation.
Thus, perhaps the most dangerous error of any monetary reform proposal would be to place the lending of money in the hands of the government, which is the essence of communist economics, carrying with it the power to destroy. Indeed, Lenin recommended government origination and control of lending for the political control it affords. That money-lending ought to be carried out by private legal persons rather than the government is a major principle of sound monetary policy. The lending of money ought to be completely divorced from its origination, for as Ms. Coogan pointed out, it is fundamental that money ought not to come into existence as loans or in response to loan applications, but only as the total stock of available goods increases (or a reasonable approximation thereof, such as three percent [3%] in the U.S.). Further, there is simply no need for the government to get involved in lending, and risk the dangers mentioned, in order to reform the present system and achieve all of the ends set forth in the preamble hereof.
14. Prof. Milton Friedman on his proposed Constitutional Amendment
When the Constitution was enacted, the power given to Congress 'to coin money, regulate the value thereof, and of foreign coin' referred to a commodity money: specifying that the dollar shall mean a definite weight in grams of silver or gold. The paper money inflation during the Revolution, as well as earlier in various colonies, led the framers to deny states the power to 'coin money; emit bills of credit [i.e., paper money]; make anything but gold and silver coin a tender in payment of debts.' The Constitution is silent on Congress's power to authorize the government to issue paper money. It was widely believed that the Tenth Amendment, providing that the 'powers not delegated to the United States by the Constitution . . . are reserved to the States respectively, or to the people,' made the issuance of paper money unconstitutional.
During the Civil War, Congress authorized greenbacks and made them a legal tender for all debts public and private. After the Civil War, in the first of the famous greenback cases, the Supreme Court declared the issuance of greenbacks unconstitutional. One 'fascinating aspect of this decision is that it was delivered by Chief Justice Salmon P. Chase, who had been Secretary of the Treasury when the first greenbacks were issued. Not only did he not disqualify himself, but in his capacity as Chief Justice convicted himself of having been
responsible for an unconstitutional action in his capacity as Secretary of the Treasury.'
Subsequently an enlarged and reconstituted Court reversed the first decision by a majority of five to four, affirming that making greenbacks a legal tender was constitutional, with Chief Justice Chase as one of the dissenting justices.
It is neither feasible nor desirable to restore a gold-or-silver coin standard, but we do need a commitment to sound money. The best arrangement currently would be to require the monetary authorities to keep the percentage rate of growth of the monetary base within a fixed range. This is a particularly difficult amendment to draft because it is so closely linked to the particular institutional structure. One version would be:
Congress shall have the power to authorize non-interest-bearing obligations of the government in the form of currency or book entries, provided that the total dollar amount outstanding increases by no more than 5 percent per year and no less than 3 percent.
It might be desirable to include a provision that two-thirds of each House of Congress, or some similar qualified majority, can waive the requirement in case of a declaration of war, the suspension to terminate annually unless renewed.
A Constitutional Amendment would be the most effective way to establish confidence in the stability of the rule. However, it is clearly not the only way to impose the rule. Congress could equally well legislate it."
Quoted from: A Program for Monetary Stability, by Dr. Milton Friedman, Fordham University Press (N.Y. 1960, 1992), pgs. X, 66-76, 100-101; and Free to Choose by Dr. Milton & Rose Friedman, Harcourt Brace & Co. (San 80, 1990), pgs. 307-
308.
EARLIER REFORM BILLS PROPOSED IN CONGRESS
Mr. Voorhis of California introduced the following bill; which was referred to the Committee on Banking and Currency, in the:
76th Congress
1st Session
H.R. 4931
IN THE HOUSE OF REPRESENTATIVES
A BILL
To restore to Congress the sole power to issue money and to regulate its value as provided in article I, section 8, of the Constitution of the United States; to improve the banking system; to aid in restoring and maintaining full employment and production' to reduce the public debt; and to provide a stable currency.
