A.N. FIELD
The Truth About the Slump
The fact that Mr. Paul Warburg founded the United States Federal Reserve Board has been recorded in a previous chapter, and we have seen also how by its control of gold this board today controls the trade of the whole world. The founding of the Federal Reserve Board is a romance in itself, and if we are to understand how completely high finance rules the world it is necessary to trace at least the main outlines of the story.
As has been shown in earlier chapters, certain important steps in bygone days in getting Britain and America on to the gold standard were achieved by subterfuge and trickery, and the similarity of the trickery in two cases strongly suggests concerted international action. We have also seen how clearly the Hazard bank circular of 1862 revealed the determination of the financiers of that era in the United States to get the control of money away from the Government.
The move in the United States in 1893 to abolish silver money co-incided with the announcement that India had stopped the free coinage of silver, and this announcement precipitated a crisis which the American Banking Association, according to the circular quoted by Mr. Lindbergh in Congress, had called upon the American banks to create in that country. Was this co-incidence accidental, or was there concerted action by international financiers ? On top of this we have Mr. Kitson pointing out how the happenings of 1893 led to the growth of the money power in the United States and the development of the great trusts now dominating industry in that country.
The panic of 1907, which was used as an argument for banking reform in the United States and which led to the fastening upon the American people of the German system of central banking, has been widely criticised as an artificial creation. The New York Bankers’ Magazine for December, 1907, stated that “the bank runs in New York at first were made almost entirely by the well-to-do, and at no time did the ordinary depositors take fright in large numbers.” Commenting in Congress on this statement Mr. Gray, of Indiana, in a speech on the Federal Reserve Bill on September 12, 1913, pointed out that in New York financial circles the phrase “well-to-do” covered only millionaires and multi-millionaires, and that these were the people who made the runs. [German system of central banking !? England had a central bank and a system two centuries before Germany and these German-Jew bankers existed ! Evil UK made a war on the US in 1812 because Congress refused to renew the charter of its first central bank ! As an Empire-loyalist, Mr. Field would have been in the army fighting against Washington, but now he is conserned.]
Mr. Gray in his speech quoted another extract from the Bankers’ Magazine showing how the currency scheme embodied in the bill had been launched by Mr. Jacob Schiff before the New York Chamber of Commerce in 1906. He added:
“The next year, 1907, when Nature responded with a most bountiful harvest, when manufactories were running full time ... when every natural condition favoured the greatest prosperity, a panic was suddenly precipitated on the country, and the only explanation given the people was that it was a currency panic.”
A large amount of similar criticism of the 1907 panic can be found in the United States Congressional Record in which the debates are printed, and one of the reports issued by the United States Monetary Commission a few years later deals severely with this panic and the way in which the concerns on which the run was made were left unsupported.
Mr. Gray in his speech next pointed out that in the following year, 1908, Congress was importuned to pass legislation to prevent a repetition of the disaster. Mr. Gray added:
“The New York bankers who had initiated this movement in the New York Chamber of Commerce through Jacob H. Schiff, January 4, 1906, had entered upon the campaign, and were conducting their operations, through the American Banking Association for the education of their country correspondents and the western bankers. To show the plan and system of education carried on among these bankers I here quote a circular letter which was issued by this association in 1893 during a similar campaign, bearing date March 11, 1893, and circulated among the influential national banks of the United States.”
Mr. Gray thereupon proceeded to quote the circular printed in Chapter III of this book, ordering the banks to create a state of monetary stringency among business men by calling up loans, etc., and to tell them that the Sherman Silver Purchase Law was the cause of it, and thus induce them to demand the repeal of this law.
In addition to providing ammunition for the campaign for central banking, the panic of 1907 yielded an immediate profit to the Money Ring. Mr. Gray says:
“A great amount of stock which had depreciated as a result of the panic in the hands of innocent bystanders and unsuspecting investors was purchased at a ruinous sacrifice and held and re-sold at par. ... And the further opportunity was taken advantage of to secure the absorption of the Tennesee Coal and Iron Company by the Steel Trust, its only formidable competitor, thereby making the monopoly in the steel industry complete.”
