WEALTH AND MONEY PART V: THE FEDERAL RESERVE BANK
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.” – – Abraham Lincoln
“We have what is known as the Federal Reserve Bank System. That system is not owned by the Government. Many people think that it is because it says “Federal Reserve.” It belongs to private banks, private corporations. So we have farmed out to the Federal Reserve Banking System – that which is owned exclusively, wholly, one hundred percent to the private banks – we have farmed out to them the privilege of issuing the Government’s money!” – – U.S. Congressman Wright Patman (1893-1976) – – Chairman of the House Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the nation’s debt. The depredations and iniquities of the Fed have cost enough money to pay the national debt several times over. ” – – U.S. Congressman Louis Thomas McFadden (1876-1836) – – chairman of the House Committee on Banking and Currency from 1920 to 1931.
The reader will please forgive the extensive use of quotations in this article. Virtually unknown, they are of historic consequence. Most are from the congressional record. Understanding their implications is critical to ending the debt enabling austerity regime now being used to exploit and impoverish the people of America and most other nations around the globe.
The following is testimony given by Marriner Eccles, Chairman of the Federal Reserve, to U.S. Congressman Wright Patman, Chairman of the House Committee on Banking and Currency, March 3-5, 1947. It concerns the Federal Reserve Act of 1913, which created the U.S. Federal Reserve Bank ( the Fed), and the power of the Fed to buy U.S. Government bonds free of interest directly from the U.S. Treasury:
CONGRESSMAN PATMAN: “The original act as passed in 1913, up until about 1935, gave the Federal Reserve banks that power is that right? . . . Yes; now, since 1935, in order for the Federal Reserve banks to buy Government bonds, they had to go through a middleman, is that correct?”
CHAIRMAN ECCLES: “That is correct.”
Mr. PATMAN: “In other words, Mr. Eccles, that is an argument in favor of the Government selling bonds to the commercial banks and permitting them to pay for them by a bookkeeping transaction and receive interest on them in order to pay the cost of carrying their accounts with individuals and corporations; is that correct?”
Mr. ECCLES: “That is right.”
Mr. PATMAN: “In other words, it is a subsidy, is it not? In the beginning, may I make it plain that I am not opposed to interest being paid by individuals or corporations for the use of other people’s money that they have hired [borrowed]. Neither am I opposed to the payment of interest by States, counties, and political subdivisions for money that they hire [borrow]. I am opposed to the United States Government, which possesses the sovereign and exclusive privilege of creating money, paying private bankers for the use of its own money. These private bankers do not hire [lend] their own money to the Government; they hire [lend] only the Government’s money to the Government, and collect an interest charge annually. . . .” (bold added)
Later in the hearing:
Mr. PATMAN: “What better evidence do you want than that, gentlemen? There is no dispute about what I say, and I insist it is absolutely wrong for this committee to permit this condition to continue and saddle the taxpayers of this Nation with a burden of debt that they will not be able to liquidate in a hundred years or two hundred years. Do you know that we are carrying a million dollars’ worth of bonds that were issued during the War Between the States and we have paid 4 billion in interest for every $1 that was borrowed? We are still paying on them and still owe them. Do you know that on the Panama Canal convertible 3’s, we have already paid more than $50,000,000 in interest and we will soon have paid $75,000,000 in interest and still owe the $50,000,000 principal on those bonds? If you judge the future by the past, the people will be compelled to pay a dollar, $2, and $5 in interest for every $1 they borrow. Does any man, then, say that we shouldn’t seriously consider any plan that will enable the taxpayers of this Nation to make that payment on the principal of the debt and not on the interest? Two and a half million each year, and in 40 years liquidating the entire debt, and removing that inflationary condition that we will have by reason of the expenditures during this war.”
Mr. ECCLES: “The framers of the United States Constitution, in article I, section 8, very wisely said: “Congress shall have the power to coin money and regulate the value thereof.” This provision of the Constitution is mandatory. All Members of Congress are sworn to uphold the Constitution. Why has this provision never been carried out? The answer is simple. In the early days of our national existence the people were deceived into believing that the subject of money was so mysterious and intricate that only a few of the financiers understood the subject and therefore the great privilege of issuing and distributing money should be farmed out to them. This was done, and it has never been changed, except to give them more power and authority.” (bold added)
It is impossible to overstate the importance of the above discussion between Eccles and Patman. The private banking industry, including the Federal Reserve Bank, is bleeding the life out of all but the richest Americans. It is a parasitic system whose only product is illegitimate debt. Methodically, deliberately, it transfers the wealth of the nation to the oligarchic few. It is debt slavery.
We are watching as our communities, our schools, our public services, and our public properties are being gutted or sold for pennies to the richest bidder – – – all in the name of debt reduction. But the sleight of hand black magic of compound interest mathematically insures the debt will never be repaid. The wisest, most insidious parasite doesn’t kill the host – it bleeds it slowly and endlessly.
Part VI will discuss: Banking as a public utility