Whereas article I, section 8, of the Constitution of the United States provides that "The Congress shall have power to coin Money, regulate the Value thereof, and of foreign Coin"' and
Whereas there has developed in the method of conducting commercial banks in the United States the custom of lending the private credit of such institutions under the guise of lending money; and
Whereas such credit, transferable from one depositor to another by the check or order of the depositor or any other person in his behalf is now generally accepted in payment of private debts, thus in effect providing an uncontrolled and privately created circulating medium of exchange which performs the func-
tions of money in disregard of article I, section 8, of the Constitution of the United States; and
Whereas the uncontrolled alternate expansion and contraction of this synthetic medium of exchange induces recurrent periods of uncontrolled and disorganizing inflation followed by disastrous periods of equally uncontrolled deflation, bankruptcy, and distress; and
Whereas it has become necessary to the safety and welfare of the Nation that inflation and deflation alike be prevented and that a stable buying power be maintained in the dollar; and
Whereas these aims and purposes can only be accomplished if Congress acts to end the existing dependence of the United States upon a privately created and destroyed bank credit medium of exchange, and to substitute therefor a dependable medium of exchange, not based on debt, but put into circulation without increase in the public debt in accordance with the provisions of the Constitution: Now, therefore,
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
PURCHASE OF FEDERAL RESERVE BANKS BY GOVERNMENT.
SECTION 1. (a) The Secretary of the Treasury of the United States is hereby authorized and directed forthwith to purchase the capital stock of the twelve Federal Reserve banks and branches, and agencies thereof, and to pay to the owners thereof the book value of such stock at the date of purchase.
(b) All member banks of the Federal Reserve System are hereby required and directed to deliver forthwith to the Treasurer of the United States, by the execution and delivery of such documents as may be prescribed by the Secretary of the Treasury, all the stock of said Federal Reserve banks owned or controlled by them, together with all claims of any kind or nature in and to the capital assets of the said Federal Reserve banks, it being the intention of this Act to vest in the Government of the United States the absolute complete, and unconditional ownership of the said Federal Reserve banks.
(c) After the date of passage of this Act all earnings of said Federal Reserve banks shall be paid into the general fund of the Treasury on the last day of each fiscal year.
BOARD OF GOVERNORS AND
MONETARY AGENT OF CONGRESS.
SEC. 2. (a) The Board of Governors of the Federal Reserve System (hereinafter referred to as the Board) is hereby constituted the monetary agent of the Congress of the United States to regulate the value of the money of the United States in accordance with article I, section 8, of the Constitution of the United States, and for this purpose the Board shall have the sole power to issue all lawful money of the United States, to regulate the exchange value of all foreign currency and coin, and to control the volume of demand bank deposits, and shall be fiscal agent of the Government of the United States.
(b) The Board shall be composed of seven members, appointed by the President with the advice and consent of the Senate. The Secretary of the Treasury shall be ex officio, one of the seven members of the Board. Members of the Board shall be selected on the basis of their qualification by experience, knowledge, and ability to formulate monetary policy.
(c) Members of the Board shall receive the same salaries as members of the Cabinet.
(d) Any member who has served fourteen years or more shall, upon his retirement, receive annually for the remainder of his life a retirement salary or pension of two-thirds of the annual salary received during his active term of office.
(e) The terms of office of members of the present Federal Reserve Board shall expire thirty days after the date of passage of this Act, whereupon a new board shall be appointed in the manner prescribed in subsection (b) of this section, except that members, with the exception of the ex officio member, shall be appointed for terms of two, three, four, five, six, and seven years, respectively. Upon the expiration of the terms of office of each member so appointed, his successor shall be appointed for a term of seven years. Members of the present Board and of all future Boards shall be eligible for reappointment.
(f) Any member of the Board ex officio member may be removed from office by the passage of an appropriate resolution by the Senate and House of Representatives.
(g) Upon the death, resignation, or removal from office of any member of the Board a successor shall be appointed to fill the unexpired term of such member in the manner set forth in subsection (b) of this section.
(h) Upon the passage of this Act the terms of office of the Federal Reserve Advisory Council and of the Open Market Committee shall terminate and thereafter the functions of such
Open Market Committee shall be exercised by the Board.
Within one year after the passage of this Act, the terms of office of all officers and directors of the twelve Federal Reserve banks and their branches and agencies shall expire, and thereafter the operation of each bank shall be conducted by a manager selected and appointed by the Board and such assistant managers as they may deem necessary, under such rules and regulations as they may from time to time prescribe: Provided, however, that salaries of managers are hereby limited to $12,000 per annum, those of assistant managers to $9,000 per annum, and those of department heads to $6,000 per annum.