In 1908 the Monetary Commission was set up by Congress to collect information on the subject of currency and banking reform. It visited Europe and published a vast amount of matter. “Most of it,” according to Mr. Gray, “was a revision of books and recast of documents of value mostly as history and without any special reference to present-day problems, and more calculated to bewilder and awe the mind, and impress both the common bankers and the citizens generally with the magnitude of the subject under investigation, and the impossibility of a full comprehension of the problem involved by the ordinary mind, to the end that a special few assuming superior wisdom and financial judgment might be allowed to dictate without question the reforms so urgently demanded.”
The next step was to get legislation through, a great campaign for banking reform being at the same time conducted throughout the United States regardless of expense. To innocent outsiders it appeared as if merchants and business people were demanding central banking and the bankers were reluctantly yielding to the demand. For instance, Mr. Gray quoted as typical of the methods employed this circular sent out by the Chase National Bank to its western correspondents under date of February 21, 1912:
“The merchants interested in the work have felt that while they regard themselves as responsible for the raising of funds for the prosecution of the work, the country at large should know that the banking interest is in sympathy with that work.—A.H. Wiggins, President.”
As an example of the intensive nature of the propaganda put out by the Money Ring to get the bill through Mr. Oscar Callaway, a member of Congress from Texas, gave this instance in his speech on the measure:
“Mr. Chairman, a paper in Texas called the Home and State in its issue of August 23 said editorially: ‘Sit down and write a short letter to your representative in Congress as soon as you have read this and urge him to steadfastly support the Administration Currency Bill. There is nothing to be gained by discussing the details. It is enough for us to know that it has been endorsed by Woodrow Wilson and William Jennings Bryan.’ ”
The first effort at legislation, however, had taken place before Mr. Wilson became President. In 1911 Senator Aldrich brought in a bill setting up a central banking system with the banks in full control of everything. The senator was leader of the Republican Old Guard, and his bill was fiercely resisted by the Democrats as a surrender of the national interests to the iniquitious Wall Street.
To show the thoroughgoing way in which Mr. Paul Warburg had worked up support for his scheme, Mr. Gray quoted the following passage from a speech delivered by Mr. Warburg at a meeting of the National Board of Trade at Washington on January 18, 1911:
“I think you could not fail to have been impressed upon the reading of our report with the remarkable degree of unanimity with which the proposed central reserve association was approved. The delegates met, and after ten minutes they knew they were agreed on that question. We then met with delegates from the New York Produce Exchange and Merchants’ Association. It took us about half an hour to agree. Meanwhile Senator Aldrich’s plan had been brought forward, and it recommended the same plan that had been recommended by our association.”
The Aldrich bill did not get through. Says Mr. Gray on this point:
“Most fortunately for the people, a change in administration came just in time to warn the party in power and defeat a colossal conspiracy to wrest from them the last vestige of public control over their currency.”
Soon after Mr. Wilson had become President in 1912 Congress set up a Commission, known as the Pujo Commission, to enquire whether or not there was a Money Trust in the United States. This Commission reported in March, 1913, that there was a Money Trust in existence, and it named the following concerns as constituting the inner ring and directing force:
J.P. Morgan and Company.
The National City Bank of New York.
Lee, Higginson and Company of Boston and New York.
Kidder, Peabody and Company.
Kuhn, Loeb and Company.
The Commission reported that by a system of inter-locking directorates, stock-holding companies and other forms of domination, the above five banking houses controlled no less than 112 banks and financial and industrial companies with resources in capital and reserves totalling the prodigious sum of £4,449,000,000. A full list was published of the concerns thus controlled. The following is a summary:
34 banks and trust companies ... 2,679,000,000
10 insurance companies .... 2,293,000,000
32 transportation companies .... 11,784,000,000
24 producing and trading companies .... 3,339,000,000
12 public utility companies ... 2,150,000,000
112 companies Resources 22,245,000,000
In the course of its voluminous report the Commission described the relations of the inner ring of five as follows:
“The first group, which for convenience we will call the inner group, consists of Messrs. J.P. Morgan and Company, the recognised leaders, and Mr. George F. Baker and Mr. James Stillman, in individual capacities and in joint administration of the First National Bank, the National Bank of Commerce, the Chase National Bank, the Guaranty Trust Company, and the Bankers’ Trust Company of New York.
