THC,
The following passages from a new book by Webster Tarpley (also referred to by Ron Reece some posts back) - Surviving the Cataclysm...Washington Grove Books, 1999 - provides some background on the establishment of the FRB. If accurate, it would be useful information supporting Rep. Ron Paul's proposed bill to abolish the FRB, noted in the last line of your post. The information is highly critical of the FRB, to say the least. I think it also supports some of your and others conclusions. Obviously, I cannot vouch for the accuracy of the information. The book is 875 pages and well documented. I am unfamiliar with the author and the publisher.
JimG
THE FEDERAL RESERVE: CAUSE OF DEPRESSION
One of the main causes for the Great Depression was the Federal Reserve System of the United States. Many naive persons think of the Federal Reserve System as a part of the United States government, which it emphatically is not. Probably this is because the only money we have nowadays is marked "Federal Reserve Note." The Federal Reserve is a privately owned and privately managed institution. Those who can remember the 1960's can recall that there were one dollar silver certificates as well as United States Notes, the descendants of Lincoln's greenbacks, in several denominations. But after the Kennedy assassination, the private Federal Reserve established a monopoly on printing American money, shutting out the US Federal Government from this important function.
In this way the Federal Reserve System violates the letter and spirit of the United States Constitution. There, in Article I, Section 8, Clause 5 we read that the Congress shall have the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."
The Federal Reserve was created in December, 1913 when Woodrow Wilson signed the Glass-Owen Federal Reserve Act. That bill had been the product of cloak-and-dagger machinations by Wall Street financiers and their political mouthpieces, many of them in league with the City of London. Wall Streeter Frank A. Vanderlip, in his autobiography "From Farm Boy to Financier" narrates that the secret conference which planned the Federal Reserve was "as secret - indeed, as furtive - as
any conspirator." Vanderlip was one of the insiders invited to the Jekyl Island Club on the coast of Georgia in the autumn of 1910 by the Senator Nelson Aldrich, the father-in-law of John D. Rockefeller Jr. Aldrich also invited Henry Davison of J.P. Morgan & Co., and Benjamin Strong, the future Governor of the New York Federal Reserve Bank. Also on hand was Paul Warburg of the notorious international banking family, descended from the Del Banco family of Venice. As Vanderlip recounted, "We were instructed to come one at a time and as unobtrusively as possible to the railway terminal on the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of a train for the South."
On Jekyl Island this crew began to decide the main features of the central bank of the United States: "We worked morning, noon, and night....As we dealt with questions I recorded our agreements...If it was to be a central bank, how was it to be owned - by the banks, by the Government or jointly ? When we had fixed upon bank ownership and joint control, we took up the political problem of whether it should be a number of institutions or only one." In the end, says Vanderlip, "there can be no question about it: Aldrich undoubtedly laid the essential, fundamental lines which finally took the form of the Federal reserve law."
Today each of the twelve Federal Reserve Banks - Boston, New York, Chicago, San Francisco, and so forth - is a private corporation. The shares are held by the member banks of the Federal Reserve System. The Class A and Class B Directors of each Federal reserve Bank are elected by the shareholders from among bankers and the business community, and other Directors are appointed by the Federal Reserve Board in Washington.
Members of the Board of Governors of the Federal Reserve System in Washington are chosen by the President and must be approved by the Senate, for what that is worth. But when we come to the vital Federal Reserve Open Market Committee, which sets short-term interest rates and influences the size of the money supply by buying or selling
government securities, the picture is even worse. The FOMC comprises 7 Fed Governors from Washington plus 5 presidents of Federal Reserve Banks appointed by the respective Directors of these banks. In practice, 5 Federal Reserve district presidents who have never been seen by the President or the Congress have a vote on setting the credit policy and money supply of the United States. Public policy is made by a private cabal of self-appointed plutocrats.
How was this sleazy product marketed to the Congress ? Interestingly, the Congressmen were told that the Federal Reserve System would prevent panics and depressions like those of the 1870's and 1890's. Here is a sampling compiled by Herbert Hoover of selling points used by lobbyists seeking votes for the Federal Reserve Act:
We shall have no more financial panics....Panics are impossible....Business men can now proceed in effect
confidence that they will no longer pu their property in peril....Now the business man may work out his destiny without living in terror of panic and hard times....Panics in the future are unthinkable....Never again can panic
come to the American people.
[The Memoirs of Herbert Hoover, p.7]
The verdict of history must be that the Federal Reserve has utterly failed to deliver on these promises. The most potent political argument against this arrangement is that it has been a resounding failure. Far from making financial crises impossible, the Fed has brought us one Great Depression, and it is about to bring us a super-depression, a worldwide disintegration.
The Federal Open Market Committee was not part of the original legislation that created the Federal Reserve System. But in the early 1920's, some regional Federal Reserve Bank presidents, inevitably dominated by New York, formed a committee outside of any law to coordinate their activities in determning the money supply and interest rates through buying and selling of government securities - i.e., open market operations. This was a very successful power grab by the regional Reserve Bank leaders, all directly chosen by bankers and the private sector, and not subject to approval by anyone in Washington. In 1935 Franklin D. Roosevelt very unwisely signed a Banking Act which legalized the Federal Open Market Committee in its present form, with a formal majority for Federal Reserve Board Governors in Washington, the ones proposed by the President and approved by the Senate. But at the same time the Secretary of the Treasury, who usedto be a member of the central Board, was ousted from that position.
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