The Board shall purchase at a price to be from time to time fixed by it any or all gold which may be offered in the domestic market. The Board, with the approval of the President, may purchase or sell gold, silver, foreign exchange, and instrumentalities and/or obligations of foreign governments, at such times, at such prices, and in such quantities as in its discretion may appear to be necessary to promote stability in the buying power of the dollar, to protect foreign commerce against the adverse effect of depreciated foreign currency and/or to carry out the purposes of this Act. The Board may sell gold or silver at the current selling price fixed by it in such amounts a may be necessary to permit the settlement of payments arising out of the legitimate and normal business and financial requirements of international trade and/or reasonable traveling and other personal requirements in connection therewith. The decisions of the Board as to all questions relating to the purchase and sale of foreign exchange and the exchange of currency for gold or silver in such international transactions shall be absolute and final. The Board shall prescribe, with the approval of the President, such rules and regulations governing banking transactions involving foreign exchange or deposits owned by citizens or institutions foreign countries as may be necessary to carry out the purposes of this Act. All laws or parts of laws in conflict with this subsection are hereby repealed.
(k) The Board shall have and exercise all powers relating to the purchase of silver conferred by law upon the Secretary of the Treasury of the United States.
(l) Sections 43 and 44 of title 3 of the Agricultural Adjustment Act approved May 12, 1933 (48 Stat. 51), as amended, are hereby repealed.
JURISDICTION AND AUTHORITY OF THE BOARD; DEMAND DEPOSITS TO BE HELD IN TRUST.
SEC. 3. (a) All individuals, firms, associations, or corporations in the United States, or Territories and possessions thereof, receiving deposits of money or credit or any other substitute medium of exchange withdrawable or payable upon the check or equivalent order of the depositor upon demand or within sixty days and transferring such deposits or title thereto, to other banks or individuals, firms, associations, or corporations, in the United States, its Territories, or possessions, or foreign countries, shall be deemed to be commercial banks engaged in interstate commerce, and as such are subject to Federal jurisdiction and to the authority of the Board of Governors of the Federal Reserve System, according to the terms of this Act.
(b) Within one year after the passage of this Act, all commercial banks shall be required to hold all deposits which are subject to check and/or payable on demand or within sixty days (hereinafter referred to as demand deposits) in trust for their demand depositors, in lawful money of the United States on hand or on deposit in a Federal Reserve bank; Provided, however, that commercial banks which have a portion of the funds of their demand depositors invested in interest-bearing bonds and/or notes issued or fully guaranteed by the United States Government three months after the date of passage of this Act may hold such interest-bearing bonds and/or notes in trust for their demand depositors in lieu of lawful money or deposits in a Federal Reserve bank and such commercial banks may continue to receive the interest thereon and retain same for their own benefit: Provided further, that any such direct or fully guaranteed obligations of the United States shall be discountable at any Federal Reserve bank, at the market price of such obligations on the day of discount as determined by the Securities and Exchange Commission, but in no case at less than the par value thereof: Provided further, that no commercial bank shall sell any bonds or notes issued or fully guaranteed by the United States held in trust for its demand depositors without permission of the Board: Provided further, that no commercial bank shall at any time use any part of the lawful money or deposits in a Federal Reserve bank held in trust for its demand depositors for the purchase of any bonds or notes of the United States, except that such lawful money or deposits in a Federal Reserve bank as may be received by any commercial bank in redemption of bonds or notes of the United States held in trust for its demand depositors may be reinvested in other bonds or notes of the United States.
(c) Within one year from the date of passage of this Act, any solvent commercial bank as defined by this Act, which has an insufficient total of cash and balances with the Federal Reserve banks and bonds or notes issued or fully guaranteed by the United States, to comply with section 3 (b) of this Act, may sell to the Reconstruction Finance Corporation and the Reconstruction Finance Corporation may purchase so much of its other assets as may be necessary to bring its total holdings of cash and bonds or notes as herein specified to the total of the demand deposits of its customers as of the effective date of this Act, or such bank may at its discretion increase its capital stock by the sale of additional common or preferred stock to the Reconstruction Finance Corporation and the Reconstruction Finance Corporation is hereby authorized to purchase the stock so offered.
(d) All demand deposits shall be held in trust for the benefit of the depositors and shall not be merged with or become a part of the assets of the bank nor shall they be liable for its obligations.
(e) The Board shall set maximum limits to the service charges which may be made by commercial banks of the several districts against their demand depositors.
(f) The Board shall establish and enforce uniform rules and regulations for the withdrawals by depositors of funds from the savings-and-time-deposit departments of all banks subject to its jurisdiction.
