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An American Affidavit

Tuesday, August 4, 2020

Chapter Nine THE MONEY TRUST CONS CONGRESS: The Federal Reserve Conspiracy by Antony C.Sutton from archive.org


Chapter Nine THE MONEY TRUST CONS CONGRESS: The Federal Reserve Conspiracy by Antony C.Sutton from archive.org

Chapter Nine  THE MONEY TRUST CONS CONGRESS   

      Congressional passage of the Federal Reserve Act in  December, 1913, must count as one of the more disgraceful  unconstitutional perversions of political power in American  history.   Certainly it is hard to think of any Act that has had greater  effect and illegally transferred more
monopoly power to a  conspiratorial clique. These are harsh words. The reader may  judge if they are accurate after reading this chapter: an almost  hour by hour detail of the passage of the Act and signature by  President Wilson.   The Act transferred control of the monetary supply of the  United States from Congress to a private elite. Paper fiat currency  replaced gold and silver. Wall Street financiers were able now to  tap an unlimited supply of fiat money at no cost.   Yet, as Senator Townsend stated: "This bill did not originate  in any party platform. The people have not expressed themselves  on it anywhere and at any time." 1 - 1 ' An extraordinary lobbying  effort surrounded the bill just as today in the 1990s an  extraordinary amount of lobbying is brought forth by any attempt  to curtail or even investigate the Fed. In 1913 the Democratic  Party leadership came     87     The Federal Reserve Conspiracy   under strong pressure from Woodrow Wilson and New York banking  lobbyists to ensure that opposition did not water down the currency bill  and allow other private interests to become stockholders.   Witness the complaint of Senator Gilbert Minell Hitchcock, an  independent-minded gentleman from Nebraska and publisher of the  Omaha World Herald. The Bill had come to the Senate from the House:   Mr. HITCHCOCK: "Sacred document" as it came from the House,   of which, as I have said, we were forbidden to dot an "i" or to   cross a "t. "   Mr. OWEN: By whom?   Mr. HITCHCOCK: And which we were commanded to pass  without a hearing and without much investigation.   Mr. POMERENE: Mr. President, I have been around these  hallowed precincts for some time, and I have not heard that  anybody has forbidden anybody else to change his views or to  criticize any bill that came from the House, or any bill that origi-  nated here. Anyone has a right to change his view. The Senator  himself has changed his view a number of times. I say that not to  his discredit, but simply for the purpose of showing that he has  been a free moral agent all these weeks.   Mr. HITCHCOCK: Mr. President...   Mr. OWEN: The Senator from Nebraska did not tell us by whom  he had been ordered not to dot an "i" nor cross a "t," and I would  be glad if the Senator would disclose that valuable information,  unless it is confidential with the Senator.     88     _The Money Trust Cons Congress     Mr. HITCHCOCK: I think I will leave that for the country to  judge. I will take my chances on it.   Mr. OWEN: If the Senator is content to leave that as an  insinuation, it is for the Senator to do so.   Mr. HITCHCOCK: I will take that liberty. (2)   On September 18, 1913 the Glass Bill, the house version of the  Morgan central banking bill, passed the House of Representatives by an  overwhelming margin of 287 to 85. Most Congressmen had no idea  what the bill was about. There were no amendments. Members voted  for or against, and only the brave voted against. This Glass bill was  named after Congressman Carter Glass of Virginia (1858-1946) - a  banker (a director of the United Loan and Trust and the Virginia Trust  Company).   The Glass Bill then went to the Senate and became the Owen Bill  after Senator Robert Latham Owen (1856-1947) of Oklahoma,  Chairman of the Senate Finance Committee -and a banker (a major  stockholder in the First National Bank of Muskogee).   The Senate took exactly 4 1/2 hours to debate and adopt the Owen  Bill, 43 to 25. The Republicans did not even see the conference report.  This is normally read to the floor. No member of the Senate could have  known of its contents and some Senators even stated on the floor of the  Senate that they had no knowledge of the contents of the Owen Bill.   At 6:02 p.m. on the same day the Bill was hurried through the  Senate without discussion. President Woodrow Wilson signed the  Federal Reserve Act of 1913 into law.   A detailed review of the Senate debate indicates the Senators had  no details to discuss and every criticism went unanswered. Republican  Senator Bristow (1861-1944) made bitter comments on the obvious  conflict of interest:     89     The Federal Reserve Conspiracy   My allegation is that this bill has been drawn in the interests  of the banks; that the Senator from Oklahoma, as the chairman of  the committee, is largely interested in banks; that the profits which  will accrue to those banks directly will add to his personal  fortune; that he has voted to increase the dividends on the stock of  the regional banks, which will be paid to the member banks, from  5 per cent to 6 per cent; that he has voted against permitting the  public to hold the stock of these regional banks and has insisted  that it shall be held by the member banks; and that he has voted  against giving the Government the control of the regional banks  and in favor of the banks controlling the regional banks, and it is  for him to say whether he has violated the rule laid down in  Jefferson's Manual. (3)   The Senate debate, for what it was worth without a conference  report, culminated in a test of political strength on Monday, December  15, 1913. At this vote the amendments proposed by Senator Hitchcock -  the only Democrat working against the bill - were tabled by a vote of 40  to 35.   