Information

Federal Reserve Act [December 23, 1913] - History


An Act To provide for the establishment of Federal reserve banks, to furrish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.

SEC. 2. As soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture and the Comptroller of the Currency, acting as "The Reserve Bank Organization Committee," shall designate not less than eight nor more than twelve cities to be known as Federal reserve cities, and shall divide the continental United States, excluding Alaska, into districts, each district to contain only one of such Federal reserve cities.... Provided, That the districts shall be apportioned with due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States.... Such districts shall be known as Federal reserve districts and may be designated by number....

Said organization committee . ., shall supervise the organization in each of the cities designated of a Federal reserve bank, which shall include in its title the name of the city in which it is situated, as " Federal Reserve Bank of Chicago."

Under regulations to be prescribed by the organization committee, every national banking association in the United States is hereby required, and every eligible bank in the United States and every trust company within the District of Columbia, is hereby authorized to signify in writing, within sixty days after the passage of this Act, its acceptance of the terms and provisions hereof. When the organization committee shall have designated the cities in which Federal reserve banks are to be organized, and fixed the geographical limits of the Federal reserve districts, every national banking association within that district shall be required within thirty days after notice from the organization committee, to subscribe to the capital stock of such Federal reserve bank in a sum equal to six per centum of the paid-up capital stock and surplus of such bank....

Any national bank failing to signify its acceptance of the terms of this Act within the sixty days aforesaid, shall cease to act as a reserve agent, upon thirty days' notice, to be given within the discretion of the said organization committee or of the Federal Reserve Board. Should any national banking association in the United States now organized fail within one year after the passage of this Act to become a member bank or fail to comply with any of the provisions of this Act applicable thereto, all of the rights, privileges, and franchises of such association granted to it under the national-bank Act, or under the provision of this Act, shall be thereby forfeited.... No individual, copartnership, or corporation other than a member bank of its district shall be permitted to subscribe for or to hold at any time more than $20,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be transferred on the books of the Federal reserve bank by the chairman of the board of directors of such bank....

SEC. 3. Each Federal reserve bank shall establish branch banks within the Federal reserve district in which it is located and may do so in the district of any Federal reserve bank which may have been suspended.

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SEC. 5. The capital stock of each Federal reserve bank shall be divided into shares of $IOO each....

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SEC. 7. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of six per centum on the paid-in capital stock, which dividend shall be cumulative. After the aforesaid dividend claims have been fully met, all the net earnings shall be paid to the United States as a franchise tax, except that one-half of such net earnings shall be paid into a surplus fund until it shall amount to forty per centum of the paid-in capital stock of such bank. The net earnings derived by the United States from Federal reserve banks shall, in the discretion of the Secretary, be used to supplement the gold reserve held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury....

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SEC. 9. Any bank incorporated by special law of any State, or organized under the general laws of any State or of the United States, may make application to the reserve bank organization committee, pending organization, and thereafter to the Federal Reserve Board for the right to subscribe to the stock of the Federal reserve bank organized or to be organized within the Federal reserve district where the applicant is located....

SEC. IO. A Federal Reserve Board is hereby created which shall consist of seven members, including the Secretary of the Treasury and the Comptroller of the Currency, who shall be members ex of ficio, and five members appointed by the President of the United States, by and with the advice and consent of the Senate. In selecting the five appointive members of the Federal Reserve Board, not more than one of whom shall be selected from any one Federal reserve district, the President shall have due regard to a fair representation of the different commercial, industrial and geographical divisions of the country. The five members of the Federal Reserve Board appointed by the President and confirmed as aforesaid shall devote their entire time to the business of the Federal Reserve Board....

The members of said board, the Secretary of the Treasury, the Assistant Secretaries of the Treasury, and the Comptroller of the Currency shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any member bank. Of the five members thus appointed by the President at least two shall be persons experienced in banking or finance. One shall be designated by the President to serve for two, one for four, one for six, one for eight, and one for ten years, and thereafter each member so appointed shall serve for a term of ten years unless sooner removed for cause by the President. Of the five persons thus appointed, one shall be designated by the President as governor and one as vice governor of the Federal Reserve Board. The governor of the Federal Reserve Board, subject to its supervision, shall be the active executive officer....

SEC. II. The Federal Reserve Board shall be authorized and empowered:

(a) To examine at its discretion the accounts, books and affairs of each Federal reserve bank and of each member bank and to require such statements and reports as it may deem necessary. The said board shall publish once each week a statement showing the condition of each Federal reserve bank and a consolidated statement for all Federal reserve banks. .

(b) To permit, or, on the affirmative vote of at least five members of the Reserve Board to require Federal reserve banks to rediscount the discounted paper of other Federal reserve banks at rates of interest to be fixed by the Federal Reserve Board.

(c) To suspend for a period not exceeding thirty days, and from time to time to renew such suspension for periods not exceeding fifteen days, any reserve requirement specified in this Act....

(e) To add to the number of cities classified as reserve and central reserve cities under existing law in which national banking associations are subject to the reserve requirements set forth in section twenty of this Act; or to reclassify existing reserve and central reserve cities or to terminate their designation as such....

(j) To exercise general supervision over said Federal reserve banks.

(k) To grant by special permit to national banks applying therefor, when not in contravention of State or local law, the right to act as trustee, executor, administrator, or registrar of stocks and bonds under such rules and regulations as the said board may prescribe.... SEC. I2. There is hereby created a Federal Advisory Council, which shall consist of as many members as there are Federal reserve districts. Each Federal reserve bank by its board of directors shall annually select from its own Federal reserve district one member of said council.... The meetings of said advisory council shall be held at Washington . .. at least four times each year, and oftener if called by the Federal Reserve Board....

The Federal Advisory Council shall have power, by itself or through its officers, (1) to confer directly with the Federal Reserve Board on general business conditions; (2) to make oral or written representations concerning matters within the jurisdiction of said board; (3) to call for information and to make recommendations in regard to discount rates, rediscount business, note issues, reserve conditions in the various districts, the purchase and sale of gold or securities by reserve banks, open-market operations by said banks, and the general affairs of the reserve banking system.

SEC. I3. Any Federal reserve bank may receive from any of its member banks, and from the United States, deposits of current funds in lawful money, national-bank notes, Federal reserve notes, or checks and drafts upon solvent member banks, payable upon presentation; or, solely for exchange purposes, may receive from other Federal reserve banks deposits of current funds in lawful money, national-bank notes, or checks and drafts upon solvent member or other Federal reserve banks, payable upon presentation. Upon the indorsement of any of its member banks, with a waiver of demand, notice and protest by such bank, any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the Federal Reserve Board to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this Act....

Any Federal reserve bank may discount acceptances which are based on the importation or exportation of goods and which have a maturity at time of discount of not more than three months, and indorsed by at least one member bank. The amount of acceptances so discounted shall at no time exceed one-half the paid-up capital stock and surplus of the bank for which the rediscounts are made. The aggregate of such notes and bills bearing the signature or indorsement of any one person, company, firm, or corporation rediscounted for any one bank shall at no time exceed ten per centum of the unimpaired capital and surplus of said bank; but this restriction shall not apply to the discount of bills of exchange drawn in good faith against actually existing values.. ..

SEC. I4. Any Federal reserve bank may, under rules and regulations prescribed by the Federal Reserve Board, purchase and sell in the open market, at home or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals, cable transfers and bankers' acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank. Every Federal reserve bank shall have power:

(a) To deal in gold coin and bullion at home or abroad, to make loans thereon, exchange Federal reserve notes for gold, gold coin, or gold certificates, and to contract for loans of gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United States bonds or other securities which Federal reserve banks are authorized to hold;

(b) To buy and sell, at home or abroad, bonds and notes of the United States, and bills, notes, revenue bonds, and warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivision, or municipality in the continental United States, including irrigation, drainage and reclamation districts....

(c) To purchase from member banks and to sell, with or without its indorsement, bills of exchange arising out of commercial transactions, as hereinbefore defined;

(d) To establish from time to time, subject to review and determination of the Federal Reserve Board, rates of discount to be charged by the Federal reserve bank for each class of paper, which shall be fixed with a view of accommodating commerce and business;

(e) To establish accounts with other Federal reserve banks for exchange purposes and, with the consent of the Federal Reserve Board, to open and maintain banking accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purpose of purchasing, selling, and collecting bills of exchange, and to buy and sell with or without its indorsement, through such correspondents or agencies, bills of exchange arising out of actual commercial transactions which have not more than ninety days to run and which bear the signature of two or more responsible parties.

SEC. 15. The moneys held in the general fund of the Treasury, except the five per centum fund for the redemption of outstanding national-bank notes and the funds provided in this Act for the redemption of Federal reserve notes may, upon the direction of the Secretary of the Treasury, be deposited in Federal reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States; and the revenues of the Government or any part thereof may be deposited in such banks, and disbursements may be made by checks drawn against such deposits.

No public funds of the Philippine Islands, or of the postal savings, or any Government funds, shall be deposited in the continental United States in any bank not belonging to the system established by this Act. .

SEC. I6. Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are hereby authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues They shall be redeemed in gold on demand at the Treasury Department of the United States, in the city of Washington . ., or in gold or lawful money at any Federal reserve bank.

Any Federal reserve bank may make application to the local Federal reserve agent for such amount of the Federal reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes and bills, accepted for rediscount under the provisions of section thirteen of this Act.... Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money deposited with the Federal reserve agent....

SEC. 24. Any national banking association not situated in a central reserve city may make loans secured by improved and unencumbered farm land, situated within its Federal reserve district, but no such loan shall be made for a longer time than five years, nor for an amount exceeding fifty per centum of the actual value of the property offered as security.... The Federal Reserve Board shall have power from time to time to add to the list of cities in which national banks shall not be permitted to make loans secured upon real estate in the manner described in this section.

SEC. 25. Any national banking association possessing a capital and surplus of $1, OOO, OOO or more may file application with the Federal Reserve Board . for the purpose of securing authority to establish branches in foreign countries or depend encies of the United States for the furtherance of the foreign commerce of the United States, and to act, if required to do so, as fiscal agents of the United States.... The Federal Reserve Board shall have power to approve or to reject such application if, in its judgment, the amount of capital proposed to be set aside for the conduct of foreign business is inadequate, or if for other reasons the granting of such application is deemed inexpedient... .

Approved, December 23, l9I3,


Federal Reserve Act

Definition and Summary of the Federal Reserve Act
Summary and Definition: The Federal Reserve Act aka the Owen-Glass Act or the Currency Bill, was a law passed during the era of the Progressive Movement that was designed to safeguard the US economy by establishing a regional Federal Reserve System operating under a supervisory board in Washington.

Federal Reserve Act
Woodrow Wilson was the 28th American President who served in office from March 4, 1913 to March 4, 1921. One of the important New Freedom progressive reforms, laws and attacks against unfair business practices passed during his presidency was the Federal Reserve Act.

Wilson's New Freedom Reforms: Federal Reserve Act for kids
President Woodrow Wilson, like his predecessors Theodore Roosevelt and William Taft, was a firm supporter of the Progressive Movement and Progressive reforms. His New Freedom polices included the passing of the US law known as the Federal Reserve Act.

Federal Reserve Act for kids: Why was the amendment to the law passed?
The Federal Reserve Act was passed because p ublic confidence in the US banking system was extremely low due to the collapse of small banks during periods of depression in which many Americans had lost their homes, businesses and life savings. There was no central bank and Wilson decided to take action to centralize the system, control American monetary policy and restore the confidence of Americans in banks. The law became commonly referred to as the Currency Bill.

Who sponsored the Federal Reserve Act aka the Owen-Glass Act?
The Federal Reserve Act, aka the Owen-Glass Act , was sponsored by the chairmen of the House and Senate Banking and Currency committees by the progressive representatives Carter Glass, a Democrat of Virginia and Senator Robert Latham Owen, a Democrat of Oklahoma. The law was passed on December 23, 1913.

What did the Federal Reserve Act do? What was the Purpose of the Act?
Woodrow Wilson signed the 1913 Federal Reserve Act into law that established a a Federal Reserve system regulated by a Board of Governors with the power to set the interest rates the reserve banks charged other banks. The objectives included the prevention of financial panics and the ready availability of cash from a money reserve.

● 12 Federal Reserve banks were created that served as depositories for the cash reserves of the banks that joined the system
● The 12 Federal Reserve banks were governed by a Federal Reserve Board, whose 7 members were appointed by the President
● The Act gave the Federal Reserve System the authority to print money and thereby set the monetary policy of the United States
● Authority was also given to sell Treasury securities (bonds issued by the U.S. government)
● Power was given to adjust the discount rate and the federal funds rate. (The federal funds rate is the interest rate banks charge each other on loans used to meet reserve requirements)
● The law further required that all federally-chartered banks belonged to the Federal Reserve System and purchased a certain amount of stock in the Federal Reserve bank

Map of the 12 Federal Reserve Districts
The map of the 12 Federal Reserve Districts indicates by a star the location of the Board of Governors. The Districts are indicated by number and Reserve Bank city.

1: Boston
2: New York
3: Philadelphia
4: Cleveland
5: Richmond
6: Atlanta
7: Chicago
8: St. Louis
9: Minneapolis
10: Kansas City
11: Dallas
12: San Francisco

Federal Reserve Act
The info about the Federal Reserve Act, aka the Owen-Glass Act or the Currency Bill, provides interesting facts and important information about this important law that was passed during the presidency of the 28th President of the United States of America. For further information on banking reforms refer to the Glass-Steagall Act aka 1933 Banking Act.

Federal Reserve Act - President Woodrow Wilson Video
The article on the Federal Reserve Act provides detailed facts and a summary of one of the important progressive reforms and federal laws passed during his presidential term in office. The following Woodrow Wilson video will give you additional important facts and dates about the political events experienced by the 28th American President whose presidency spanned from March 4, 1913 to March 4, 1921.