“The second group, closely allied to this inner and primary group, is composed of the powerful international banking house of Lee, Higginson and Company, Kidder, Peabody and Company, with three affiliated banks in Boston.
“The third group consists of the international house of Kuhn, Loeb and Company. This firm is only qualifiedly allied to the inner group, yet through its relations with the National City Bank, the National Bank of Commerce, and other financial institutions with which it has recently allied itself, it has many interests in common; conducting large financial transactions with them, and having what virtually amounts to an understanding not to compete, which is defended on the principle of banking ethics. Together they have with few exceptions pre-empted the banking business of the important railways of the country.
“The fourth group is in Chicago.”
Elsewhere in its report the Commission said:
“The powerful grip of these gentlemen is on the throttle that controls the wheels of credit, and on their signal those wheels will turn or stop.”
The general effect of this financial combination on American industry was outlined by the Commission on page 160 of their report as under:
“Issues of securities of local or small enterprises requiring moderate sums of money are frequently financed without the co-operation of these gentlemen; but from what we have learned of existing conditions in finance, and the vast ramifications of this group throughout the country and in foreign countries, we are satisfied that their influence is sufficiently potent to prevent the financing of any enterprise in any part of the country requiring 10,000,000 dollars or over, of which for reasons satisfactory to themselves they do not approve. Therein lies the peril of this money power to our progress, far greater than the combined danger of all existing combinations. ...
“The acts of this inner group, as here described, have nevertheless been more destructive of competition than anything accomplished by the trusts, for they strike at the very vitals of potential competition in every industry that is under their protection, a condition which, if permitted to continue, will render impossible all attempts to restore normal competitive conditions in the industrial world. ...
“The gentlemen constituting this inner circle, however, violated no law in what they have done, so far as we can discover, but that is rather because ... the law has not yet properly safeguarded the community against this form of control.”
Before we go on to consider the amazing way in which President Wilson handed over control of America to these financiers by a measure which he thought would curb them, it is convenient at this stage to insert a list of the banks and the industrial concerns controlled by the Money Trust in 1913. Without such a list for reference the true inwardness of the colossal combina-tions formed during the past year or two in the United States and internationally cannot be grasped:
MONEY TRUST BANKS IN 1913.
New York—
American Exchange National Bank .... 63,000,000
Astor Trust Company .... .... 27,000,000
Bank of Manhattan .... ... ... 70,000,000
Central Trust Company ........ 118,000,000
Chase National Bank .... ... .... 125,000,000
Chemical National Bank .... 40,000,000
Commercial Exchange Bank ...... 78,000,000
Equitable Trust Company .... ... 102,000,000
Farmers’ Loan and Trust Company .... 135,000,000
Fourth National Bank ............... 51,000,000
Hanover National Bank ............. 126,000,000
Liberty National Bank .............. 29,000,000
Mechanics and Metals National Bank .... 87,000,000
National Bank of Commerce ........... 190,000,000
National Park Bank ......... .... ...... 123,000,000
New York Trust Company .... .... 63,000,000
Union Trust Company ............ 74,000,000
United States Mortagage and Trust Company ... 75,000,000
United States Trust Company .... .... 77,000,000
Washington—
American Security Trust Company .... 15,000,000
Rigg’s National Bank ........ .... 14,000,000
Pittsburgh—
Mellon National Bank .... ... .... 55,000,000
Union Trust Company ... ... .... 69,000,000
Philadelphia—
Fourth St. National Bank .... .... 57,000,000
Franklin National Bank .... .... ... 39,000,000
Girard Trust Company ..... ... ... 47,000,000
Philadelphia National Bank .... 54,000,000
Chicago—
Central Trust Company ... ... ... 50,000,000
Continental and Commercial National Bank .... 226,000,000
Continental and Commercial Trust and Savings Bank ... 27,000,000
First National Bank .... .... .... 137,000,000
First Trust and Savings Bank .... ... 64,000,000
Illinois Trust and Savings Bank .... 107,000,000
Merchants’ Loan and Trust Company ..... 65,000,000
In the 32 transportation companies controlled by the Money Trust were included the leading American railway systems, and among the 12 public utility corporations was the great Western Union Telegraph Company controlled by Kuhn, Loeb and Company. The producing and trading companies controlled by the Money Trust were as follows:
Amalgamated Copper.
