For over a century, the privately owned and operated Federal Reserve Banking system has controlled this nation's money supply and credit. This institution and its economic policies are an enigma to most government officials and American citizens. To understand the Federal Reserve Bank, we have to first look at how it operates. We can then understand why our founding fathers were opposed to such a system for the United States of America.
The Federal Reserve is what is known as a central bank. This bank is not regulated by the United States government. It creates the nation's money supply, loans it back to the government at interest, and regulates interest rates on the money it loaned out.
However, the Federal Reserve, also commonly called "the Fed," does not loan out money held in its vaults. Instead, it creates new money for circulation by adding credits to an account. Thus, they are creating new money that never existed before.
How much money can be created out of nothing? The Fed is only required to hold ten percent in reserves, and can loan out ninety percent. One of the Federal Reserve's publications states, "Of course, they (the banks) do not really pay out loans from the money received from deposits. What they do when they make loans is to accept promissory notes (money) for credits to the borrowers account."
Actual currency is relative to the amount of new loans in demand. In short our system is based on debt. New money cannot be created unless banks issue new loans.
The Federal Reserve is a private bank. It loans America it's currency at interest like any other bank, and process works like this. The federal government needs to make more money. It has the Federal Reserve print reserve notes (money) worth a set value. The federal government then prints treasury bonds, which is basically a promissory note to pay back the loan of the currency at interest. In simple terms our government is in debt to the Federal Reserve as soon as the money is created.
If the government is in debt to the Fed, who makes the money, and the only way to get out debt is make more money, and the people who make the money are charging interest; how would the debt ever be paid off?
It doesn't.
As stated by the great scientist and creator of the light bulb, Thomas Edison wrote, "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. The difference between the bond and the bill is that the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way. 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 usurers and the other helps the people."
Our founding fathers were very aware of this problem and fought it from the time of the colonies. As Benjamin Franklin states in his autobiography explaining the Currency Act by the Bank of England in 1764, "The colonies would gladly borne little tax on tea and other matters had not been that England took away from the colonies their money, which created unemployment and dissatisfaction... The inability of the colonists to get power to issue their own money out of the hands of King George III and the international bankers was the PRIME reason for Revolutionary War."
Many other founding fathers agreed that our country should issue and regulate its own money. At the Constitutional Convention in 1787, Thomas Jefferson stated, "If the American people were ever allow private banks to control the issue on their currency first by inflation, then by deflation, the banks and their corporations which grow up around them, will deprive the people of all property until their children wake slaves on the continent their fathers conquered... I sincerely believe that banking institutions are more dangerous than standing armies. The issuing power should be taken from the banks and restored to the people to whom it properly belongs."
Also, James Madison said, "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 it's issuance."
Throughout American history; there has been a battle to keep banking interests from controlling this nation's money supply. A few central banks have come and gone during our Nation's history.
Andrew Jackson recognized the connection between the international banking interests and central banks. In his inaugural address he states, "It is not our own citizens to receive the bounty of our government, over 8 million in stock of this bank is held by foreigners...controlling our currency, raising our dependency...and holding thousands of our citizens in dependence would be more formidable than a military power of an enemy."
Andrew Jackson fought throughout his presidency to remove the central bank that preceded the Federal Reserve. By the end of his term, he had accomplished the total removal of central banks in America. Of course the battle waged on through the decades.
Our country remained mostly free of the banking interests until 1913, when the Federal Reserve act was passed in to law. In actuality, the history of the Federal Reserve goes back before 1913, to the economic panic of 1907. The panic of 1907 was the first major economic crisis; stocks dropped and banks collapsed in mass. The knowledge of "special interests" manipulating the market was widespread as stated by Frederick Allen in Life magazine, "The Morgan interests took advantage, to precipitate the panic, guiding it shrewdly."
Even though, a congressional hearing in to the panic of 1907, led by Senator Aldrich was convened. Senator Aldrich conclusion was that another central bank was needed to keep panic of 1907 from happening again, "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 this country". After this hearing a secret meeting between banking interest and senator Aldrich took place on a small island of coast of Georgia called Jekyll Island. That meeting was described by Frank Vanderlip in February 9, 1935 in the Saturday Evening Post, "I was secretive, indeed as further 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 gotten together and written a banking bill. That bill would have no chance of passage by Congress."
The bill that was written was called the Aldrich Plan. Many knew this was just a economic takeover of the country as quoted by Senator Charles Lindbergh, "This act establishes the most gigantic trust on earth. When the president signs this bill the invisible government by the monetary power will be legalized...The worst legislation crime of the ages is perpetuated in this banking bill...The Aldrich Plan is the Wall Street plan. It means another panic, if necessary, to intimidate the people".
Once Woodrow Wilson became president, the Aldrich Plan was rewritten and given another name; The Glass-Owen bill. This new bill remained almost identical to its previous version. Congress appointed an Ohio lawyer to investigate the bill. He testified in front of the committee saying, "The bill grants just what Wall Street and the big banks for twenty-five years been striving for, private instead of public control of currency. The Glass-Owen bill does this as completely as the Aldrich bill. Both measures rob the government and the people".
Even with major congressional opposition, the Federal Reserve Act was passed on Christmas Eve when majority of congress was at home for the holidays. President Woodrow Wilson quickly signed it into law.
With the passing of this law, many people were outraged from politicians to scientists. The Senate Chairman on Banking and Currency stated, "A super-state controlled by international bankers and industrialists is being set up here, acting together to enslave the world for their own interests...The Fed has usurped the government".
After Woodrow Wilson left office, later despaired by his role in passing the Federal Reserve Act, writes, "Our great industrial nation is controlled by its system of credit. Our system is privately concentrated in the hands of a few men...By very reasoned their limitations, chill and cheek and destroy genuine economic freedom. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion. No longer a government of conviction and vote of the majority, but a government by the opinions and duress of small group of dominate men."
On March 4, 1933, during Franklin D. Roosevelt's inaugural address he said, "Practices of the scrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men." Shortly, after his election, President Roosevelt signed the Gold Seizure Act which by law forced Americans to turn over all but a small amount of gold in their possession to the Federal Reserve. All the American gold, that totaled 700 million ounces of gold (70% of world's gold) was rounded up and placed in Fort Knox.
By the 1950s the gold in Fort Knox was given regulation control to the Federal Reserve Bank. Until this time there had been an audit on the gold every year, but the last audit done was by Eisenhower in 1954. In 1982, President Ronald Reagan appointed the Gold Commission to determine how much gold was owned by the United States. The conclusion from this commission was that United States Treasury owned no gold and that it was owned by the Federal Reserve.
In 1985, President Reagan created the Grace Commission to investigate where the Income Tax money was spent by the government each year. The commission conclusion was that 100% of income taxes were absorbed by the interests on the debt owed to the Federal Reserve.
At the end of 2008, our country fell in to another depression, which is the Federal Reserve's job to prevent. Their solution was to print more money and bailout the banking corporations, thus putting America and its citizens in to greater debt during a time of depression.
Since the creation of the Federal Reserve, it has maintained total control over America's currency and economics. The national debt in time the Federal Reserve was passed in to law was $2,912,499,269. After 100 years of the Federal Reserve control, the national debt is $12,296,232,673,031. This is an astronomical 42,200% increase in the national debt, and most of the debt was incurred with no regulation from the United States government at all.
As we move toward the 2010 Congressional elections, it is important to remember that both the Democrat and Republican Parties have led us to the point we are today. Only the Libertarian Party has consistently placed candidates on the ballot that are dedicated to ending the Federal Reserve's stranglehold on the American People.
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