● Interesting Facts about Federal Reserve Act for kids and schools
● Federal Reserve Act aka the Owen-Glass Act or Currency Bill for kids
● The Federal Reserve Act, a major event in US history
● Woodrow Wilson Presidency from March 4, 1913 to March 4, 1921
● Fast, fun facts about the Federal Reserve Act
● Progressive laws and reforms of President Woodrow Wilson
● Woodrow Wilson Presidency and Federal Reserve Act, aka Owen-Glass Act or Currency Bill, for schools, homework, kids and children

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Federal Reserve Established

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On December 23, 1913, President Woodrow Wilson signed the Federal Reserve Act, establishing America’s current central banking system.

The idea of a central banking system dates back to post-Revolutionary War America. The new country had large wartime debts and needed a solid banking system. Two of America’s founding fathers and long-time friends, Alexander Hamilton and Thomas Jefferson, were split on the issue.

Hamilton believed the US should adopt a national bank, similar to European nations, but Jefferson thought that would threaten democracy. Jefferson also believed it would benefit the North but hurt the South, who received credit from local banks after the war.

US #1053 is generally considered one of the most beautiful US portrait stamps of the 1900s. Click the image to order.

In the end, Hamilton won and the First Bank of the United States was established in 1791. Chartered for 20 years, the bank did successfully help the economy, but it failed to be renewed by one vote in 1811. The Second Bank of the United States was established in 1816, also for a period of 20 years. It was largely unpopular in the west and south and became a private bank when its charter expired in 1836.

For over 75 years, America didn’t have a central bank. During that time there were several financial panics that led some to believe that banking reform was needed. In 1912, the National Monetary Commission submitted the Aldrich Plan (named for its chairman, Nelson W. Aldrich), which called for the creation of a National Reserve Association. This association would provide emergency loans to member banks, produce money, and serve as the government’s fiscal agent.

US #1040 features a portrait of Wilson based on a drawing by F. Graham Cootes. Click the image to order.

During the election of 1912, Democratic candidate Woodrow Wilson included plans for banking and currency reform on his platform. After he was elected and entered the White House, he made this reform one of his top priorities. He sought to find a middle ground between the needs of the conservative Republicans and the left-wing Democrats. The act was introduced to the house in August 1913 and signed into law by President Wilson that December 23.

The Federal Reserve Act of 1913 gave private banks control of the 12 regional Federal Reserve Banks but placed controlling interest in a central board selected by the president, with Senate approval. The plan went into effect in 1915, later playing a major role in financing the Allied and American war efforts.

The Federal Reserve Act set the framework and guidelines for the nation’s banks, credit, and money supply that we still use today. Commonly known as the “Fed,” this independent governmental agency manages the country’s supply of money and credit. The Fed also provides various financial services for the federal government and the banking system and issues our paper money.

US #3183b – Fleetwood First Day Cover. Click the image to order.

Congress created the Fed to provide a flexible currency for the nation and to supervise the banking system. It controls the flow of money and credit in three ways: through open-market operations, the sale or purchase of government securities by changing reserve requirements, the percentages of deposits that most banks must set aside before funds are made available for loans and by changing the discount rate, the interest rate banks pay the Federal Reserve Bank when they borrow money.

US #1577-78 commemorates the Centennial Convention of the American Bankers Association. Click the image to order.

The Fed operates with a great deal of autonomy. It does not rely on Congress for funding – operating expenses are collected from investment income and fees for its services. Although the Fed reports to Congress, it is legally free to make its own policy decisions. The Fed has promoted nationwide economic stability by working to keep interest rates low during recessions and letting them rise during periods of economic growth.


The Federal Reserve System is the third central banking system in United States history. The First Bank of the United States (1791–1811) and the Second Bank of the United States (1817–1836) each had a 20-year charter. Both banks issued currency, made commercial loans, accepted deposits, purchased securities, maintained multiple branches and acted as fiscal agents for the U.S. Treasury. [1] The U.S. Federal Government was required to purchase 20% of the bank capital stock shares and to appoint 20% of the board members (directors) of each of those first two banks "of the United States." Therefore, each bank's majority control was placed squarely in the hands of wealthy investors who purchased the remaining 80% of the stock. These banks were opposed by state-chartered banks, who saw them as very large competitors, and by many who insisted that they were in reality banking cartels compelling the common man to maintain and support them. President Andrew Jackson vetoed legislation to renew the Second Bank of the United States, starting a period of free banking. Jackson staked the legislative success of his second presidential term on the issue of central banking. "Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people," Jackson said in 1832. [2] Jackson's second term in office ended in March 1837 without the Second Bank of the United States's charter being renewed.

In 1863, as a means to help finance the Civil War, a system of national banks was instituted by the National Currency Act. The banks each had the power to issue standardized national bank notes based on United States bonds held by the bank. The Act was totally revised in 1864 and later named as the National-Bank Act, or National Banking Act, as it is popularly known. The administration of the new national banking system was vested in the newly created Office of the Comptroller of the Currency and its chief administrator, the Comptroller of the Currency. The Office, which still exists today, examines and supervises all banks chartered nationally and is a part of the U.S. Treasury Department.

National bank currency was considered inelastic because it was based on the fluctuating value of U.S. Treasury bonds. If Treasury bond prices declined, a national bank had to reduce the amount of currency it had in circulation by either refusing to make new loans or by calling in loans it had made already. The related liquidity problem was largely caused by an immobile, pyramidal reserve system, in which nationally chartered rural/agriculture-based banks were required to set aside their reserves in federal reserve city banks, which in turn were required to have reserves in central city banks. During the planting seasons, rural banks would exploit their reserves to finance full plantings, and during the harvest seasons they would use profits from loan interest payments to restore and grow their reserves. A national bank whose reserves were being drained would replace its reserves by selling stocks and bonds, by borrowing from a clearing house or by calling in loans. As there was little in the way of deposit insurance, if a bank was rumored to be having liquidity problems then this might cause many people to remove their funds from the bank. Because of the crescendo effect of banks which lent more than their assets could cover, during the last quarter of the 19th century and the beginning of the 20th century, the United States economy went through a series of financial panics. [3]

The National Monetary Commission, 1907-1913 Edit

Prior to a particularly severe panic in 1907, there was a motivation for renewed demands for banking and currency reform. [4] The following year, Congress enacted the Aldrich–Vreeland Act which provided for an emergency currency and established the National Monetary Commission to study banking and currency reform. [5]

The chief of the bipartisan National Monetary Commission was financial expert and Senate Republican leader Nelson Aldrich. Aldrich set up two commissions – one to study the American monetary system in depth and the other, headed by Aldrich, to study the European central-banking systems and report on them. [5]

Aldrich went to Europe opposed to centralized banking but, after viewing Germany's banking system, he came away believing that a centralized bank was better than the government-issued bond system that he had previously supported. Centralized banking was met with much opposition from politicians, who were suspicious of a central bank and who charged that Aldrich was biased due to his close ties to wealthy bankers such as J.P. Morgan and his daughter's marriage to John D. Rockefeller, Jr. [5]

In 1910, Aldrich and executives representing the banks of J.P. Morgan, Rockefeller, and Kuhn, Loeb & Co., secluded themselves for ten days at Jekyll Island, Georgia. [5] The executives included Frank A. Vanderlip, president of the National City Bank of New York, associated with the Rockefellers Henry Davison, senior partner of J.P. Morgan Company Charles D. Norton, president of the First National Bank of New York and Col. Edward M. House, who would later become President Woodrow Wilson's closest adviser and founder of the Council on Foreign Relations. [6] There, Paul Warburg of Kuhn, Loeb, & Co. directed the proceedings and wrote the primary features of what would be called the Aldrich Plan. Warburg would later write that "The matter of a uniform discount rate (interest rate) was discussed and settled at Jekyll Island." Vanderlip wrote in his 1935 autobiography From Farmboy to Financier: [7]

Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion, near the close of 1910, when I was as secretive, indeed, as furtive as any conspirator. None of us who participated felt that we were conspirators on the contrary we felt we were engaged in a patriotic work. We were trying to plan a mechanism that would correct the weaknesses of our banking system as revealed under the strains and pressures of the panic of 1907. I do not feel it is any exaggeration to speak of our secret expedition to Jekyl Island as the occasion of the actual conception of what eventually became the Federal Reserve System. . Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had gotten together and written a banking bill, that bill would have no chance whatever of passage by Congress. Yet, who was there in Congress who might have drafted a sound piece of legislation dealing with the purely banking problem with which we were concerned?

Despite meeting in secret, from both the public and the government, the importance of the Jekyll Island meeting was revealed three years after the Federal Reserve Act was passed, when journalist Bertie Charles Forbes in 1916 wrote an article about the "hunting trip". [8]

The 1911–12 Republican plan was proposed by Aldrich to solve the banking dilemma, a goal which was supported by the American Bankers' Association. The plan provided for one great central bank, the National Reserve Association, with a capital of at least $100 million and with 15 branches in various sections. The branches were to be controlled by the member banks on a basis of their capitalization. The National Reserve Association would issue currency, based on gold and commercial paper, that would be the liability of the bank and not of the government. The Association would also carry a portion of member banks' reserves, determine discount reserves, buy and sell on the open market, and hold the deposits of the federal government. The branches and businessmen of each of the 15 districts would elect thirty out of the 39 members of the board of directors of the National Reserve Association. [9]

Aldrich fought for a private monopoly with little government influence, but conceded that the government should be represented on the board of directors. Aldrich then presented what was commonly called the "Aldrich Plan" – which called for establishment of a "National Reserve Association" – to the National Monetary Commission. [5] Most Republicans and Wall Street bankers favored the Aldrich Plan, [6] but it lacked enough support in the bipartisan Congress to pass. [10]

Because the bill was introduced by Aldrich, who was considered [ by whom? ] the epitome of the "Eastern establishment", the bill received little support. It was derided by southerners and westerners who believed that wealthy families and large corporations ran the country and would thus run the proposed National Reserve Association. [10] The National Board of Trade appointed Warburg as head of a committee to persuade Americans to support the plan. The committee set up offices in the then-45 states and distributed printed materials about the proposed central bank. [5] The Nebraskan populist and frequent Democratic presidential candidate William Jennings Bryan said of the plan: "Big financiers are back of the Aldrich currency scheme." He asserted that if it passed, big bankers would "then be in complete control of everything through the control of our national finances." [11]

There was also Republican opposition to the Aldrich Plan. Republican Sen. Robert M. La Follette and Rep. Charles Lindbergh Sr. both spoke out against the favoritism that they contended the bill granted to Wall Street. "The Aldrich Plan is the Wall Street Plan . I have alleged that there is a 'Money Trust'", said Lindbergh. "The Aldrich plan is a scheme plainly in the interest of the Trust". In response, Rep. Arsène Pujo, a Democrat from Louisiana, obtained congressional authorization to form and chair a subcommittee (the Pujo Committee) within the House Committee Banking Committee, to conduct investigative hearings on the alleged "Money Trust". The hearings continued for a full year and were led by the subcommittee's counsel, Democratic lawyer Samuel Untermyer, who later also assisted in drafting the Federal Reserve Act. The "Pujo hearings" [12] convinced much of the populace that America's money largely rested in the hands of a select few on Wall Street. The Subcommittee issued a report saying: [13]

If by a 'money trust' is meant an established and well-defined identity and community of interest between a few leaders of finance . which has resulted in a vast and growing concentration of control of money and credit in the hands of a comparatively few men . the condition thus described exists in this country today . To us the peril is manifest . When we find . the same man a director in a half dozen or more banks and trust companies all located in the same section of the same city, doing the same class of business and with a like set of associates similarly situated all belonging to the same group and representing the same class of interests, all further pretense of competition is useless. . [11]

Seen as a "Money Trust" plan, the Aldrich Plan was opposed by the Democratic Party as was stated in its 1912 campaign platform, but the platform also supported a revision of banking laws intended to protect the public from financial panics and "the domination of what is known as the "Money Trust." During the 1912 election, the Democratic Party took control of the presidency and both chambers of Congress. The newly elected president, Woodrow Wilson, was committed to banking and currency reform, but it took a great deal of his political influence to get an acceptable plan passed as the Federal Reserve Act in 1913. [10] Wilson thought the Aldrich plan was perhaps "60–70% correct". [5] When Virginia Rep. Carter Glass, chairman of the House Committee on Banking and Currency, presented his bill to President-elect Wilson, Wilson said that the plan must be amended to contain a Federal Reserve Board appointed by the executive branch to maintain control over the bankers. [11]

After Wilson presented the bill to Congress, a group of Democratic congressmen revolted. The group, led by Representative Robert Henry of Texas, demanded that the "Money Trust" be destroyed before it could undertake major currency reforms. The opponents particularly objected to the idea of regional banks having to operate without the implicit government protections that large, so-called money-center banks would enjoy. The group almost succeeded in killing the bill, but were mollified by Wilson's promises to propose antitrust legislation after the bill had passed, and by Bryan's support of the bill. [11]

Enactment of the Federal Reserve Act (1913) Edit

After months of hearings, amendments, and debates the Federal Reserve Act passed Congress in December, 1913. The bill passed the House by an overwhelming majority of 298 to 60 on December 22, 1913 [14] and passed the Senate the next day by a vote of 43 to 25. [15] An earlier version of the bill had passed the Senate 54 to 34, [16] but almost 30 senators had left for Christmas vacation by the time the final bill came to a vote. Most every Democrat was in support of and most Republicans were against it. [11] As noted in a paper by the American Institute of Economic Research:

In its final form, the Federal Reserve Act represented a compromise among three political groups. Most Republicans (and the Wall Street bankers) favored the Aldrich Plan that came out of Jekyll Island. Progressive Democrats demanded a reserve system and currency supply owned and controlled by the Government in order to counter the "money trust" and destroy the existing concentration of credit resources in Wall Street. Conservative Democrats proposed a decentralized reserve system, owned and controlled privately but free of Wall Street domination. No group got exactly what it wanted. But the Aldrich plan more nearly represented the compromise position between the two Democrat extremes, and it was closest to the final legislation passed. [6]

Frank Vanderlip, one of the Jekyll Island attendees and the president of National City Bank, wrote in his autobiography: [7]

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 was finally adopted.