MISCELLANEOUS PROVISIONS.
SEC.4. The Treasurer of the United States is authorized to accept for custody and safekeeping for the Federal Reserve banks deposits of gold or silver bullion or lawful money of the United States or gold or silver coin or bullion of foreign countries deposited with the said Federal Reserve banks. The Treasurer, under the direction of the Board, shall keep books of account in which shall be entered all deposits of the said Federal Reserve banks and all withdrawals. Said books of the Treasurer shall show at all times the lawful money held for the account of the said Federal Reserve banks, and the Treasurer shall, at the request of the duly authorized officers of the Federal Reserve banks, and under regulations prescribed by the Board, deliver said lawful money to whomsoever the said Federal Reserve banks may direct, or transfer the title to said money by proper entry upon the Treasurer's books of account.
SEC. 5. (a) The Chairman of the Board shall be ex officio a member of the Board of Directors of the Federal Deposit Insurance Corporation.
(b) Beginning one year from the date of passage of this Act, the Federal Deposit Insurance Corporation shall insure the full payment of all deposits in all banks subject to the jurisdiction of the Board under the terms of this Act (and all such banks shall be deemed to be "insured banks" as defined in section 101 of the Banking Act of 1935), but after this subsection becomes effective no assessment shall be made upon any bank as to its demand deposits.
(c) The Federal Deposit Insurance Corporation is hereby authorized and directed to act as an agent of the Board and, under such rules and procedure as the Board may prescribe, to examine all insured banks without charge. Banks thus examined shall not be subject to examination by any other Federal agency.
(d) The powers in respect to supervision and liquidation of banks now exercised by the Comptroller of the Currency and the Board are hereby vested in the Federal Deposit Insurance Corporation, and such Federal Deposit Insurance Corporation shall add to its existing staff such members of the staff of the Comptroller of the Currency and the Federal Reserve Board as may be necessary to carry out the purposes of this section.
MANDATE TO THE BOARD
SEC. 6 (a) The Board is hereby authorized and directed to use any or all of its powers to bring about and maintain full employment and a stable buying power in the dollar.
(b) The Board is authorized and directed to purchase with lawful money or deposits in the Federal Reserve banks direct or fully guaranteed obligations of the United States, including, but not limited to, obligations issued for the purpose of financing employment of the unemployed, the rehabilitation of agriculture, the provision of low-interest credit to farmers, home builders, and small industry or other recovery purposes. The Board shall carry forward this policy until such time as a condition of practically full employment has been attained or until the buying power of the dollar has been restored to the average level held by it in the year 1926.
(c) Whenever the Board shall find that there is practically full employment or that the buying power of the dollar has been restored to the average level held by it in the year 1926, then the Board shall so announce and shall thereafter use any or all of its powers to maintain the buying power of the dollar as of the date of such announcement and to promote the balanced expansion of production, distribution and consumption, and full employment therein.
(d) If the Board shall find that the exercise of all its powers is ineffectual in maintaining practically full employment at the stabilization level of the buying power of the dollar provided for in subsection (c) of this section, then the Board shall promptly advise the Congress and the President with recommendations for appropriate legislation and/or executive action.
(e) The Board is hereby directed to develop a dependable index which shall adequately represent the average buying power of the dollar.
(f) The Board shall supply itself with the publish such statistical and other information as will at all times keep it fully informed in respect to economic conditions in the United States and impending changes therein, Such information shall include, among other things, monthly statistics of (1) the volume of means of payment and its velocity of circulation; (2) production, wholesale prices, sales, orders, and inventories of consumer perishable goods, consumer durable goods, capital goods, agricultural raw materials, industrial raw materials; (3) the volume of savings and investment; (4) the volume of long-term and short-term debt by consumers, business, industry, and agriculture; (5) wages, employment, and unemployment; (6) national income; and (7) such data regarding foreign trade and international capital movements as affect the national economy.
METHODS OF EXPANSION AND CONTROL UNDER CONDITIONS OF STABILITY AND FULL EMPLOYMENT.