American Agricultural Chemical Company.
American Beet Sugar Company.
American Can Company.
American Car and Foundry Company.
American Locomotive Company.
American Smelting and Refining Company.
Armour and Company.
Baldwin Locomotive Works.
Central Leather Company.
Colorado Fuel and Iron Company.
General Electric Company.
Intercontinental Rubber Company.
International Agricultural Corporation.
International Harvester Company.
International Nickel Company.
International Paper Company.
Lackawanna Steel Company.
National Biscuit Company.
Pullman Company.
United States Rubber Company.
United States Steel Corporation.
Westinghouse Electric and Manufacturing Company
Six months after the publication of this report affirming the existence of an all-powerful Money Trust the Democratic Party brought in their bill to establish the Federal Reserve System. Unlike the Aldrich Bill, which proposed to give the bankers control of the whole monetary situation, the Glass Bill provided for a board of which the Secretary of the Treasury was chairman, with certain powers of veto. The Comptroller of the Currency was also an ex officio member, and the appointment of the other members was to be by the President. In other respects the Bill was very similar to the Aldrich Bill. The Glass Bill was advanced as a measure that would free the country from the toils of the Money Trust. This is very clearly shown by the speech of Mr. Carter Glass, chairman of the Banking and Currency Committee, on introducing the Bill in the House of Representatives on September 10, 1913. Mr. Glass referred in scathing terms to:
“Bankers who contributed thousands of dollars to fasten on this country the wretched Aldrich scheme, which would have impounded the surplus funds of the entire banking community of America in the vaults of a single central bank to be by it transferred at any time to any point that might appeal to the sweet will or whim of the governing board of that institution.”
Mr. Glass was also strongly of opinion that his bill would give more stable financial conditions. He said:
“Remembering that financial panics in the United States are decennial, and that we are fast approaching the time limit from 1907 to 1917, it seems to me that the obligation to legislate is immediate.”
Senator Owen, who piloted the bill through the Senate made a similar statement on November 24, 1913, as follows:
“The chief purposes of the banking and currency bill are to give stability to the commerce and industry of the United States; prevent financial panics or financial stringencies. ...”
The bill was rushed through the House of Representatives in eight days without any public hearings on it. It was passed by the House by 287 votes to 85. The Senate took a little longer to digest the measure and evidence on it was taken by a committee. The bill, nevertheless, was passed with little alteration.
One highly significant alteration was, however, quietly made in the bill during its passage through the House, an alteration which escaped comment at the time. As passed the act says the discount rate “shall be made with a view to accommodating commerce and business.” As introduced there was a further instruction that the rate should be made so as “to promote stability in the price level.” This had vanished before the bill reached the Senate, and totally unsuccessful efforts have since been made to amend the act by incorporating in it an instruction to this end.
A great number of people honestly thought that this measure would free the United States from the domination of the Money Trust. Among them was the late Mr. William Jennings Bryan, a life-long defender of the people’s interest against the financiers, and who fought a Presidential campaign in 1896 as the champion of silver money, declaring in a famous phrase that the workers and farmers of the United States were being “crucified on a cross of gold.” Mr. Bryan had been made Secretary of State in President Wilson’s Cabinet in 1912, and it is said that it was largely by his activity in whipping up support for it in Congress that the Federal Reserve Bill was put through.