Ironically, in October 1913, two months before the enactment of the Federal Reserve Act, Frank Vanderlip proposed before the Senate Banking Committee his own competing plan to the Federal Reserve System, one with a single central bank controlled by the Federal government, which almost derailed the legislation then being considered and already passed by the U.S. House of Representatives. [17] Even Aldrich stated strong opposition to the currency plan passed by the House. [18]

However, the former point was also made by Republican Representative Charles Lindbergh Sr. of Minnesota, one of the most vocal opponents of the bill, who on the day the House agreed to the Federal Reserve Act told his colleagues:

But the Federal reserve board have no power whatever to regulate the rates of interest that bankers may charge borrowers of money. This is the Aldrich bill in disguise, the difference being that by this bill the Government issues the money, whereas by the Aldrich bill the issue was controlled by the banks . Wall Street will control the money as easily through this bill as they have heretofore.(Congressional Record, v. 51, page 1447, Dec. 22, 1913)

Republican Congressman Victor Murdock of Kansas, who voted for the bill, told Congress on that same day:

I do not blind myself to the fact that this measure will not be effectual as a remedy for a great national evil – the concentrated control of credit . The Money Trust has not passed [died] . You rejected the specific remedies of the Pujo committee, chief among them, the prohibition of interlocking directorates. He [your enemy] will not cease fighting . at some half-baked enactment . You struck a weak half-blow, and time will show that you have lost. You could have struck a full blow and you would have won. [19]

In order to get the Federal Reserve Act passed, Wilson needed the support of populist William Jennings Bryan, who was credited with ensuring Wilson's nomination by dramatically throwing his support Wilson's way at the 1912 Democratic convention. [11] Wilson appointed Bryan as his Secretary of State. [10] Bryan served as leader of the agrarian wing of the party and had argued for unlimited coinage of silver in his "Cross of Gold Speech" at the 1896 Democratic convention. [20] Bryan and the agrarians wanted a government-owned central bank which could print paper money whenever Congress wanted, and thought the plan gave bankers too much power to print the government's currency. Wilson sought the advice of prominent lawyer Louis Brandeis to make the plan more amenable to the agrarian wing of the party Brandeis agreed with Bryan. Wilson convinced them that because Federal Reserve notes were obligations of the government and because the president would appoint the members of the Federal Reserve Board, the plan fit their demands. [11] However, Bryan soon became disillusioned with the system. In the November 1923 issue of "Hearst's Magazine" Bryan wrote that "The Federal Reserve Bank that should have been the farmer's greatest protection has become his greatest foe."

Southerners and westerners learned from Wilson that the system was decentralized into 12 districts and surely would weaken New York and strengthen the hinterlands. Sen. Robert L. Owen of Oklahoma eventually relented to speak in favor of the bill, arguing that the nation's currency was already under too much control by New York elites, who he alleged had singlehandedly conspired to cause the 1907 Panic. [6]

Large bankers thought the legislation gave the government too much control over markets and private business dealings. The New York Times called the Act the "Oklahoma idea, the Nebraska idea" – referring to Owen and Bryan's involvement. [11]

However, several Congressmen, including Owen, Lindbergh, La Follette, and Murdock claimed that the New York bankers feigned their disapproval of the bill in hopes of inducing Congress to pass it. The day before the bill was passed, Murdock told Congress:

You allowed the special interests by pretended dissatisfaction with the measure to bring about a sham battle, and the sham battle was for the purpose of diverting you people from the real remedy, and they diverted you. The Wall Street bluff has worked. [21]

When Wilson signed the Federal Reserve Act on December 23, 1913, he said he felt grateful for having had a part "in completing a work . of lasting benefit for the country," [22] knowing that it took a great deal of compromise and expenditure of his own political capital to get it enacted. This was in keeping with the general plan of action he made in his First Inaugural Address on March 4, 1913, in which he stated:

We shall deal with our economic system as it is and as it may be modified, not as it might be if we had a clean sheet of paper to write upon and step-by-step we shall make it what it should be, in the spirit of those who question their own wisdom and seek counsel and knowledge, not shallow self-satisfaction or the excitement of excursions we can not tell. [23]

While a system of 12 regional banks was designed so as not to give eastern bankers too much influence over the new bank, in practice, the Federal Reserve Bank of New York became "first among equals". The New York Fed, for example, is solely responsible for conducting open market operations, at the direction of the Federal Open Market Committee. [24] Democratic Congressman Carter Glass sponsored and wrote the eventual legislation, [10] and his home state capital of Richmond, Virginia, was made a district headquarters. Democratic Senator James A. Reed of Missouri obtained two districts for his state. [25] However, the 1914 report of the Federal Reserve Organization Committee, which clearly laid out the rationale for their decisions on establishing Reserve Bank districts in 1914, showed that it was based almost entirely upon current correspondent banking relationships. [26] To quell Elihu Root's objections to possible inflation, the passed bill included provisions that the bank must hold at least 40% of its outstanding loans in gold. (In later years, to stimulate short-term economic activity, Congress would amend the act to allow more discretion in the amount of gold that must be redeemed by the Bank.) [6] Critics of the time (later joined by economist Milton Friedman) suggested that Glass's legislation was almost entirely based on the Aldrich Plan that had been derided as giving too much power to elite bankers. Glass denied copying Aldrich's plan. In 1922, he told Congress, "no greater misconception was ever projected in this Senate Chamber." [20]

Wilson named Warburg and other prominent experts to direct the new system, which began operations in 1915 and played a major role in financing the Allied and American war efforts. [27] Warburg at first refused the appointment, citing America's opposition to a "Wall Street man", but when World War I broke out he accepted. He was the only appointee asked to appear before the Senate, whose members questioned him about his interests in the central bank and his ties to Kuhn, Loeb, & Co.'s "money trusts". [5]

The 1951 Accord, also known simply as the Accord, was an agreement between the U.S. Department of the Treasury and the Federal Reserve that restored independence to the Fed.

During World War II, the Federal Reserve pledged to keep the interest rate on Treasury bills fixed at 0.375 percent. It continued to support government borrowing after the war ended, despite the fact that the Consumer Price Index rose 14% in 1947 and 8% in 1948, and the economy was in recession. President Harry S. Truman in 1948 replaced the then-Chairman of the Federal Reserve Marriner Eccles with Thomas B. McCabe for opposing this policy, although Eccles's term on the board continued for three more years. The reluctance of the Federal Reserve to continue monetizing the deficit became so great that, in 1951, President Truman invited the entire Federal Open Market Committee to the White House to resolve their differences. Eccles's memoir, Beckoning Frontiers, presents a detailed eyewitness account of this meeting and surrounding events, including verbatim transcripts of pertinent documents. William McChesney Martin, then Assistant Secretary of the Treasury, was the principal mediator. Three weeks later, he was named Chairman of the Federal Reserve, replacing McCabe.

In July 1979, President Jimmy Carter nominated Paul Volcker as Chairman of the Federal Reserve Board amid roaring inflation. Volcker tightened the money supply, and by 1986 inflation had fallen sharply. [28] In October 1979 the Federal Reserve announced a policy of "targeting" money aggregates and bank reserves in its struggle with double-digit inflation. [29]

In January 1987, with retail inflation at only 1%, the Federal Reserve announced it was no longer going to use money-supply aggregates, such as M2, as guidelines for controlling inflation, even though this method had been in use from 1979, apparently with great success. Before 1980, interest rates were used as guidelines inflation was severe. The Fed complained that the aggregates were confusing. Volcker was chairman until August 1987, whereupon Alan Greenspan assumed the mantle, seven months after monetary aggregate policy had changed. [30]

From early 2001 to mid-2003 the Federal Reserve lowered its interest rates 13 times, from 6.25% to 1.00%, to fight recession. In November 2002, rates were cut to 1.75%, and many rates went below the inflation rate. On June 25, 2003, the federal funds rate was lowered to 1.00%, its lowest nominal rate since July 1958, when the overnight rate averaged 0.68%. Starting at the end of June 2004, the Federal Reserve System raised the target interest rate then continued to do so 17 more times.

In February 2006, President George W. Bush appointed Ben Bernanke as the chairman of the Federal Reserve. [31]

In March 2006, the Federal Reserve ceased to make public M3, because the costs of collecting this data outweighed the benefits. [32] M3 includes all of M2 (which includes M1) plus large-denomination ($100,000 +) time deposits, balances in institutional money funds, repurchase liabilities issued by depository institutions, and Eurodollars held by U.S. residents at foreign branches of U.S. banks as well as at all banks in the United Kingdom and Canada.

2008 subprime mortgage crisis Edit

Due to a credit crunch caused by the subprime mortgage crisis in September 2007, the Federal Reserve began cutting the federal funds rate. The Fed cut rates by 0.25% after its December 11, 2007, meeting, disappointing many investors who had expected a bigger cut the Dow Jones Industrial Average dropped nearly 300 points that day. The Fed slashed the rate by 0.75% in an emergency action on January 22, 2008, to assist in reversing a significant market slide influenced by weakening international markets. The Dow Jones Industrial Average initially fell nearly 4% (465 points) at the start of trading and then rebounded to a 1.06% (128-point) loss. On January 30, 2008, eight days after the 0.75% decrease, the Fed lowered its rate again, this time by 0.50%. [33]

On August 25, 2009, President Barack Obama announced he would nominate Bernanke to a second term as chairman of the Federal Reserve. [34] In October 2013, he nominated Janet Yellen to succeed Bernanke.

In December 2015, the Fed raised its benchmark interest rates by a quarter of a percentage point to between 0.25% and 0.50%, after nine years without changing them. [35]


Century of Enslavement: The History of The Federal Reserve

Click here to download an mp3 audio version of this documentary.

Part One: The Origins of the Fed

The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.” — FDR letter to Colonel Edward House, Nov. 21, 1933

All our lives we’ve been told that economics is boring. It’s dull. It’s not worth the time it takes to understand it. And all our lives, we’ve been lied to.

War. Poverty. Revolution. They all hinge on economics. And economics all rests on one key concept: money.

Money. It is the economic water in which we live our lives. We even call it “currency” it flows around us, carries us in its wake. Drowns those who are not careful.

We use it every day in nearly every transaction we conduct. We spend our lives working for it, worrying about it, saving it, spending it, pinching it. It defines our social status. It compromises our morals. People are willing to fight, die, and kill for it.

But what is it? Where does it come from? How is it created? Who controls it? It is a remarkable fact that, given its central importance in our lives, not one person in a hundred could answer such basic questions about money as these.

Interviewer: So if you were planning a family, you’d want to know where babies come from. And this is a lot about banking. So let me ask you: Where does money come from?

Interviewee 1: Where does the money come from? The government prints it. It’s printed off.

Interviewer: How is new money created?

Interviewee 2: By labor. People work and produce wealth, and the money is supposed to match that wealth.

Interviewee: Where does money come from?

Interviewee 3: Well, I have a pretty different outlook on money. It actually comes from, like, trees, right?

SOURCE: Occupy Vancouver answers “Where does money come from?”

But why is this? How could we be so ignorant about a topic of such importance? “Where does money come from?” is a basic, childlike question. So why is our only response the childlike answer, meant as a joke: “It grows on trees”?

Such a profound state of ignorance could not come about naturally. From the time we are children, we are curious about the world and eager to learn about the way it works. And what could lead to a better understanding of the way the world works than a knowledge of money, its creation and destruction? Yet discussion of this topic is fastidiously avoided in our school years and ignored in our daily life. Our monetary ignorance is artificial, a smokescreen that has been erected on purpose and perpetrated with the help of complicated systems and insufferable economic jargon.

But it doesn’t take an economist to understand the importance of money. Deep down we all know that the wars, the poverty, the violence we see around us hinges on this question of money. It seems like a thousand-piece jigsaw puzzle just waiting to be solved. And it is.

The puzzle pieces, taken together, create an image of the Federal Reserve, America’s central bank and the heart of the country’s banking system. Despite its central importance to the economy, relatively few have heard of it, and fewer still know what it is, despite the bank’s attempts at self-description:

Our economy runs on a complex system of exchange of goods and services in which money plays a key part. Coin, currency, savings, and checking accounts the overall supply of money is managed by the Federal Reserve. Money is the medium through which economic exchanges take place, and money as a standard of value helps us to set prices for goods and services. The job of managing money—monetary policy—is to preserve the purchasing power of the dollar while ensuring that a sufficient amount of money is available to promote economic growth.

The Federal Reserve also promotes the safety and soundness of the institutions where we do our banking. It ensures that the mechanisms by which we make payments, whether by cash, cheque, or electronic means, operate smoothly and efficiently.

And in its fiscal role acts as the banker for the United States government.

Now these duties comprise the major responsibilities of our central bank.

SOURCE: The Fed: Our Nation’s Central Bank

But in order to understand the Federal Reserve, we must first understand its origins and context. We must deconstruct the puzzle.

The first piece of that puzzle lies here, in the White House. This is where the Federal Reserve Act, then known as the Currency Bill, was signed into law after passing the House and Senate in late December 1913.

“The Christmas spirit pervaded the gathering. While the ceremony was a little less impressive than that of the signing of the Tarriff act on Oct. 3 last in the same room, the spectators were much more enthusiastic and seized every occasion to applaud.”

There in the White House that fateful December evening, President Wilson signed away the last veneer of control over the American money supply to a cartel—a well-organized gang of crooks so successful, so cunning, so well-hidden that even now, a century later, few know of its existence, let alone the details of its operations. But those details have been openly admitted for decades.