SEC. 7 (a) It is hereby declared to be the policy of Congress to provide, in an orderly manner and without increase in the public debt, such expansion in the actively circulating volume of lawful money and demand bank deposits subject to check as may be necessary to compensate for the annual increase in population of the Nation and in the productive capacity of its industry, agriculture, and commerce. In order to carry out this policy the Board shall from time to time in return for obligations of the United States, establish deposits in the Federal Reserve banks in favor of the Secretary of the Treasury of the United States in amounts sufficient to maintain a stable buying power in the dollar under condition of expanding production, distribution, and consumption; and the Secretary of the Treasury shall forthwith apportion such deposits to be accounts of appropriate Federal agencies for prompt disbursement by such agencies in accordance with congressional enactment for any or all of the following purposes: (1) For the payment of pensions or social dividends to such citizens of the United States as shall have been made eligible to receive any such payments by Act of Congress; (2) for the making of loans at low interest rates to farmers to assist in the rehabilitation of agriculture and the reduction of farm tenancy; (3) for the expansion of public works, including conservation and development of our natural resources, slum-clearance, low-cost-housing construction, and similar activities; (4) for retirement of the public debt of the United States; (5) for payment of the ordinary expenses of the Federal Government.
(b) If at any time after the announcement provided for in subsection 6 (c) above the Board shall find that the volume of lawful money and demand bank deposits in active circulation is not so balanced by the volume of goods and services flowing through the markets of the Nation as to prevent a sharp and inflationary rise in prices, then the Board shall cause the Federal Reserve banks to sell to the public obligations issued or fully guaranteed by the United States Government in amounts sufficient to maintain a stable buying power in the dollar.
SEC. 8. All laws or parts of laws in conflict with this Act are hereby repealed.
SEC. 9. If any provision of this Act, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Act or the application of such provisions to persons or circumstances other than those as to which it is held invalid shall not be affected thereby.
SEC. 10. This Act shall take effect immediately upon its passage.
SEC. 11. This Act shall be known as the Binderup-Voorhis Monetary Control Act of 1939.
[Comment: This bill, which did not pass, though praiseworthy, takes the ideal, or "Monetary Commission", approach which includes wide, discretionary powers of administration which we find undesirable for the reasons discussed in endnote 5. to our Monetary Reform Act; further, it involves the government in lending, which we object to in endnote 12. But overall, it is a fine draft of reform legislation.]
The Gonzales Bills
Congressman Henry Gonzales introduced in Congress the following proposed legislation which was referred to the House of Representative's Committee on Banking and Currency. The actual bill calling for the repeal of the Federal Reserve Act is as follows:
A Bill
To vest in the Government of the United States the full, absolute, complete, and unconditional ownership of the twelve Federal Reserve banks.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that
(a) the Secretary of the Treasury of the United States is hereby authorized and directed forthwith to purchase the capital stock of the twelve Federal Reserve banks and branches, and agencies thereof, and to pay the owners thereof the par value of such stock at the date of purchase.
(b) All member banks of the Federal Reserve System are hereby required and directed to deliver forthwith to the Treasurer of the United States, by the execution and delivery of said documents as may be prescribed by the Secretary of the Treasury, all the stock of said Federal Reserve banks owned or controlled by them, together with all claims of any kind or nature in and to the capital assets of the said Federal Reserve banks, it being the intention of this Act to vest in the Government of the United States of this Act to vest in the Government of the United States the absolute, complete, and unconditional ownership of the said Federal Reserve banks.
(c) There is hereby authorized to be appropriated, out of any funds not otherwise appropriated, such sums as may be necessary to carry out the purposes of this Act.
* * *
[Comment: This bill, which did not pass, though praiseworthy, does not abolish the debt system of public finance, nor fractional reserve banking.]
Rep. Henry Gonzales introduced the following bill: which was referred to the Committee on Banking, Finance and Urban Affairs.
97th Congress 1st Session
H.R. 4358
IN THE HOUSE OF REPRESENTATIVES
July 31, 1981
A BILL
To repeal the Federal Reserve Act and transfer the functions formerly carried out under the Act to the Department of the Treasury.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. This Act shall be known as the "Monetary Policy Reorganization Act."
SEC. 2. REPEAL OF FEDERAL RESERVE ACT. The Federal Reserve Act is hereby repealed.
SEC. 3. TRANSFER OF FUNCTIONS. Such functions as were carried out under the Federal Reserve Act on the date of the enactment of this Act are hereby transferred to the Department of the Treasury.