Although the bill was carried by a big majority, a certain number of members denounced it as a sham. Mr. Oscar Callaway, a Texas Democrat, for instance, made the following protest in the House:
“Mr. Chairman, in our platform adopted at Baltimore, and with which we won such a signal victory at the polls last November, we said: ‘We oppose the establishment of a central bank.’ I thought we meant that. ... True we did not say: ‘We oppose the establishment of a central board,’ but I submit in all candour that there is no real difference so far as the concentration of power is concerned between a central bank which controls the entire banking interests of the country, and a central board which controls the entire banking interests of the country. ...
“This bill provides for a board of seven appointed directly by the President, subject, of course, like his Cabinet, to the President’s will, which board has discretionary power over the twelve regional banks. ... The board has exclusive power of note issue to the reserve banks; the power to fix the discount rate; with the accompanying power to increase or decrease the circulating medium of the country at will. ...
“Summarise these powers, and you will find that power centred in this board, which Chairman Glass said ‘could determine the welfare, happiness and prosperity of every man, woman and child in the United States,’ and which Majority Leader Underwood declared ‘resolved itself into faith in the President’s board, the whole question being whether the board was angel or devil. ...’
“The big banking interests have never at any time opposed this bill in its entirety. They have asked for changes in it here and there, but the general policy of the bill has suited them.”
The following striking denunciation of the bill was made during the debate by Mr. Horace Mann Towner, a Republican member from Iowa:
“I did not approve of the Aldrich plan. I would not support it now. But it is astonishing how enamoured of it the majority is. Protesting that it is dangerous, yet they adopt and strengthen its autocratic features. Declaring it unworthy of consideration, the committee copies large portions of the bill, even to the extent of embodying the language verbatim of the Aldrich Bill. If the Aldrich Bill could have been patented this bill would be an infringement. If it could have been copyrighted, this would have been an invasion. Very artfully the issue is made to appear as one between Wall Street and the Government; as between selfish speculators on the one hand, and the Government acting for the people on the other.”
Another notable speech against the bill was that of Mr. Finley H. Gray, an Indiana member, and from it portions have already been quoted. Not to weary the reader, it is sufficient to conclude with this extract from the speech of Mr. Charles A. Lindbergh of Minnesota:
“It is not my purpose to show that this bill is more vicious than the system which it seeks to amend. I propose to show that it would perpetuate the system which actual experience proves to have been the cause of centralising wealth, so that a few have robbed the people generally. It is perpetuating a system the very purpose of which is to enable the money loaners, rent collectors, dividend beneficiaries, and speculators generally, to take advantage of the actual producers so as to control production and fix prices.”
Before the Senate Committee Mr. George H. Shibley, director of the American Bureau of Political Research at Washington, gave a valuable historical summary of the devious steps taken to foist the gold standard on the world. In concluding he said, “This closes my outline of the way the American people and the people of the entire world were tricked into the demonetising of silver. I have stated it for several reasons: first, because a somewhat similar trick is being attempted here in this Senate Committee.”
It is unnecessary to quote the speeches of the supporters of the hill, for these gentlemen merely took it at its face value, and expatiated on such of its fancied advantages as appealed specially to them.
Thirteen years later the publication of The Intimate Papers of Colonel House (1926) showed that the bill had been framed by the very men officially denounced a few short months previously as controlling the Money Trust ! These men were the people to whom Colonel House as adviser-in-chief to President Woodrow Wilson ran for advice as to how to frame a measure to curb the Money Trust. The whole incredible story is told with disarming candour in these Intimate Papers. All the time the good Colonel, it appears, was firmly of opinion that the Money Ring should be brought to book. Under date of July 26, 1911, he wrote as follows to Senator Culberson :
“I think Woodrow Wilson’s remark that the Money Trust is the most pernicious of all trusts is eminently correct. A few individuals and their satellites control the leading banks and trust companies of America. They also control the leading corporations.”