Of course, just as we have been taught to find economics boring, we have been taught that this story is boring. This is the way the Federal Reserve itself tells it:

The United States was facing severe financial problems. At the turn of the century, most banks were issuing their own currency, called “bank notes.” The trouble was, currency that was good in one state was sometimes worthless in another. People began to lose confidence in their money, since it was only as sound as the bank that issued it. Fearful that their bank might go out of business, they rushed to exchange their bank notes for gold or silver. By attempting to do so, they created the Panic of 1907.

SOURCE: Where The Bankers Bank

During the panic, people streamed to the banks and demanded their deposits. The banks could not meet the demand they simply did not have enough gold and silver coin available. Many banks went under. People lost millions of dollars, businesses suffered, unemployment rose, and the stability of our economic system was again threatened.

Well, this couldn’t go on. If the country was going to grow and prosper, some means would have to be found to achieve financial and economic stability.

To prevent financial panics like the one in 1907, President Woodrow Wilson signed The Federal Reserve Act into law in 1913.

SOURCE: Too Much, Too Little

But this is history as told by the victors: a revisionist vision in which the creation of a central bank to control the nation’s money supply is merely a boring historical footnote, about as important as the invention of the zipper or an early 20th century hula-hoop craze. The truth is that the story of the secret banking conclave that gave birth to that Federal Reserve Act is as exciting and dramatic as any Hollywood screenplay or detective novel yarn, and all the more remarkable for the fact that it is all true.

We pick up the story, appropriately enough, under cover of darkness. It was the night of November 22, 1910, and a group of the richest and most powerful men in America were boarding a private rail car at an unassuming railroad station in Hoboken, New Jersey. The car, waiting with shades drawn to keep onlookers from seeing inside, belonged to Senator Nelson Aldrich, the father-in-law of billionaire heir to the Rockefeller dynasty, John D. Rockefeller, Jr. A central figure on the influential Senate Finance Committee, where he oversaw the nation’s monetary policy, Aldrich was referred to in the press as the “General Manager of the Nation.” Joining him that evening was his private secretary, Shelton, and a who’s who of the nation’s banking and financial elite: A. Piatt Andrew, the Assistant Treasury Secretary Frank Vanderlip, President of the National City Bank of New York Henry P. Davison, a senior partner of J.P. Morgan Company Benjamin Strong, Jr., an associate of J.P. Morgan and President of Bankers Trust Co., and Paul Warburg, heir of the Warburg banking family and son-in-law of Solomon Loeb of the famed New York investment firm, Kuhn, Loeb & Company.

The men had been told to arrive one by one after sunset to attract as little attention as possible. Indeed, secrecy was so important to their mission that the group did not use anything but their first names throughout the journey so as to keep their true identities secret even from their own servants and wait staff. The movements of any one of them would have been reason enough to attract the attention of New York’s voracious press, especially in an era where banking and monetary reform was seen as a key issue for the future of the nation a meeting of all of them, now that would surely have been the story of the century. And it was.

Their destination? The secluded Jekyll Island off the coast of Georgia, home to the prestigious Jekyll Island Club, whose members included the Morgans, Rockefellers, Warburgs, and Rothschilds. Their purpose? Davison told intrepid local newspaper reporters who had caught wind of the meeting that they were going duck hunting. But in reality, they were going to draft a reform of the nation’s banking industry in complete secrecy.

G. Edward Griffin, the author of the best-selling The Creature from Jekyll Island and a long-time Federal Reserve researcher, explains:

G. Edward Griffin: What happened is the banks decided that since there was going to be legislation anyway to control their industry, that they wouldn’t just sit back and wait and see what happened and cross their fingers that it would be OK. They decided to do what so many cartels do today: they decided to take the lead. And they would be the ones calling for regulations and reform.

They like the word “reform.” The American people are suckers for the word “reform.” You just put that into any corrupt piece of legislation, call it “reform” and people say “Oh, I’m all for ‘reform,'” and so they vote for it or accept it.

So that’s what they were doing. They decided, “We will ‘reform’ our own industry.” In other words, “We will create a cartel and we will give the cartel the power of government. We’ll take our cartel agreement so we can self-regulate to our advantage and we’ll call it ‘The Federal Reserve Act.’ And then we’ll take this cartel agreement to Washington and convince those idiots there to pass it into law.”

And that basically was the strategy. It was a brilliant strategy. Of course we see it happening all the time, certainly in our own day today we see the same thing happened in other cartelized industries. Right now we’re watching it unfold in the field of healthcare, but at that time it was banking, alright?

And so the banking cartel wrote their own rules and regulations, called it “The Federal Reserve Act,” got it passed into law, and it was very much to their liking because they wrote it. And in essence what they had created was a set of rules that made it possible for themselves to regulate their industry, but they went even beyond that. In fact, it’s clear to me when I was reading their letters and their conversation at the time, and the debates, that they never dreamed that Congress would go along and also give them the right to issue the nation’s money supply. Not only were they now going to regulate their own industry, which is what they started out as wanting to do, but they got this incredible gift that they didn’t dream would be given to them (although they were negotiating for it), and that was that Congress gave them the authority to issue the nation’s money. Congress gave away the sovereign right to issue the nation’s money to the private banks.

And so all of this was in The Federal Reserve Act, and the American people were joyous because they were told, and they were convinced, that this was finally a means of controlling this big creature from Jekyll Island.

SOURCE: Interview with G. Edward Griffin

Amazingly enough, they were successful, not just in conspiring to write the legislation that would eventually become the Federal Reserve Act, but in keeping that conspiracy a secret from the public for decades. It was first reported on in 1916 by Bertie Charles Forbes, the financial writer who would later go on to found Forbes magazine, but it was never fully admitted until a full quarter-century later, when Frank Vanderlip wrote a casual admission of the meeting in the February 9, 1935, edition of The Saturday Evening Post:

“I was as secretive—indeed, as furtive—as any conspirator.[…]I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System.”

Over the course of their nine days of deliberation at the Jekyll Island Club, they devised a plan so overarching, so ambitious, that even they could scarcely imagine that it would ever be passed by Congress. As Vanderlip put it, “Discovery [of our plan], we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.”

So what, precisely, did this conclave of conspirators devise at their Jekyll Island meeting? A plan for a central banking system to be owned by the banks themselves, a system which would organize the nation’s banks into a private cartel that would have sole control over the money supply itself. At the end of their nine-day meeting, the bankers and financiers went back to their respective offices content in what they had accomplished. The details of the plan changed between its 1910 drafting and the eventual passage of the Federal Reserve Act, but the essential ideas were there.

But ultimately, this scene on Jekyll Island, too, is just one piece of a larger puzzle. And like any other puzzle piece, it has to be seen in its wider context for the bigger picture to become visible. To understand the other pieces of the puzzle and their importance in the creation of the Federal Reserve, we have to travel backward in time.

The story begins in late 17th century Europe. The Nine Years’ War is raging across the continent as Louis XIV of France finds himself pitted against much of the rest of the continent over his territorial and dynastic claims. King William III of England, devastated by a stunning naval defeat, commits his court to rebuilding the English navy. There’s only one problem: money. The government’s coffers have been exhausted by the waging of the war and William’s credit is drying up.

A Scottish banker, William Paterson, has a banker’s solution: a proposal “to form a company to lend a million pounds to the Government at six percent (plus 5,000 ‘management fee’) with the right of note issue.” By 1694, the idea has been slightly revised (a 1.2 million pound loan at 8 percent plus 4,000 for management expenses), but it goes ahead: The magnanimously titled Bank of England is created.

The name is a carefully constructed lie, designed to make the bank appear to be a government entity. But it is not. It is a private bank owned by private shareholders for their private profit with a charter from the king that allows them to print the public’s money out of thin air and lend it to the crown. What happens here at the birth of the Bank of England in 1694 is the creation of a template that will be repeated in country after country around the world: a privately controlled central bank lending money to the government at interest, money that it prints out of nothing. And the jewel in the crown for the international bankers that creates this system is the future economic powerhouse of the world, the United States.

In many important respects, the history of the United States is the history of the struggle of the American people against the bankers that wish to control their money. By the 1780s, with colonies still fighting for independence from the crown, the bankers will get their wish.

In 1781 the United States is in financial turmoil. The Continental, the paper currency issued by the Continental Congress to pay for the war, has collapsed from overissue and British counterfeiting. Desperate to find a way to finance the end stages of the war, Congress turns to Robert Morris, a wealthy shipping merchant who was investigated for war profiteering just two years earlier. Now, as “Superintendent of Finance” of the United States from 1781 to 1784, he is regarded as the most powerful man in America next to General Washington.

In his capacity as Superintendent of Finance, Morris argues for the creation of a privately-owned central bank deliberately modeled on the Bank of England that the colonies were supposedly fighting against. Congress, backed into a corner by war obligations and forced to do business with the bankers just like King William in the 1690s, acquiesces and charters the Bank of North America as the nation’s first central bank. And exactly as the Bank of England came into existence loaning the British crown 1.2 million pounds, the B.N.A. started business by loaning 1.2 million dollars to Congress.

By the end of the war, Morris has fallen out of political favor and the Bank of North America’s currency has failed to win over a skeptical public. The B.N.A. is downgraded from a national central bank to a private commercial bank chartered by the State of Pennsylvania.

But the bankers have not given up yet. Before the ink is even dry on the Constitution, a group led by Alexander Hamilton is already working on the next privately-owned central bank for the newly formed United States of America.

So brazen is Hamilton in the forwarding of this agenda that he makes no attempt to hide his aims or those of the banking interests he serves:

“A national debt, if it is not excessive, will be to us a national blessing,” he wrote in a letter to James Duane in 1781. “It will be a powerful cement of our Union. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry.”

Opposition to Hamilton and his debt-based system for establishing the finances of the US is fierce. Led by Jefferson and Madison, the bankers and their system of debt-enslavement is called out for the force of destruction that it is. As Thomas Jefferson wrote:

“[T]he spirit of war and indictment, […] since the modern theory of the perpetuation of debt, has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating.”

Still, Hamilton proves victorious. The First Bank of the United States is chartered in 1791 and follows the pattern of the Bank of England and the Bank of North America almost exactly a privately-owned central bank with the authority to loan money that it creates out of nothing to the government. In fact, it is the very same people behind the new bank as were behind the old Bank of North America. It was Alexander Hamilton, Robert Morris’ former aide, who first proposed Morris for the position of Financial Superintendent, and the director of the old Bank of North America, Thomas Willing, is brought in to serve as the first director of the First Bank of the United States. Meet the new banking bosses, same as the old banking bosses.

In the first five years of the bank’s existence, the US government borrows 8.2 million dollars from the bank and prices rise 72%. By 1795, when Hamilton leaves office, the incoming Treasury Secretary announces that the government needs even more money and sells off the government’s meager 20% share in the bank, making it a fully private corporation. Once again, the US economy is plundered while the private banking cartel laughs all the way to the bank that they created.

By the time the bank’s charter comes due for renewal in 1811, the tide has changed for the money interests behind the bank. Hamilton is dead, shot to death in a duel with Aaron Burr. The bank-supporting Federalist Party is out of power. The public are wary of foreign ownership of the central bank, and what’s more don’t see the point of a central bank in time of peace. Accordingly, the charter renewal is voted down in the Senate and the bank is closed in 1811.

Less than a year later, the US is once again at war with England. After two years of bitter struggle, the public debt of the US has nearly tripled, from $45.2 million to $119.2 million. With trade at a standstill, prices soaring, inflation rising and debt mounting, President Madison signs the charter for the creation of another central bank, the Second Bank of the United States, in 1816. Just like the two central banks before it, it is majority privately-owned and is granted the power to loan money that it creates out of thin air to the government.

The 20-year bank charter is due to expire in 1836, but President Jackson has already vowed to let it die prior to renewal. Believing that Jackson won’t risk his chance for reelection in 1832 on the issue, the bankers forward a bill to renew the bank’s charter in July of that year, four years ahead of schedule. Remarkably, Jackson vetoes the renewal charter and stakes his reelection on the people’s support of his move. In his veto message, Jackson writes in no uncertain terms about his opposition to the bank:

“Whatever interest or influence, whether public or private, has given birth to this act, it can not be found either in the wishes or necessities of the executive department, by which present action is deemed premature, and the powers conferred upon its agent not only unnecessary, but dangerous to the Government and country. It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.[…]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.”

The people side with Jackson and he’s reelected on the back of his slogan, “Jackson and No Bank!” The President makes good on his pledge. In 1833 he announces that the government will stop using the bank and will pay off its debt. The bankers retaliate in 1834 by staging a financial crisis and attempting to pin the blame on Jackson, but it’s no use. On January 8, 1835, President Jackson succeeds in paying off the debt, and for the first and only time in its history the United States is free from the debt chain of the bankers. In 1836 the Second Bank of the United States’ charter expires and the bank loses its status as America’s central bank.

It is 77 years before the bankers can regain the jewel in their crown. But it is not for lack of trying. Immediately upon the death of the bank, the banking oligarchs in England react by contracting trade, removing capital from the US, demanding payment in hard currency for all exports, and tightening credit. This results in a financial crisis known as the Panic of 1837, and once again Jackson’s campaign to kill the bank is blamed for the crisis.

Throughout the late 19th century the United States is rocked by banking panics brought about by wild banking speculation and sharp contractions in credit. By the dawn of the 20th century, the bulk of the money in the American economy has been centralized in the hands of a small clique of industrial magnates, each with a near-monopoly on a sector of the economy. There are the Astors in real estate the Carnegies and the Schwabs in steel the Harrimans, Stanfords and Vanderbilts in railroads the Mellons and the Rockefellers in oil. As all of these families start to consolidate their fortunes, they gravitate naturally to the banking sector. And in this capacity, they form a network of financial interests and institutions that centered largely around one man, banking scion and increasingly America’s informal central banker in the absence of a central bank, John Pierpont Morgan.