SEC. 4. DEPUTY SECRETARY FOR MONETARY AFFAIRS. There shall be in the Department of the Treasury a Deputy Secretary for Monetary Affairs, who shall be responsible for administering the functions transferred to the Department under section 3 of this Act. The Deputy Secretary for Monetary Affairs shall be appointed by the President, by and with the advice and consent of the Senate.
SEC. 5. DISPOSAL OF ASSETS. Within one hundred and eighty days after the date of the enactment of this Act, the Deputy Secretary for Monetary Affairs shall dispose of all the assets formerly under the custody and control of the Federal Reserve System, except such assets as are necessary to continue essential functions relating to check clearing or other services provided directly to financial institutions in the United States, or such other assets as the Deputy Secretary for Monetary Affairs shall by rule determine to be essential to the carrying out of effective monetary policy for the united States. The proceeds from the sale of such assets shall be paid into the Treasury as miscellaneous receipts.
SEC. 6. ADVISORY COUNCIL. There is hereby created a Monetary Policy Advisory Council, which shall consist of six members appointed by the President, by and with the advice and consent of the Senate. The Council shall provide advice to the Deputy Secretary for Monetary Affairs relating to all aspects of monetary policy, including those functions carried out by the Federal Open Market Committee prior to the date of the enactment of this Act.
* * *
[Comment: This bill, which did not pass, though praiseworthy, does not abolish the debt system of public finance, nor fractional reserve banking.]
Rep. Paul Laxalt introduced the following bill: which was read twice and referred to Committee.
97th Congress 2nd Session
IN THE SENATE OF THE UNITED STATES
A BILL
To provide for the increase in the circulation of U.S. Notes from $300,000,000 to $100,000,000,000.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Sec. 402 of Title 31 of the United States Code is hereby amended to read as follows (new material underscored; old material lined through):
Sec. 402. Limitation of amount of United States notes in circulation.
The amount of United States notes outstanding and to be used as a part of the circulating medium shall not exceed the sum of $100,000,000,000, $300,000,000, which sum shall appear in each monthly statement of the public debt, and no part thereof shall be held or used as a reserve.
* * *
[Comment: This bill, which did not pass, though praiseworthy, does not abolish the Fed, the debt system of public finance, nor fractional reserve banking, and, as is, does not mandate any reform (it merely permits more U.S. notes) though it is a step in the right direction. But without mandating an increase in the reserve ratio to compensate for this proposed increase in high-powered money, it would cause further inflation.]
Rep. Ron Paul introduced the following bill which was referred to the Committee on Banking, Finance and Urban Affairs.
98th Congress 1st Session
H.R. 875
IN THE HOUSE OF REPRESENTATIVES
January 15, 1983
A BILL
To repeal the Federal Reserve Act.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled;
That, one year after the date of the enactment of this Act, the Federal Reserve Act (12 U.S.C. 221 et seq.) is hereby repealed. The Board of Governors of the Federal Reserve System shall take such actions as are necessary to dispose of all assets of the Federal Reserve System, and to achieve an orderly termination of the affairs of the Federal Reserve System, prior to the effective date for the repeal of the Federal Reserve Act.
* * *
[Comment: This bill, which did not pass, though praiseworthy, does not abolish the debt system of public finance, nor fractional reserve banking.]
Mr. Phil Crane introduced the following bill; which was referred to the Committee on Banking, Finance and Urban Affairs.
100th Congress 1st Session
A BILL
To authorize and direct the General Accounting Office to audit the Federal Reserve Board, the Federal Advisory Council, the Federal Open Market Committee, and Federal Reserve banks and their branches.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that
(a) the Comptroller General of the United States shall make, under such rules and regulations as he shall prescribe, an audit for each fiscal year of the Federal Reserve Board, the Federal Advisory Council, the Federal Open Market Committee and all Federal Reserve banks and their branches, including transactions of the system open market account conducted through recognized dealers.
(b) In making the audit required by subsection (a), representatives of the General Accounting Office shall have access to books, accounts, records, files, and all other papers, things, and property belonging to or in use by the entities being audited, including reports of examinations of member banks, from whatever source. They shall be afforded full facilities for verifying transactions with balances and securities held by depositories, fiscal agents, and custodians of such entities.