Colonel House’s papers were edited by Dr. Charles Seymour, Professor of History at Yale University, and his editor relates the very active part taken by the Colonel in framing the bill which Mr. Glass subsequently introduced, and which as we have seen in an earlier chapter Mr. Paul Warburg last year claimed, with excellent reason, as his own creation. On page 164 of The Intimate Papers we find their editor remarking:
“The task which Colonel House set himself was primarily to prevent the President-Elect from committing himself to any one scheme until the problem had been thoroughly studied; later he guarded the measure so that it was left in the control of experts and preserved from the heresies of political incompetents. The Colonel was the unseen guardian angel of the bill. ... Colonel House was indefatigable in providing the President with the knowledge that he sought. ... He laid chief stress on his frequent conferences with the bankers themselves.”
The following extracts from the papers themselves show pretty clearly where the Colonel got his ideas from:
“December 19, 1912.—I talked with Paul Warburg over the telephone regarding currency reform.”
“February 26, 1913.—I went to the Harding dinner [a bankers’ gathering]. ... It was an interesting occasion. I first talked to Mr. Frick, then with Denman, and afterwards with Otto Kahn [partner with Paul Warburg in Kuhn, Loeb and Company of the inner ring of the Money Trust].”
“March 13, 1913.—Vanderlip [National City Bank chairman, allied with Kuhn-Loeb] and I had an interesting discussion regarding currency reform.”
“March 27, 1913.—J.P. Morgan, Junior, and Mr. Denny of his firm, came promptly at five. McAdoo [Secretary of the Treasury and formerly partner with Paul Warburg] came about ten minutes afterwards. Morgan had a currency plan already formulated and printed. We discussed it at some length. I suggested that he should have it typewritten and sent to us today.”
To this is attached the following editorial footnote: “Typewritten in order to avoid the impression that might be given that Morgan’s were so sure of their financial power that they could impose a cut and dried plan.”
“March 24, 1913.—I had an engagement with Carter Glass at five. We drove in order not to be interrupted. ... I urged him not to allow ... the Senate Committee to change what we had agreed upon in any of the essential features. He promised to be firm. I advised using honey so long as it was effective, but when it was not, I would bring the President and the Secretary of the Treasury to his rescue. I spoke to the President after dinner and advised that McAdoo and I whip the Glass measure into final shape, which he could endorse and take to Owen [Senator Owen].”
Here Colonel Houses’s editor adds:
“The Currency Bill [establishing the Federal Reserve System] was brought into the House of Representatives early the next session, unchanged from the first drafts decided on by the President, McAdoo, and the chairmen of the House and Senate Committees.”
One of the concerns in the inner ring of the Money Trust was Lee, Higginson and Company, of Boston and New York. At the end of August Colonel House visited Boston and was rather coldly received on discussing the banking scheme with some ordinary bankers. His editor remarks that he found “more consolation and satisfaction in a long talk with Major Henry L. Higginson,” of which talk the Colonel wrote:
“I can well understand why he is called by many Boston’s first citizen. We talked on the currency question. ... Every banker like Warburg who knows the subject thoroughly has been called upon in the making of the bill. Major Higginson seemed thoroughly satisfied with the endeavours the Administration have made to construct a good and beneficent measure.”
It appeared that Mr. Warburg had a few final touches which he desired to insert to perfect the measure, and on November 17, when the bill was before the Senate, Colonel House relates that Mr. Warburg, Mr. Schiff, and Mr. Dodge came to see him by appointment. Mr. Dodge arrived in advance of the others, and took advantage of this circumstance to explain that he had only come along at the urgent request of Warburg and Schiff, who had just handed him a munificent donation to the funds of the Y.M.C.A., of which he was president. The papers proceed:
“Mr. Schiff and Mr. Warburg came. Warburg did most of the talking. He has a new suggestion in regard to the grouping of the regional reserve banks, so as to get the units welded together and in easier touch with the Federal Reserve Board. They wanted me to go to Washington with Mr. Warburg and Mr. Dodge. ... I advised against going to the President with new suggestions. I thought they should be taken to Secretary McAdoo, Senator Owen and Mr. Glass; if they agreed as to the advisability of accepting them the President would probably also accept them.”