John Pierpont Morgan, or “Pierpont,” as he prefers to be called, is born in Hartford, Connecticut, in 1837 to Junius Spencer Morgan, a successful banker and financier. Morgan rides his father’s coattails into the banking business and by 1871 is partnered in his own firm, the firm that was eventually to become J.P. Morgan and Company.

It is Morgan who finances Cornelius Vanderbilt’s New York Central Railroad. It is Morgan who finances the launch of nearly every major corporation of the period, from AT&T to General Electric to General Motors to DuPont. It is Morgan who buys out Carnegie and creates the United States Steel Corporation, America’s first billion-dollar company. It is Morgan who brokers a deal with President Grover Cleveland to “save” the nation’s gold reserves by selling 62 million dollars worth of gold to the Treasury in return for government bonds. And it is Morgan who, in 1907, sets in motion the crisis that leads to the creation of the Federal Reserve.

That year, Morgan begins spreading rumors about the precarious finances of the Knickerbocker Trust Company, a Morgan competitor and one of the largest financial institutions in the United States at the time. The resulting crisis, dubbed the Panic of 1907, shakes the US financial system to its core. Morgan puts himself forward as a hero, boldly offering to help underwrite some of the faltering banks and brokerage houses to keep them from going under. After a bout of hand-wringing over the nation’s finances, a Congressional Committee is assembled to investigate the “money trust,” the bankers and financiers who brought the nation so close to financial ruin and who wield such power over the nation’s finances. The public follows the issue closely, and in the end a handful of bankers are identified as key players in the money trust’s operations, including Paul Warburg, Benjamin Strong, Jr., and J.P. Morgan.

Andrew Gavin Marshall, editor of The People’s Book Project, explains:

Andrew Gavin Marshall: At the beginning of the 20th century there was an investigation following the greatest of these financial panics, which was in 1907, and this investigation was on “the money trust.” It found that three banking interests–J.P. Morgan, National City Bank, and the City Bank of New York–basically controlled the entire financial system. Three banks. The public hatred toward these institutions was unprecedented. There was an overwhelming consensus in the country for establishing a central bank, but there were many different interests in pushing this and everyone had their own purpose behind advocating for a central bank.

So to represent most people, you had farmer interests, populists, progressives, who were advocating a central bank because they couldn’t take the recurring panics, but they wanted government control of the central bank. They wanted it to be exclusively under the public control because they despised and feared the New York banks as wielding too much influence, so for them a central bank would be a way to curb the power of these private financial interests.

On the other hand, those same financial interests were advocating for a central bank to serve as a source of stability for their control of the system, and also to act as a lender of last resort to them so they would never have to face collapse. But also, in order to exert more control through a central bank, the private New York banking community wanted a central bank under the exclusive control of them. There’s a shocker.

So you had all these various interests which converged. Of course, the most influential happened to be the New York financial houses which were more aligned with the European financial houses than they were with any other element in American society. The main individual behind the founding of the Federal Reserve was Paul Warburg, who was a partner with Kuhn, Loeb and Company, a European banking house. His brothers were prominent bankers in Germany at that time, and he had of course close connections with every major financial and industrial firm in the United States and most of those existing in Europe. And he was discussing all of these ideas with his fellow compatriots in advocating for a central bank. In 1910, Warburg got the support of a Senator named Nelson Aldrich, whose family later married into the Rockefeller family (again, I’m sure just a coincidence). Aldrich invited Warburg and a number of other bankers to a private, secret meeting on Jekyll Island just off the coast of Georgia where they met in 1910 to discuss the construction of a central bank in the United States, but one which would of course be owned by and serve the interests of the private bank. Aldrich then presented this in 1911 as the “Aldrich Plan” in the U.S. Congress, but it was actually voted out.

The public, suspicious of Senator Aldrich’s banking connections, ultimately reject the Jekyll Island cabal’s “Aldrich Plan.” The cabal does not give up, however. They simply revise and rename their plan, giving it a new public face, that of Representative Carter Glass and Senator Robert Owen.

In the end, the money trust that was behind the Panic of 1907 uses the public’s own outrage against them to complete their consolidation of control over the banking system. The newly retitled Federal Reserve Act is signed into law on December 23, 1913, and the Fed begins operations the next year.

Part Two: How the Scam Works

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” — John Kenneth Galbraith

So how does the Federal Reserve system work? What does it do? Who owns and controls it? These are the basic questions that would get to the heart of the fundamental question: “What is money?” And that is why the answers to these questions have been shrouded in impenetrable economic jargon.

Even the Federal Reserve’s own educational propaganda, which has an unusual tendency toward cutesy animation and talking down to its audience, has a difficult time summarizing the Fed’s mission and responsibilities. According to the Fed:

To achieve [its] goals, the Fed, then and now, combines centralized national authority through the Board of Governors with a healthy dose of regional independence through the reserve banks. A third entity, the Federal Open Market Committee, brings together the first two in setting the nation’s monetary policy.

SOURCE: In Plain English

Precisely what imaginary gaggle of schoolchildren is this economic gibberish aimed at?

The simple truth, hidden behind the sleight of hand of economic jargon and magisterial titles, is that a banking cartel has monopolized the most important item in our entire economy: money itself.

We are taught to think of money as the pieces of paper printed in government printing presses or coins minted by government mints. While this is partially true, in this day and age the actual notes and coins circulating in the economy represent only a tiny fraction of the money in existence. Over 90% of the money supply is in fact created by private banks as loans that are payable back to the banks at interest.

Although this simple fact is obscured by the wizards of Wall Street and gods of money who want to make the money creation process into some special art of alchemy carefully overseen by the government, the truth is not hidden from the public.

In December 1977, the Federal Reserve Bank of New York published another of its dumbed-down, cartoon-ridden information pamphlets for the general public, attempting to explain the functions of the Federal Reserve System. There in black and white they carefully explain the money creation process:

“Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars to accounts on their books in exchange for a borrower’s IOU.[…]Banks create money by ‘monetizing’ the private debts of businesses and individuals. That is, they create amounts of money against the value of those IOUs.”

There it is, in plain English: The vast majority of money in the economy, the “checkbook” money in our accounts at the bank and that we use in our electronic transfers and digital payments, is created not by a government printing press, but by the bank itself. It is created out of thin air as debt, owed back to the bank that created it at interest. This means that bank loans are not money taken from other bank depositors, but new money simply conjured into existence and placed into your account. And the bank is able to create much more money than it has cash to back up those deposits.

The Fed claims to be the entity overseeing and backing up the banking industry. It was established, according to its own propaganda, to stabilize the system and prevent bank runs like the Panic of 1907 from happening again:

Throughout much of the 1800s, almost any organization that wanted could print its own money. As a result, many states, banks, and even one New York druggist, did just that. In fact at one time there were over 30,000 different varieties of currency in circulation. Imagine the confusion.

Not only were there multitudes of currencies, some were redeemable in gold and silver, others were backed by bonds issued by regional governments. It was not unusual for people to lose faith both in the value of their currency and in the entire financial system. With many people trying to withdraw their deposits at once, sometimes the banks didn’t have enough money on hand to pay their depositors. Then when the funds ran out the banks suspended payment temporarily and some even closed. People lost their entire savings. Sometimes regional economies suffered.

Obviously something had to be done. And in 1913, something was. In that year, President Woodrow Wilson signed into effect the Federal Reserve Act. This act created the Federal Reserve system to provide a safer and more stable monetary and banking system.

SOURCE: The Fed Today

If that was indeed its aim, it signally failed to do so in running up one of the greatest bubbles in American history to that point in the 1920s, just a decade after its creation. The popping of that bubble, of course, led directly into the Great Depression and one of the greatest periods of mass poverty in American history. Economists have long argued that the Fed itself was the cause of the depression by its complete mismanagement of the money supply. As former Federal Reserve Chairman Ben Bernanke admitted in a speech commemorating Fed critic Milton Friedman’s 90th birthday: “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”

“Price stability” is another cited tenet of the Federal Reserve’s mandate. But here, too, the Fed has completely failed to live up to its own standards:

Aside from the banking system, the Federal Reserve has another responsibility that’s probably even more important. It’s in charge of something called “monetary policy.” Basically, it means trying to keep prices stable to avoid inflation. Say you buy a CD today for $14. But what if next year the price of the CD jumped to $20 or $50, not because of a change in supply or demand, but because all prices were going up. That’s inflation.

There are a lot of different causes of inflation, but one of the most important is too much money. The Fed can adjust the money supply by injecting money into the system electronically, or by withdrawing money from the economy.

Think of it: the Federal Reserve has the ability to create money, or make it disappear. What’s most important is what happens as a result. Any time the supply of money is altered, the effects are felt throughout the economy.

The Fed’s methods have changed over time to take advantage of the latest computers and electronics, but its mission remains the same: to aim for stable prices, full employment and a growing economy.

SOURCE: Inside The Fed

100 years ago, in 1913, the Fed was created, and we’ve marked it with a vertical line there. Consumer prices now are about 30 times higher than they were when the Fed was created in 1913.

SOURCE: Bloomberg

Paper money, too, is the responsibility of the Federal Reserve. Hence the dollars in circulation are not Treasury notes, not bills of credit, but Federal Reserve Notes, debt-based notes backed up ultimately by the government’s own promise to pay, its “sovereign bonds” secured by the taxpayers themselves. At one time, the Federal Reserve Banks were legally required to keep large stockpiles of gold in reserve to back up these notes, but that requirement was abandoned and today the notes are backed up mostly by government securities. The Fed no longer keeps any actual gold on its books, but gold “certificates” issued by the treasury and valued not at the spot price of $1,300 per troy ounce, but an arbitrarily fixed “statutory price” of $42 2/9 per ounce.

Ron Paul: But I do have one question: During the crisis or at any time that you’re aware of, has the Federal Reserve or the Treasury participated in any gold swap arrangements?

Scott Alvarez: The Federal Reserve does not own any gold at all. We have not owned gold since 1934 so we have not engaged in any gold swaps.

Ron Paul: But it appears on your balance sheet that you hold gold.

Scott Alvarez: What appears on our balance sheet is gold certificates. When we turned in…before 1934, we did…the Federal Reserve did own gold. We turned that over by law to the Treasury and received in return for that gold certificates.

Ron Paul: If the Treasury entered into…because under the Exchange Stabilization Fund I would assume they probably have the legal authority to do it…they wouldn’t be able to do it then because you have the securities for essentially all the gold?

Scott Alvarez: No, we have no interest in the gold that is owned by the Treasury. We have simply an accounting document that is called “gold certificates” that represents the value at a statutory rate that we gave to the Treasury in 1934.

Ron Paul: And still measured at $42 an ounce which makes no sense whatsoever.

SOURCE: House Financial Services Subcommittee Hearings

Clearly, there is a discrepancy between what we are led to believe is motivating the Fed and what it actually does. To understand what the Fed is actually intended to do, it’s first important to understand that the Federal Reserve is not a bank, per se, but a system. This system codifies, institutionalizes, oversees, and undergirds a form of banking called fractional reserve banking, in which banks are allowed to lend out more money than they actually have in their vaults.

G. Edward Griffin: The process of decay and corruption starts with something called “fractional reserve banking.” That’s the technical name for it. And what that really means is that as the banking institution developed over several centuries, starting of course in Europe, it developed a practice of legalizing a certain dishonest accounting procedure.

In other words, in the very, very beginning (if you want to go all the way back), people would bring their gold or silver to the banks for safekeeping. And they said, “Give us a paper receipt, we don’t want to guard our silver and our gold, because people could come in in the middle of the night and they could kill us or threaten us and they’ll get our gold and silver, so we can ‘t really guard it, so we’ll take it to the bank and have them guard it and we just want a paper receipt. And we’ll take our receipt back and get our gold anytime we want.” So in the beginning money was receipt money. Then, instead of changing or exchanging the gold coins, they could exchange the receipts, and people would accept the receipts just as well as the gold, knowing that they could get gold. And so these paper receipts being circulated were in essence the very first examples of paper money.

Well, the banks learned early on in that game that here they were sitting on this pile of gold and all these paper receipts out there. People weren’t bringing in the receipts anymore, very few of them, maybe five percent, maybe seven percent of the people would bring in their paper receipts and ask for the gold. So they said, “Ah ha! Why don’t we just sort of give more receipts out then we have gold? They’ll never know because they only ask for, at the best, seven percent of it. So we can create more receipts for gold then we have. And we can collect interest on that because we’ll loan that into the economy. We’ll charge interest on this money that we don’t really have. And it’s a pretty good gimmick, don’t ya think?” And they go, “Well, yeah, of course.” And so that’s how fractional reserve banking started.

And now it’s institutionalized and they teach it in school. No one ever questions the integrity of it or the ethics of it. They say, “Well, that’s the way banking works, and isn’t it wonderful that we now have this flexible currency and we have prosperity” and all these sorts of things. So it all starts with this concept of fractional reserve banking.

The trouble with that is that it works most of the time. But every once and a while there are a few ripples that come along that are a little bit bigger than the other ripples. Maybe one of them is a wave. And more than seven percent will come in and ask for their gold. Maybe twenty percent or thirty percent. And well, now the banks are embarrassed because the fraud is exposed. They say, “Well, we don’t have your gold” “What do you mean you don’t have my gold!! I gave it to you and put it on deposit and you said you’d safeguard it.” “Well, we don’t have it, we loaned it out.” So then the word gets out and everyone and their uncle comes out and lines up for their gold. And of course they don’t have it, the banks are closed, and they have bank holidays. Banks are embarrassed, people lose their savings. You have these terrible banking crashes that were ricocheting all over the world prior to this time. And that is what caused the concern of the American people. They didn’t want that anymore. They wanted to put a stop to that.