(c) The Comptroller General shall, within six months after the end of each fiscal year, or as soon thereafter as may be practicable, make a report to the Congress on the results of the audit required by subsection (a), and he shall make any special or preliminary reports he deems desirable for the information of the Congress. A copy of each report made under this subsection shall be sent to the President of the United States, the Federal Reserve Board, and the Federal Reserve banks. In addition to other matters, the report shall include such comments and recommendations as the Comptroller General may deem advisable, including recommendations for attaining a more economical and efficient administration of the entities audited, and the report shall specifically show any program, financial transaction, or undertaking observed in the course of the audit which in the opinion of the Comptroller General has been carried on without authority of law.
(d) The Comptroller General is authorized to employ such personnel and to obtain such temporary and intermittent services as may be necessary to carry out the audits required by subsection (a), without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and such individuals may be paid without regard to the provisions of chapter 51 and sub-chapter III of chapter 53 of such title relating to classification and General Schedule pay rates.
* * *
[Comment: This bill, which did not pass, though praiseworthy, does not abolish the debt system of public finance, nor fractional reserve banking. This sort of bill was necessary as there has never been an independent audit of either the twelve Fed banks, nor of the Board, that has been filed with Congress for inspection. The GAO does not have jurisdiction over the Fed.]
AMENDED OPINION
LEWIS v. UNITED STATES
John L. LEWIS, Plaintiff/Appellant,
v.
UNITED STATES of America,
Defendant/Appellee.
No. 80-5905.
United States Court of Appeals, Ninth Circuit.
Submitted March 2, 1982; Decided April 19, 1982; As Amended June 24, 1982
"Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, Jr., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.
Affirmed.
...Examining the organization and function of the Federal Reserve Banks and applying the relevant factors, we conclude that the Reserve
Banks ... are independent, privately owned and locally controlled corporations.
Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stockholding commercial banks elect two-thirds of each Bank's nine member board of directors. The remaining three directors are appointed by the Federal Reserve Board. The Federal Reserve Board regulates the Reserve Banks, but direct supervision and control of each Bank is exercised by its board of directors. 12 U.S.C. § 301. The directors enact by-laws regulating the manner of conducting general Bank business, 12 U.S.C. § 341, and appoint officers to implement and supervise daily Bank activities. These activities include collecting and clearing checks, making advances to private and commercial entities, holding reserves for members banks, discounting the notes of members banks, and buying and selling securities on the open market. See 12 U.S.C. §§ 341-361.
...The Banks are listed as neither "wholly owned" government corporations under 31 U.S.C. § 846 nor as "mixed ownership" corporations under 31 U.S.C. § 856, ...
Additionally, Reserve Banks, as privately owned entities, receive no appropriated funds..."
For interesting cases involving the Federal Reserve System:
https://home.hiwaay.net/~becraft/
[paticularly Memorandum of Law: The Money Issue pages 34 and 35]
This text was originally prepared as a video script, without footnotes.
Endnotes are being compiled, and may be requested by writing:
The Money Masters Video
P.O. Box 4005
Joplin, MO 64803-4005
Revised Video Script
The Money Masters
1. The Problem
The Money Masters
2. Roman Empire
The Money Masters
4. The Goldsmiths of Medieval England
The Money Masters
5. Tally Sticks
The Money Masters
6. The Bank of Englan
The Money Masters
7. The Rise of the Rothschilds
The Money Masters
8. The American Revolution
The Money Masters
9. The Bank of
The Money Masters
10. The Constitutional Convention
The Money Masters
11.
First Bank of the
The Money Masters
Napoleon's Rise to Power
The Money Masters
13. Death of the First Bank/The War of 1812
The Money Masters
14.
The Money Masters
16. Andrew Jackson
The Money Masters
17. Abe Lincoln and the Civil War
The Money Masters
18. Return of the Gold Standard
The Money Masters
19. Free Silver
The Money Masters
20. J.P. Morgan & the Crash of 1907/Rockefeller
The Money Masters
21.
The Money Masters
22. Fed Act of 1913
The Money Masters
23. Morgan/World War I
The Money Masters
24. Roaring 20s/Great Depression
The Money Masters
25. FDR/World War II/
The Money Masters
26. World Central Bank
The Money Masters
27. Conclusions
The Money Masters
28. Postscript - Peeling the Onion
The Money Masters
28. Appendix a- Epilogue
The Money Masters
29. Appendix b. Towards Ideal Monetary Reform (Principles)
The Money Masters
29. Appendix c. - Monetary Reform Act
The Money Masters
29. Appendix d. - Earlier Reform Bills Proposed in Congress
The Money Masters
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