The editor tells how success was finally achieved:
“Pressure from both sides and above finally compelled the acquiescence of the opposing senators, and on December 20, ‘a gala day,’ House called it, the Federal Reserve Bill passed the Senate.”
On December 23. 1913, Mr. Jacob Schiff wrote a Christmas letter to Colonel House, congratulating him on the passage of the bill. In his letter Mr. Schiff said:
“The bill is a good one in many respects, anyhow good enough to start with and to let experience teach us in what direction it needs perfection, which in due time we shall then get.”
The foregoing extracts show clearly enough that President Woodrow Wilson and his naive friend and adviser, Colonel House, were mere putty in the hands of these astute financiers. Thinking they were freeing America from an octopus, they merely fastened its tentacles more firmly than ever on the people of the United States, and created an organisation which has enabled the Jewish section of the Money Trust to dominate not only America but the commerce and industry of the entire globe.
Before we proceed to trace the course of events through the great international war which within a few months followed on the perfecting of this engine of financial control, it is worth noting that in 1928 the Federal Reserve Law was amended to permit of inter-locking directorates among the banks, thus permitting a further centralising of control. In his book published last year Mr. Warburg urged that the Secretary of the Treasury should be removed from the chairmanship of the Federal Reserve Board, and the Comptroller of the Currency removed from the Board and made a subservient officer to it, the banker members taking general charge and electing their own chairman. As Mr. Warburg seems seldom to ask in vain for what he wants these steps in “perfecting” the Federal Reserve System may possibly have been effected before this reaches the reader’s hands.
It has been noted above how an instruction to the Federal Reserve Board to use its powers to stabilise prices was deleted from the bill during its passage through the House of Representatives. Several efforts have since been made by Mr. James G. Strong, a Kansas member of the House of Representatives, to place such an instruction in law. In 1926-27 and 1925-29 there were hearings by the House Committee on Banking and Currency on bills to this end introduced by Mr. Strong.
In his earlier bill Mr. Strong proposed that in addition to the instruction to make the discount rate “with a view to accommodating commerce and business,” there should be added the words “and promoting a stable price level for commodities in general. All the powers of the Federal Reserve System shall be used for promoting stability in the price level.”
This was very similar to what was in the bill to start with but had been surreptitiously removed. It was merely in keeping with Senator Oven’s statements in fathering the bill in the Senate. However, every possible objection was raised to this simple instruction. It would lead the public to expect impossibilities, etc., etc. In order to meet these objections Mr. Strong went to all concerned for their views as how the necessary instruction should be drafted. The result he embodied in a new bill in the following language:
“The Federal Reserve system shall use the powers and authority now or hereafter possessed by it to maintain a stable gold standard; to promote the stability of commerce, industry, agriculture and employ ment; and a more stable purchasing power of the dollar so far as such purposes may be accomplished by monetary and credit policy.”
A remarkable feature of the hearings on the second bill was the epidemic of invalidism which afflicted the members of the Federal Reserve Board when the time to give evidence approached. These gentlemen, who had objected freely enough to the crude language of the first bill were now in a number of cases afflicted with shingles, rheumatism and what not, and regrettably unable to come and testify again. Such members and officers of the board as did testify were all emphatically of the opinion that anything on the lines sought by Mr. Strong was impracticable.
In the course of their evidence the Federal Reserve Witnesses nevertheless put in numerous charts and graphs from the board’s records showing movements in the price level, etc. Naturally questions were asked why the board compiled these elaborate charts if its operations had no connection with prices at all. Was not the truth of the matter that members and officers of the board watched very closely the effect of their proceedings on the price level ? For example, take this passage between Mr. Strong, author of the amending bill, and Mr. Goldenweiser, Director of Research and Statistics to the Federal Reserve Board:
“Mr. Strong: Is not the real purpose of these charts to enable them to use the powers of the Federal Reserve System towards stabilisation ?
“Mr. Goldenweiser: If I had to answer that in one word I would say no.
“Mr. Strong: Then they are not using the information they have for the purpose ?