And that was the whole purpose, supposedly, of the Federal Reserve System. Was to put a stop to that. But since the people who designed the plan to put a stop to it were the very ones who were doing it in the first place, you cannot be surprised that their solution was not a very good one so far as the American people were concerned. Their solution was to expand it. Not to control it, to expand it. See, prior to that time, this little game of fractional reserve banking was localized at the state level. Each state was doing its own little fractional reserve banking system. Each state, in essence, had its own Federal Reserve. Central banks were authorized by state law to do this sort of thing. And that was causing all this problem. So the Federal Reserve came along and said, “No no, we’re not going to do this at the state level anymore, because look at all the problem it’s causing. We’re going to consolidate it all together and we’re going to do it at the national level.”

SOURCE: Interview with G. Edward Griffin

The key to the system, of course, is who controls this incredible power to “regulate” the economy by setting reserve requirements and targeting interest rates. The answer to this question, too, has been deliberately obscured.

The Federal Reserve System is a deliberately confusing mishmash of public and private interests, reserve banks, boards and committees, centralized in Washington and spread out across the United States.

Andrew Gavin Marshall: So you have the Federal Reserve Board in Washington appointed by the President. That’s the only part of this system that is directly dependent on the government for input that’s the “federal” part: that the government—the [US] President, specifically—gets to choose a few select governors. The twelve regional banks—the most influential of which is the Federal Reserve Bank of New York, which is essentially based in Wall Street to represent Wall Street—is a representative of the major Wall Street banks who own shares in the private, not federal, but private Federal Reserve Bank of New York. All of the other regional banks are also private banks. They vary according to how much influence they wield but the Kansas City Fed is influential, the St. Louis Fed, the Dallas Fed, but the New York Fed is really the center of this system and precisely because it represents the Wall Street banks who appoint the leadership of the New York Fed.

So the New York Fed has a lot of public power, but no public accountability or oversight. It does not answer to Congress the way that the chairman of the Federal Reserve Board of Governors does and even the chairman of the Federal Reserve Board, who is appointed by the President, does not answer to the President, does not answer to Congress. He goes to Congress to testify, but the policy that they set is independent. So they have no input from the government. The government can’t tell them what to do, legally speaking, and of course they don’t.

Rep. John Duncan: Do you think it would cause problems for the Fed or for the economy if that legislation was to pass?

Ben Bernanke: My concern about the legislation is that if the GAO is auditing not only the operational aspects of our programs and the details of the programs, but is making judgments about our policy decisions, that would effectively be a takeover of monetary policy by the Congress, a repudiation of the independence of the Federal Reserve, which would be highly destructive to the stability of the financial system, the dollar, and our national economic situation.

SOURCE: Bernanke Threatens Congress

The Federal Open Market Committee is responsible for setting interest rates. Now this committee, which is enormously powerful, has as its membership the Governor and Vice Chair of the Federal Reserve Board, but on the Federal Open Market Committee most of the membership is the presidents of the regional Federal Reserve Banks representing private interests. So they have significant input in setting the interest rates. Interest rates are not set by a public body, they’re set by private financial and corporate interests. And that’s whose interests they serve, of course.

The reason that the Federal Reserve goes to such great lengths to make its organizational structure as confusing as possible is to cover up the massive conflicts of interest that are at the heart of that system. The fact is that the Federal Reserve System is comprised of a Board of Governors, 12 regional banks, and an Open Market Committee. The privately-owned member banks of each Federal Reserve Bank vote on the majority of the Reserve Bank’s directors, and the directors vote on members to serve on the Federal Open Market Committee, which determines monetary policy. What’s more, Wall Street is given a prime seat at the table, with tradition holding that the president of the powerful New York Federal Reserve Bank be given the vice chairmanship of the FOMC and be made a permanent committee member. In effect, the private banks are the key determinants in the composition of the FOMC, which regulates the entire economy.

According to the Fed, “its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.”

Or, in the words of Alan Greenspan: “The Federal Reserve is an independent agency, and that means there is no other agency of government that can overrule actions that we take.”

The Fed goes on in its self-mythologization to state that it is “not a private, profit-making institution.” This characterization is dishonest at best and an outright lie at worst.

The regional banks are themselves private corporations, as noted in a 1928 Supreme Court ruling: “Instrumentalities like the national banks or the federal reserve banks, in which there are private interests, are not departments of the government. They are private corporations in which the government has an interest.” This point is even admitted by the Federal Reserve’s own senior counsel.

Yvonne Mizusawa: Our regulations do specify overall terms for the lending, but the day to day operation of the banking activities are conducted by the Federal Reserve Banks. They are banks, and indeed they do lend…

Peter W. Hall: So they’re their own agency, then, essentially, in that regard.

Yvonne Mizusawa: They are not agencies, your honor, they are “persons” under FOIA. Each Federal Reserve Bank, the stock is owned by the member banks in the district, 100% privately held, they are private boards of directors. The majority of those boards are appointed by the independent banks, private banks in the district. They are not agencies.

SOURCE: Freedom of Information Cases

These private corporations issue shares that are held by the member banks that make up the system, making the banks the ultimate owners of the Federal Reserve Banks. Although the Fed’s profits are returned to the Treasury each year, the member banks’ shares of the Fed do earn them a 6% dividend. According to the Fed, the fixed nature of these returns mean that they are not being held for profit.

Despite the dishonest nature of this description, however, it is important to understand that the bankers who own the Federal Reserve indeed do not make their money from the Fed directly. Instead, the benefits are much less obvious, and much more insidious. The simplest way that this can be understood is that, as a century of history and the specific example of the last financial crisis shows, the Fed was used as a vehicle to bail out the very bankers who own the Fed banks in the most obvious example of fascistic collusion imaginable.

Michel Chossudovsky: A handful of financial institutions have enriched themselves as a result of institutional speculation on a large scale, as well as manipulation of the market. And secondly what they have done is that they have then gone to their governments and said, “Well, we are now in a very difficult situation and you need to lend us…you need to give us money so that we can retain the stability of the financial system.”

And who actually lends the money, or brokers the public debt? The same financial institutions that are the recipients of the bailout. And so what you have is a circular process. It’s a diabolical process. You’re lending money…no, you’re not lending money, you’re handing money to the large financial institutions, and then this is leading up to mounting public debt in the trillions. And then you say to the financial institutions, “We need to establish a new set of Treasury bills and government bonds, etc.,” which of course are sold to the public, but they are always brokered through the financial institutions, which establish their viability, and so on and so forth. And the financial institutions will probably buy part of this public debt so that in effect what the government is doing is financing its own indebtedness through the bailouts. It hands money to the banks, but to hand money to the banks, it becomes indebted to those same financial institutions, and then it says, “We now have to emit large amounts of public debt. Please can you help us?” And then the banks will say: “Well, your books are not quite in order.” And then the government will say: “Obviously they’re not in order because we’ve just handed you 1.4 trillion dollars of bailout money and we’re now in a very difficult situation. So we need to borrow money from the people who are in fact the recipients of the bailout.”

So this is really what we’re dealing with. We’re dealing with a circular process.

SOURCE: The Banker Bailouts

The 2008 crisis and subsequent bailouts are merely the latest and most brazen examples of the fundamental conflicts of interest at the heart of America’s privately-owned central banking system.

Beginning with the collapse of Lehman Brothers in September of that year, the Federal Reserve embarked on an unprecedented program of bailouts and special zero-interest lending facilities for the very banks that had caused the subprime meltdown in the first place. By the cartelization of the Federal Reserve structure, and thus not by accident, it was the very bank presidents who had overseen their banks’ lending practices that ended up in the director positions of the Federal Reserve Banks that voted on where to direct the trillions of dollars in bailout money. And unsurprisingly, they directed it toward their own banks.

A stunning 2011 Government Accountability Office report examined $16 trillion of bailout facilities extended by the Fed in the wake of the crisis and exposed numerous examples of blatant conflicts of interest. Jeffrey Immelt, chief executive of General Electric served as a director on the board of the Federal Reserve Bank of New York at the same time the Fed provided $16 billion in financing to General Electric. JP Morgan Chase Chief Executive Jamie Dimon, meanwhile, was also a member of the board of the New York Fed during the period that saw $391 billion in Fed emergency lending directed to his own bank. In all, Federal Reserve Board members were tied to $4 trillion in loans to their own banks. These funds were not simply used to keep these banks afloat, but actually to return these Fed-connected banks to a period of record profits in the same period that the average worker saw their real wages actually decrease and the economy on Main Street slow to a standstill.

Then Fed Chairman Ben Bernanke was confronted about these conflicts of interest by Senator Bernie Sanders upon the release of the GAO report in June 2012.

Ben Bernanke: Senator, you raised an important point, which is that this is not something the Federal Reserve created. This is in the statute. Congress in the Federal Reserve Act said, “This is the governance of the Federal Reserve.” And more specifically that bankers would be on the board…

Bernie Sanders: 6 out of 9.

Ben Bernanke: Sorry?

Bernie Sanders: 6 out of 9 in the regional banks are from the banking industry.

Ben Bernanke: That’s correct. And that is in the law. I’ll answer your question, though. The answer to your question is that Congress set this up, I think we’ve made it into something useful and valuable. We do get information from it. But if Congress wants to change it, of course we will work with you to find alternatives.

SOURCE: Conflicts at the Fed

Bernanke is completely right. These conflicts are in fact a part of the institution itself. A structural feature of the Federal Reserve that was baked into the Federal Reserve Act itself over 100 years ago by the bankers who conspired to cartelize the nation’s money supply. You could not ask for a more succinct reason why the Federal Reserve itself, this admitted cartel of banking interests, needs to be abolished…but you could get one.

Part Three: End the Fed

They who control the credit of a nation, direct the policy of Governments and hold in the hollow of their hands the destiny of the people.” — Reginald McKenna

We now know that for centuries the people of the United States have been at war with the international banking oligarchs. That war was lost, seemingly for good, in 1913, with the creation of the Federal Reserve. With the passage of the Federal Reserve Act, President Woodrow Wilson consigned the American population to a century in which the money supply itself has depended on the whims of the banking cabal. A century of booms and busts, bubbles and depressions, has led to a wholesale redistribution of wealth toward those at the very top of the system. At the bottom, the masses toil in relative poverty, single-income households becoming double-income households out of necessity, their quality of life being slowly eroded as the Federal Reserve Notes that pass for dollars are themselves devalued.

Worse yet, the fraud itself perpetuates Alexander Hamilton’s persistent myth that a national debt is necessary at all. The US is now locked into a system whereby the government issues bonds to generate the funds for their operations, bonds that are backed up by the taxation of the public’s own labor.

The perpetrators of this fraud, meanwhile, remain in the shadows, largely ignored by a general public that could instantly recognise the latest Hollywood heartthrob or pop idol, but have no clue what the head of Goldman Sachs or the New York Fed does, let alone who they are. This cabal bear allegiance to no nationality, no philosophy or creed, no code of ethics. They are not even motivated by greed, but power. The power that the control of the money supply inevitably brings with it.

It did not take long for this lust for power to rear its head. In 1921, just seven years after the Fed began operations, the same J.P. Morgan-connected banking elite that founded the Federal Reserve incorporated an organization called the Council on Foreign Relations with the goal of taking over the foreign policy apparatus of the United States, including the State Department. In this quest, it was remarkably successful. Although there are only about 4,000 members in the organization today, its membership has included 21 Secretaries of Defense, 18 Treasury Secretaries, 18 Secretaries of State, 16 CIA directors, and many other high-ranking government officials, military officers, business elite, and, of course, bankers. The first Director of the CFR was John W. Davis, J.P. Morgan’s personal lawyer and a millionaire in his own right.

Together with its sister organizations in Britain and elsewhere around the world, these groups would work together toward what they called a “New World Order” of total financial and political control directed by the bankers themselves. As Carroll Quigley, noted Georgetown historian and mentor of Bill Clinton, wrote in his 1966 work, Tragedy and Hope: A History of The World In Our Time:

“The powers of financial capitalism had [a] far-reaching aim, 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 private meetings and conferences. The apex of the system 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.”

This is why the bankers and their partners in government and business conspired to bring about the 2008 crisis. Not for the pursuit of money, but power. In the same way the bankers used the Panic of 1907 to consolidate their control over the money supply, they hope to use the 2008 crisis and subsequent panics, which they themselves have created, to consolidate their political control.

The inevitable conclusion, one that flows necessarily from the true understanding of this situation, is that the Federal Reserve system needs to be consigned to the dustbin of history. After a century of enslavement, it is time for the American public to finally throw off the bankers’ debt chains.

Andrew Gavin Marshall: If there was ever a point in human history to start questioning alternatives, this would be it. And to think that where we are…and simply say, “Oh, well this is the best of our options,” how many of the best options lead to self-destruction? Doesn’t sound like a best option.

I think that with a world of seven billion people, we can probably come up with something better than a system in which a few thousand people benefit so much at the expense of everything else on this world and at the expense of the potential for the future of mankind. They’re leveraging our future, and so long as we accept this way of thinking, so long as we accept these institutions as having dominance, that’s the direction we’ll be going.

So I think reform is a good way to try and stall and to push back directly against the expanding and evolving power structures, but radical change is what’s really needed, and that has to be built from the bottom up. But I think that these two processes can and should go together in parallel.

If you’ve made it this far, congratulations. You are now better informed on the economic history of the United States and the truth about the Federal Reserve than 99% of the population. If you do nothing else, then just working to get those around you educated on this information alone will have a profound effect. Once they learn of the scam, many are motivated to do something about it, and they, in turn, inform others. This is the viral nature of suppressed truth, and it is the reason that more people are aware of and energized by the issue of the Federal Reserve and the nature of money than ever before.