“Mr. Goldenweiser: Only incidentally.
“Mr. Strong: Incidental to what ?
“Mr. Goldemveiser: Incidental to those things that are more directly the work of the Federal Reserve System.
“Mr. Strong: That is, to accommodate business and industry ?
“Mr. Goldenweiser : To maintain sound banking conditions.”
Most of the witnesses took a great deal of cornering to extract anything definite from them on this vital point, and endeavoured to shy away from it under a cloud of words. However, Mr. Strong succeeded in getting a clear-cut statement from the chief executive officer of the board. This passage occurs in the examination of Mr. Roy A. Young, Governor of the Federal Reserve Board, on May 28, 1928:
“Mr. Strong: Do you not think that the first duty of any financial system is to attempt to stabilise the purchasing power of its unit of value ?
“Mr. Young: It never has been.
“Mr. Strong: Should it not be ?
“Mr. Young: No, sir; I am not going to say that.
“Mr. Strong: Have you, meaning the Federal Reserve Board, not been doing this very thing ?
“Mr. Young: No.”
That is a precise and definite enough statement that the directors of the United States Federal Reserve System—which the American people were told was designed specially to give stable business conditions and prevent financial crises and stringencies — consider themselves under no obligation whatsoever to use their gigantic powers for any such purpose. The basic theory of any monetary system is that an undertaking to pay a given sum of money at a future date is an undertaking to give the same value that that money represents today. Here we have the chief controlling officer of money in the United States calmly declaring that what the dollar represents in wealth is no concern of his. Nothing further is needed to reveal what a colossal fraud was perpetrated when this gang of international financiers led the people of America into this Federal Reserve System.
The position was well put by Mr. Carroll L. Beedy, a member of the Committee, during the examination in May 1928 of Professor Gustav Cassel the noted Swedish monetary expert.
“Mr. Beedy: You will recall the statement of Mr. Ebersole, of the Treasury Department, who concluded his remarks at the dinner which we attended last night by saying that he was convinced that the Federal Reserve System did not want stabilisation and the American business man did not want it, and I think that is right. They want these fluctuations in prices, not only in securities, but in commodities, in trade generally, because those who are now in control of the situation are making a profit out of that very situation. There is nothing to be gained by them by stabilising, but practically all is lost. The gain from stabilisation comes in the welfare of the countless thousands who are not in the capitalist class. ... And it is probably true that if it does not come in a legitimate way, let us say through central banking systems, it may come, or there may be an attempt to produce it, by general upheavals, such as have characterised society in days gone by. The revolutions have been prompted, in other words, by dissatisfaction with existing conditions, the control being in the hands of a few, and the many paying the bills.
“Dr. Cassel: Yes, I think that goes very well with what I have said about the purpose of the Federal Reserve System.”
At the conclusion of the hearings on May 29, 1928. Mr. Strong summed up the position in the following words:
“Both bills have been attacked by financiers, bankers, and financial writers, some for selfish reasons, others because, having become versed in existing conditions they hesitate, or refuse, to consider and study the real purpose of the proposed legislation, which was also true when the Federal Reserve system was proposed and sought to be enacted by Congress; but I am being forced to the conclusion that the main opposition is because of the fact that certain bankers and financiers, together with those they control, desire the Federal Reserve System to use its powers ‘to accommodate business and commerce,’ and not ‘for the stabilisation of the purchasing power of our monetary unit,’ which I hold with Dr. Cassel, Dr. J.R. Commons and others who have come before this Committee, to be the first duty of a financial system set up by any government authority.
“When the Federal Reserve Act creating the Federal Reserve System was framed as the Administration Bill it contained the directions that the powers so given should be to ‘accommodate business and commerce’ and to aim ‘to promote stability in the price level,’ but the House struck out the clause for stabilisation and the Senate did not restore it.
“But little information has ever been given why this w as done, but it was evidently the work of those who did not wish the Federal Reserve system to be used for the stabilisation of the purchasing power of money.”
Now let us see what began to happen when the United States was enslaved under this German-Jew engine of control.