Perhaps even more amazingly, this movement is spreading to other parts of the globe. Recognizing the interlocking nature of the modern global economy, and the international nature of the banking oligarchy, movements to abolish the Federal Reserve have sprung up in Europe, where protests against the cartelized central banking system are taking place in over 100 cities attracting 20,000 people on a weekly basis.

Lars Maehrholz: I started this movement because I realized that the Federal Reserve Act, in my opinion, is one of the worst laws in the whole world. So a private banking company is lending America the money, and in my opinion is not democratic anymore. The Federal Reserve tells the government what to do, and that’s the problem.

Luke Rudkowski: It’s a very big problem, especially in the U.S. Why is it a global issue, and why are people doing it here in Germany?

Lars Maehrholz: Because when you realize that this finance system, it’s a global system, you have to go really to the beginning of the system. And in my opinion, it’s also the World Bank and the International Monetary Fund and stuff like this, but at the beginning of all this is a law from 1913. Woodrow Wilson signed it, and this is the beginning of all this hardcore capitalism we are now suffering from. And the only way to stop this is maybe to break this law.

SOURCE: Establishment is Afraid of End The Fed Movement in Germany

But what if the burgeoning movement to End The Fed is successful? What system do people propose as the answer? There have been several proposals along different lines by various researchers. Some argue for a return to America’s colonial roots of debt-free money issued by state-run banks, pointing to the Bank of North Dakota as one already functioning, successful model of this approach.

Ellen Brown: We’ve had two banking systems ever since the 1860’s with the state bank system and the federal bank system, and the federal bank system are the big Wall Street banks particularly. They dominate the federal system. So, they’re taking over right now. In California we don’t even have any local banks where I am. We had two and I had accounts in both of them and now one of them is Chase Bank and the other is U.S. Bank. So they’re both big Wall Street banks now that have been taken over.

So it’s the local banks that have an interest in serving the local business. The big banks have no interest in making loans to local businesses it’s too risky, why should they bother? They’ve got this virtually free money they can get from the Fed and from each other and it’s much more lucrative to them either to speculate in commodities or other thing abroad, or what works very well for them is to buy long-term government bonds at 3% because these have no capital requirement. The capital requirements for government bonds are zero. So they can buy all of those that they want. Whereas if they make loans for mortgages or they make loans to businesses then they have to worry about the capital requirement and as soon as they’ve used up all their capital—in other words eight dollars in capital will get you a hundred dollars of loans—then they can’t make any more loans they have to wait for thirty years for the loans to get paid off. So what they do if they do buy mortgages is sell them off too investors and so that’s the whole mortgage-backed security scam that we’ve seen. They had no motivation to make sure that these borrowers were actually sound borrowers they just wanted to make a sale. So they sold the stuff to the unwary investors who might be somebody in Iceland or Sweden or pension funds. So that didn’t work out so well.

So a state bank partnering with the local banks can provide the capital. It can help them with capital. In North Dakota the state bank guarantees the loans of the local banks, allowing them to make much bigger loans than they could otherwise. The state bank provides liquidity to the small banks. That’s why the local banks aren’t making loans to small business right now, because they don’t know that they can get money from the other banks as needed. The way banking works is they make the loan first. I mean, if you have credit lines to many different businesses and if they all hit up their credit lines at once you are going to run out of money. So you don’t dare do that unless you know that you can get short-term loans from the other banks. And so what’s happening right now, even though there’s $1.6 trillion is excess reserves sitting on the books of the big banks, they’re not available to the little banks and the reason is because the Fed is paying 0.25% interest on those reserves. So the banks have no incentive to lend them to the little banks. Why let go of them when you can make just as much keeping them and then you still have your reserves and you can use them as collateral to buy bonds or something that’ll make you more money?

So the whole system is messed up and in North Dakota, the bank of North Dakota provides liquidity for these local banks.

SOURCE: Ellen Brown: Finance Capital vs. Public Banking

Others advocate a decentralized system of alternative and competing currencies that greatly reduce or even eliminate altogether the need for a central bank.

Paul Glover: Well, 22 years ago in Ithaca, New York I noticed there were a lot of people, friends particularly, that had skills and time that were not being employed or respected by the prevailing economy. While we had much desire to create things and trade them with each other and many services we could provide to each other, we didn’t have the money. So since I have a background in graphic design, journalism and arrogance I went to my computer and designed paper money for Ithaca, New York. I designed pretty colourful money with pictures of children, waterfalls and trolley cars denominated in hours of labor. One-hour note, half-hour, quarter, eight-hour notes and two-hour notes. I then began to issue to each of those pioneer traders who had agreed to being listed in the directory a specific starter amount, and the game began. An hour has been worth basically $10 U.S. dollars which at that time 20 years ago was double the minimum wage. People who usually expect more than $10 per hour of their service can charge multiple hours per hour but the denomination puts between us as residents of our community, that reminds us that we are fellow citizens, not merely winners or losers scrambling for dollars. It introduces us to each other on the basis of these skills and services that we have, that we are more proud to provide for each other than often is the case with a conventional job. Just the stuff we have to do to get the money to pay the bills.

So through that trading process, that more intimate scale process within the community, we’re more easily able to become friends and lovers and political allies.

James Corbett: It’s an inspiring story and tell people about how much money has circulated through this community. I mean, it’s important for people to understand just how successful this has been.

Paul Glover: Because we are not a computer system we don’t have a specific volume of trading recorded but by the grapevine, by phone surveys and over the years watching the money move we were able to guess very reliably that several million dollars equivalent of this money has transacted over those years. Making loans without charging interest up to $30,000 value, which is the fundamental monetary revolution in our system. Then as well, making grants of the money to over a hundred community organizations.

SOURCE: Avoiding Economic Collapse: Complementary Currencies

Some argue for currencies whose mathematical nature prevent them from being merely conjured into existence whenever a federal government wants to wage another war of aggression or forge another link in the seemingly endless train of governmental tyranny and abuse.

Roger Ver: What people have to understand about bitcoin is that it’s a completely decentralized network. There’s no central server, there’s no controlling company, there’s no office, it’s just free software that anyone can download and start running on their computer anywhere in the world. And that the bitcoins themselves can be transferred to or from anyone, anywhere in the world and it’s impossible for any bank or government or entity to block you from sending or receiving those bitcoins. There’s a limited supply of those bitcoins, there will never ever be any more than 21 million bitcoins. So, like everything the price is set based on supply and demand. Because the supply of bitcoins is limited and the demand is increasing as more and more people start to use them and more and more websites start to accept them, the price of bitcoins in terms of dollars is going to have to increase, even a lot more than the $500 per bitcoin that it is today.

James Corbett: Are there any drawbacks at all to the idea of using a crypto-currency?

Roger Ver: If you’re part of the current power elite that can just print money at will to spend on whatever you feel like, then, yeah, the world switching over to bitcoin is probably not going to benefit you. But if you’re one of the normal people that aren’t working for the Federal Reserve or any central bank that’s printing money to pay to your friends and that sort of thing, then a bitcoin world is a wonderful thing for you.

SOURCE: How to Defund the System: Bitcoin vs. the Central Banksters

Sound money. Cryptocurrencies. State banks. LETS programs. Self-issued credit. These and many other solutions have all been proposed and many of them are in use in different localities today. Information on all of these ideas and how they are being applied in various parts of the world is widely available online today. The point is that the question of what money is and how it should be created is perhaps the single greatest question facing humanity as a whole, and yet it is one that has been almost completely eliminated from the national conversation…until recently.

For the first time in living memory, people are once again rallying around the monetary issue, and American politics stands on the threshold of a transformation almost unimaginable just two decades ago.

And so the rest of the story is now in our hands. Once we understand the scam that has taken place, the gradual consolidation of wealth and power in the hands of an elite few banking oligarchs and the growing impoverishment of the masses, all in the name of banking funny money created out of nothing and loaned to the public at interest, we can choose to get active or to do nothing at all.

For those who choose to get active, there are some steps that you can take to help change the course of this system:

1) Follow the links and resources from the transcript of this documentary at corbettreport.com/federalreserve to familiarize yourself with the history, the connections and the functions of the Federal Reserve system. If you can’t explain this material to yourself then you will never be able to teach it to others.

2) Begin reaching out to others to bring them up to speed on the issue. It can be as simple as broaching this conversation in the Monday morning water cooler talk or passing out a copy of this documentary or sending out links to this information to your email list. Insert this topic into your conversations. When people start talking about the national debt or the state of the economy or other political talking points, get them to question the roots of these issues, and why there is a national debt at all.

3) When you are able to find or create a group of like-minded people in your area who are engaged with the issue, start a study group on the issue and its solutions. The study group can help source alternative or complementary currencies in the local area, or, if none exist already, the group can form the basis for a community of local businesses and customers who are willing to start experimenting with ways to wean themselves off of the Federal Reserve notes.

4) Use the resources at corbettreport.com, including the Federal Reserve information flyer, or hold DVD screenings, to attract interest in your group and draw others into studying the true nature of the monetary system.

The work of building up an alternative to the current system can seem daunting, even at times overwhelming. But it’s important to keep in mind that the Federal Reserve System that seems so monolithic today has only been around for one century. Central banks have been defeated in America before and they can be defeated again.

The question of how we decide to change this system is not rhetorical it will either be answered by an informed, engaged, active population working together to create viable alternatives and to dismantle the current system, or it will be answered by the same banking oligarchy that has been controlling the money supply, and indeed the lifeblood of the country, for generations.

Now, one century after the creation of the Federal Reserve System, we have a choice to make: whether the next century, like the one before it, will be a century of enslavement or, transformed by the actions and choices that we make in the light of this knowledge, a century of empowerment.


1913: The Horrible Year

For all the problems America had prior to 1913 (including the unnecessary and horrifying Civil War), nothing spelled the death of the nation like the horrors of 1913.

February 3rd:

The 16th Amendment to the United States Constitution was ratified, authorizing the Federal government to impose income taxes on individuals. An amendment to a tariff act in 1894 had attempted to do this, but since it was clearly unconstitutional, the Supreme Court struck it down. As a result – and mostly under the banner of bleeding the rich – the 16th amendment was promoted and passed.

As a result, the Revenue Act of 1913 was signed into law by President Woodrow Wilson in October. Income taxes began in 1914, with the government swearing (as in, “only a crazy person would say otherwise!”) that the rate would never, ever go higher than one or two percent.

And, by the way, the amendment was introduced by Senator Aldrich of Rhode Island, to whom we’ll come again shortly.

April 8th:

The 17th Amendment to the United States Constitution was ratified, taking the powers of the states and transferring them to Washington, by mandating the popular election of senators.

Previously, senators were appointed by state legislatures, restraining the power of the national government. This change gave political parties immediate and massive power, nearly all of which was consolidated in the city of Washington.

The amendment was ratified in the name of restraining the rich and making government into a force for good. It was true that state governments were often corrupt, but the implied idea that Washington was pristine was and remains a bad joke. A structure featuring small, separate pockets of corruption is far less dangerous than one featuring a single, large seat of corruption, to which oceans of money are gathered. As Thomas Jefferson wrote:

It is not by the consolidation or concentration of powers, but by their distribution that good government is effected.

December 23rd:

Woodrow Wilson signs the Federal Reserve Act, which had passed Congress just the previous day. This system – called the Aldrich Plan, and promoted by Senator Nelson Aldrich of Rhode Island – gave a monopoly on the creation of dollars to a consortium of large banks.

The Act was passed, by the way, in the name of financial stability.

And Senator Aldrich? Wikipedia says this about him:

He… dominated all tariff and monetary policies in the first decade of the 20th century… Aldrich helped to create an extensive system of tariffs that protected American factories and farms from foreign competition, while driving the price of consumer goods artificially high… Aldrich became wealthy with insider investments in streets, railroads, sugar, rubber and banking… His daughter, Abby, married John D. Rockefeller, Jr., the only son of John D. Rockefeller.

I’ll leave you to connect the dots on Aldrich, his family, the Rockefeller banking empire (Chase Manhattan and others), high political offices (such as Governor and Vice President Nelson Aldrich Rockefeller) and so on.


Act of December 23, 1913 (Federal Reserve Banks Act), Public Law 63-43, 38 STAT 251, which established Federal reserve banks to furnish an elastic currency, to afford means of rediscounting commercial

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The Federal Reserve Comes To Life or The US Gets a Central Bank

The Federal Reserve Act, also known at the time as the Currency Bill, or the Owen-Glass Act. The bill called for a system of eight to twelve regional Reserve Banks that would be owned by commercial banks and whose actions would be coordinated by a committee appointed by the President. The Federal Reserve System would be a privately owned central banking system. Bankers would run the twelve Banks and those Banks would be supervised and by the Federal Reserve Board.

The Federal Reserve Act was passed of December 23 by a vote of 298 to 60. The Senate passed the measure 43 to 25. President Wilson signed the bill on December 23 at 6 PM.

The bill had been shepherded through a Congressional Conference Committee meeting scheduled for between 1:30 - 4:30 AM (when most members of Congress were asleep) on December 22, 1913. The Act was then voted on the next day and passed although many members of the body had left for the Christmas holidays and most others who stayed behind hadn't had time to read it or know its contents.

Europe

World war breaks out in Europe. President Woodrow Wilson declares American neutrality.

Panama

Congress ratifies the 16th Amendment creating the Internal Revenue Service. The amendment was proposed in Congress by Senator Nelson Aldrich.

As presented the income tax would only be one percent of income under $20,000, with the assurance that it would never increase.


THERE ARE SEVERAL SIMPLE WAYS TO ABOLISH THE FED:

  • Inform all Americans of this report and collect signatures on the petition.
  • Demand that Congress and the media support "We the People's" rights to uphold the Constitution and abolish the illegal FED.
  • Write to your local newspaper, show them this report and ask them to keep freedom of the press alive, support the Constitution and abolish the FED. Freedom of the press should not be limited to those who own it.
  • Write to CNN and other media. Tell them you want to see FED-UP(tm) on their programs.
  • Ask your State/County Representatives to use their Constitutional powers to enforce your rights under the Constitution to have the FED abolished. Write to Reference 5 for detailed paperwork to be given to your local government.
  • Call in on TV and radio talk shows and discuss why the FED should be abolished.
  • Support businesses who distribute the petition and display the sign "FED-UP". If they don't, please ask them to.
  • Ask candidates if they plan to introduce legislation to abolish the FED and uphold the Constitution which they are obligated to defend. Make candidates take a stand! Have the politician sign a contract with "We the People" enacting legislation to abolish the FED by a certain date or the politician must resign from office. The Democratic Congress and President promised the people "no FED" before the election. Thirteen months later, they passed the FED.
  • Display your bumper sticker to show support and inform people.
  • If 5,000 people distribute 2-3 brochures daily, we can inform half a million Americans monthly. Roughly 10% of these half a million people will make copies and inform others. Our goal is to inform 70 million adult Americans. Public opinion will soon be on our side. Once 10% of the population know, the other 90% will follow.
  • Pray and ask God to return us to "One nation under God."

It is our recommendation that you research the references listed, support all organizations that re trying to stop this fraud, and help us in our goal to get every American to sign this petition.

(1) "The Federal Reserve Bank", by H.S. Kenan, published by The Noontide Press (2) National Committee to Repeal the Federal Reserve Act, P.O. Box 156, Westmont, IL 60559 (3) "The New World Order, Saving America", P.O. Box 1205, Middleburg, FL 32050-1205 (4) "Bulletin", February 1989 & November 1991 issues, P.O. Box 986, Ft. Collins, CO 80522 (Newsletter $3 each) (5) "The Most Secret Science", Betsy Ross Press, P.O. Box 986, Ft. Collins, CO 80522 (Book) States attempt to abolish the FED. $12.00 (6) "Insider Report", P.O. Box 84903, Phoenix, AZ 85071 (7) "Phoenix Journal Express", P.O. Box 986, Tehachap, CA 93581 (8) $16 trillion in government and private debt, much of which the FED printed and collected interest on (Reference 3) (9) Northpoint Tactical Team, P.O. Box 129, Topton, NC 28781 (10) Christian Defense League, Box 449, Arabi, LA 70023 (11) "Bulletin", June 1992 issue, P.O. Box 986, Ft. Collins, CO 80522 (Newsletter $3 each) (12) "Savings and Loan Unethical Bailout" by Rev. Casimir F. Gierut (13) "Dark Secrets of the New Age" by Texe Marrs (14) "En Route to Global Occupation" by Gary H. Kah (15) "One World" by John Amkerberg & John Weldon (16) "The Spotlight", Liberty Lobby, 300 Independence Ave. S.E., Washington, D.C. 20003 (Newspaper) (17) "Repeal the Federal Reserve Banks" by Rev. Casimir Frank Gierut (18) The Constitution of the United States (19) "Walls in Our Minds" by M.J. Red Beckman, Common Sense Press, P.O. Box 1544, Billings, MT 59103. A must read book - $2.50 (20) "The Law That Never Was" Volume I, Bill Benson & M.J. Red Beckman, P.O. Box 1544, Billings, MT 59103 or write to Bill Benson, P.O. Box 550, South Holland, IL 60473. Proof that the 16th Amendment (income tax) was never properly ratified. (21) "New World Order: The Ancient Plan of Secret Societies" by William T. Still (22) "The Secrets of the Federal Reserve" by Mullins (23) "The Social Security & Pension Conspiracy" by Metz (24) "The History of the Federal Reserve. How to Replace It or How to Reform It" by Metz - for references 23 & 24 write to Howard Metz, P.O. Box 341, Malverne, LI 11565 (25) "The New World Order" by Pat Robertson. On page 131 he states that we must abolish the FED. (26) "Operation Vampire Killer 2000", highly recommended book. $6.00 ($8.00 for 2) from ACLA, P.O. Box 8712, Phoenix, AZ 85066 This is a must read book with quotes from well known people. This book proves conspiracy. Your local police needs to read this book so they will protect you - not become United Nations Agents against you. This book will stop the New World Order plan to take over the U.S.A. "America Betrayed", Center For Action, 652 N. Glenview, Nesa, AZ 85213 For references 1, 12, and 17, contact The National Committee to Repeal the Federal Reserve Act (Reference 2)

MEDIA BLACKS OUT THE FACTS

Here's one terrific example. John Swinton, the former Chief of Staff for the New York Times, was one of New York's best loved newspapermen. Called by his peers "The Dean of his Profession", John was asked in 1953 to give a toast before the New York Press Club, and in so doing, made a monumentally important and revealing statement. He is quoted as follows:

"There is no such thing, at this date of the world's history, in America, as an independent press. You know it and I know it. There is not one of you who dares to write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping my honest opinion out of the paper I am connected with. Others of you are paid similar weekly salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the streets looking for another job. If I allowed my honest opinions to appear in one issue of my paper, before twenty-four hours my occupation would be gone. The business of the journalists is to destroy the truth to lie outright to pervert to vilify to fawn at the feet of mammon, and to sell his country and his race for his daily bread. You know it and I know it, and what folly is this toasting an independent press? We are the tools and vassals of rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance. Our talents, our possibilities, and our lives are all the property of other men. We are intellectual prostitutes."

RICHARD M. COHAN, Senior Producer of CBS political news said: "We are going to impose OUR AGENDA on the coverage by dealing with issues and subjects that WE choose to deal with."

RICHARD SALANT, former President of CBS News stated: "Our job is to give people not what they want, but what WE decide they ought to have."

And what is "their" agenda? What do they believe we, the American people, - THE COMMON HERD, ". ought to have?" Here is the answer:

NORMAN THOMAS - For many years the U.S. Socialist Presidential candidate proclaimed: "The American people will never knowingly adopt Socialism. But under the name of "liberalism" they will adopt every fragment of the socialist program, until one day America will be a Socialist nation, without knowing what happened."

HERMAN DISMORE, foreign editor of the New York Times from 1950 to 1960: "The New York Times is deliberately pitched to the liberal (socialist) point of view."

WALTER CRONKITE: "News reporters are certainly liberal (socialists) and left of center."

BARBARA WALTERS: "The news media in general are liberals (socialists)."

Reference for everything above - Operation Vampire Killer, P.O. Box 8712, Phoenix, AZ 85066

The world, finally including even the balky American public, is "being rapidly educated into overcoming limited patriotism" and accepting "United Nations solutions to common global problems," said Henry Kissinger.

  • Establishing a UN tax to not only finance new global programs, but to condition "citizens of the world" to paying tribute.
  • Conditioning the public -- again, especially "those stubborn Americans" -- to accept the idea of a UN army that could, by force, impose its will on the internal affairs of any nation.

"Today, Americans would be outraged if UN forces entered Los Angeles to restore order tomorrow, they will be grateful," Kissinger said (of the 1992 Los Angeles riot).

Kissinger reported on a shocking speech made by UN Secretary General Butrous Ghali to the American Association of Newspaper Publishers at UN headquarters in New York in early May. The publishers' newspapers covered up the story.

The UN Security Council must have a permanent force that can be deployed anywhere in the world, instantly, to "protect the peace" and "ensure human rights" the secretary-general told the newspaper publishers.

UNITED NATIONS TO INVADE UNITED STATES

This force must be allowed to intervene "at the local and community levels," the UN leader told the American publishers.

What is "especially gratifying," Kissinger said, "is that the publishers showed no reservations about the prospects of UN forces landing in the United States and imposing the UN's will."

Reference - The Spotlight, June 8, 1992, page 10. Liberty Lobby, 300 Independence Ave. S.E., Washington, D.C. 20003 (Newspaper)


SUMMARY OF QUICK FACTS

  • Various dates and proofs that the Bankers created panic to push Congress to pass laws favoring bankers. Reference 22
  • President Wilson received $85,000 bribe from bankers. Reference 22, pages 25-26
  • How England, through the Bankers, controls our Congress. Reference 22, pages 47-48
  • Rockefeller is connected to President Carter. Reference 22, page 171 Reference 25, page 103
  • How George Bush is directly connected to the FED bank. Reference 22, page 49
  • President Hoover and President Roosevelt were international Bankers. Reference 22, pages 69-71 and pages 157-159
  • President Nixon was hired by Rockefeller's law firm to become President. Reference 25, pages 100-101
  • FED owner's manual to destroy and control U.S. citizens. Reference 22, pages 55-56
  • Proof Bankers claim they control the government. Reference 22, page 59
  • Proof the FED knowingly created the Great Depression for their gain. Reference 22, pages 137-170
  • FED bankers are directly linked to the New World Order and the United Nations. New World Order was discussed by George Bush, Rockefeller, Adolph Hitler, and Jimmy Carter. Reference 25, pages 5-7
  • The Great Seal on back of the FED $1 bill, below pyramid, the NOVUS ORDO SECLORUM means "New World of the Ages" or --->> New World Order. Reference 25, page 35
  • How the Banker's tax-exempt organizations fund activities to destroy America's freedom by attacking our Constitution and way of life. Reference 25, pages 138-159 Reference 14 (throughout whole book)
  • Senator Barry Goldwater warned of economic powers capable of bypassing or controlling the political powers. Bank induced depression is possible in the future to force political change. Reference 25, 131
  • Rockefeller's money was used to seize control of America's teaching and training of students by rewriting history and textbooks. Rockefeller has also funded the National Education Association (NEA). Reference 14, page 61
  • Gary Kah, high-ranking government liaison having first-hand knowledge of the New World Order exposes the truth. Read his book and En Route To Global Occupation. Reference 14

First, we must uphold the Constitution. Please call the Hotline (217-854- 7504) weekly for new information. When a state considers a Constitutional Convention, concerned Americans call the Hotline and it gives us the names and telephone numbers of the legislators involved. It tells us exactly what to say, and to whom. The Hotline helps us to fight and win!

Secondly, we must change the opinions of the masses with information. The brochure has been a big help, and once 10% of the population agrees to abolish the FED, the rest will follow.

It is obvious the media (radio and newspapers) have lied about the FED and the efforts of FED-UP(tm) to educate people with the truth. This will not stop us - we will persist! Decide for yourself if you want to win America back. If 10,000 patriotic Americans each distribute 1,000 brochures, 10 million Americans will become informed. It would be almost impossible to stop people from talking about abolishing the FED if that many Americans were informed. Another way you can participate is to put a bumper sticker on your car. Over 1,000 people every month will see that bumper sticker about abolishing the FED.

If you think our goal is impossible, remember this only 3% of Americans supported the Revolutionary War, and we won that war. We can win this war too, but only with your help.

For the secret owners of the FED to control the volume of money and become our absolute masters, they had to get the Gold away from our grandparents. This was accomplished in 1933 with the threats of fines and imprisonments by their President Franklin D. Roosevelt with aide Harry Hopkins, who said. "Elect, elect, elect, tax, tax, tax, spend, spend, spend, for the people are too damned stupid to understand". By the way, Roosevelt was an international Banker. See "Fool's Gold is Green" by Winston Smith.

THE FED IS SLOWLY DESTROYING AMERICA

Our government never had a chance. with political corruption ravaging its Constitution. The *real facts* don't lie. and neither do government documents. Congressional Record, Congressman Wright Patman, A Primer On Money prepared by the Sub-committee on Domestic Finance, House of Representatives, Committee on Banking and Currency - 88th Congress, 2nd session, August 4th, 1964 and December 23, 1913, page 1464 & 1478.

Congressional Record, Congressman Louis McFadden, June 10, 1932, House of Representatives, pages 12604-12605

Congressional Record, 98th Congress, 1st session, February 3, 1983, Congressman Ron Paul

Congressional Record, Committee on Banking and Currency, House of

Representatives, 77th Congress, 1st session, Tuesday, September 30, 1941, pages 1342-1345

THERE ARE MANY MORE CONGRESSIONAL TESTIMONIALS

IS THERE BIAS IN THE MEDIA REGARDING THE FED?

DURING THE TV PRESIDENTIAL DEBATES, CLINTON WAS ASKED SHOULD THERE BE RESTRICTIONS ON THE FED? THE NEXT DAY, MAJOR NEWSPAPERS SAID THEY COVERED THE WHOLE PRESIDENTIAL DEBATE TEXT, BUT MANY NEWSPAPERS ELIMINATED THIS ONE QUESTION. CHECK YOUR LIBRARY!

The Revolutionary War was fought and the Constitution was written to prevent other nations and private banks from issuing (printing) money and controlling our currency.

In 1913, members of Congress committed treason and violated their oath of office to defend the Constitution against all enemies foreign and domestic by voting in the Federal Reserve Bank.

For the New World Order to create a one world government, they must control a central bank, eliminate the Constitution, end Christian values, disarm America, and control the media. The Council on Foreign Relations has openly said they will take us over in favor of a one world government. The American people must be warned or we may lose our freedom forever. If we do not demand our rights and uphold the Constitution, the CFR and bankers will continue their march toward socialism. If we allow them to continue, they will abolish our rights and put an end to our present government. I urge all Americans to distribute the "main" FED-UP brochure ("saving $6000 in taxes per year, per person & balancing the budget) and collect signatures on the petition (see order form in the main brochure). Then all informed Americans can take action and hold their politicians accountable. The bankers control the media, but can not stop patriotic Americans from using copy machines to distribute information and inform America. Once informed, people will demand an explanation why Congress allowed this fraud as the media appeared to be independent and investigative, but remained silent on this important issue.

The ones who scream the loudest to keep the Federal Reserve Bank probably profit the most.

Thomas D. Schauf, CPA, is a national speaker to Certified Public Accountants and business leaders. Mr. Schauf's expertise includes banking, the economy, business appraisals, mergers, and acquisitions.