Hitchcock's amendments were aimed to make the Federal Reserve  System a government rather than a private monopoly, i.e., the control of  the Money Trust would be placed in the Department of the Treasury.   It is interesting that the Senate would overwhelmingly refuse to  place control of the money supply within the Treasury and prefer to  hand it over to the House of Morgan. Colonel House had done his work  well.   On rereading the lengthy rambling debate, the likelihood of price  inflation was recognized. The argument was a common sense approach  that without the discipline of limited gold and silver, the pressure of  unlimited flat money would lead to price inflation. The only argument  against was     90     The Money Trust Cons Congress   a rather weak "sound bankers would not allow price inflation."   Note that we use the term price inflation. In 1913 the term  inflation always referred to "currency inflation," i.e., expansion of the  note issue. In the intervening decades the meaning has changed  entirely. Today when the term inflation is used it always refers to price  inflation, i.e., an increase in prices.   The key Senator warning of inflation (currency inflation) ahead  was Senator Root, who oddly accused Bryan, the pro-silver populist, as  the dominating influence behind the Federal Reserve Act (most  unlikely, and a probable red herring).   However, Root did warn of currency inflation and financial panic  but then defended the Glass-Owen bill on the grounds that no inflation  could come about "unless the sound money men who run the banks  brought it about."   Once again we have the Money power controlling the opposition,  i.e., proclaiming arguments that can be easily countered while ensuring  that the really potent criticisms do not see the light of day.   Today the irrefutable link between currency inflation and price  inflation is buried in a confusion of academic double-talk and algebraic  manipulation. Today's academic economists are so beholden to  mathematical manipulation (with the deluding plea of rigorousness) that  they have entirely overlooked fundamental economic truisms. With  very few exceptions (Hillsdale College, Ludwig von Mises Institute at  Auburn University), academic economic departments are willing pawns  of the modern money trust or the Federal Reserve System. (This author  can speak first hand of the abysmal ignorance of the UCLA Economics  Department in the early 1960s).   The reply to Reed came from Senator Hitchcock, who pointed out  that under the Bill, "the control of the currency     91     The Federal Reserve Conspiracy   system of the country would have to be turned over to the bankers."  Others like Senator Weeks were unconcerned on the grounds that "the  United States has the most competent bank men in the world." But then,  Weeks was a banker himself.   The last speech on this Monday afternoon came from  Congressman Mann of Illinois, the Republican floor leader who made  the rather odd assertion that the U. S. was in the midst of a financial and  industrial panic which demanded passage of the Federal Reserve Act.   Tuesday, December 16, 1913   In Tuesday's Senate debate, Senator Root again emphasized the  danger of inflation from the proposed Federal Reserve Act. Constant  interruptions, according to the New York Times (December 17), suggest  that supporters of the bill were publicly worried. They argued in reply  that inflation was not possible if the securities issued were good  government securities - to which Root replied:   That is neither here nor there so far as my criticism of the  bill is concerned. My objection is that the bill permits a vast  inflation of our currency and that inflation can be accomplished  just as readily and just as certainly by loans of the Government  paper on good security as upon bad security...   emphasizing the point that;   no one denies that in the past from time to time great  commercial nations have found themselves moving along a tide of  optimism which, with the facilities of easy money has brought them  to a point of most injurious and serious collapse.     92     The Money Trust Cons Congress   Root reinforced his "tide of optimism" argument as follows,   ...judgement becomes modified by the optimism of the hour  and grows less and less effective in checking the expansion of  business as the period of expansion goes on.   He clinched the argument:   ...instead of doing our duty as the responsible legislative  branch of the Government of the United States, we are shirking  that duty and throwing it upon a subordinate agency of the  government.   Unfortunately, Root did not push his argument to the limit, i.e.,  that this "subordinate agency of government" as he called it, was in  effect going to be a private money monopoly of national bankers.   The general response to warnings of inflation was to cite the  existence of a gold reserve backing for the money supply: proposed at  33 1/3 percent. For example, Senator Williams of Mississippi claimed  that the great inflation feared by Senator Root was only a "bare  mathematical possibility." Why? Because, argued Senator Williams,  "no President conceivably would appoint one member of the board who  believed in fiat money." Eighty years later, Senator Williams to the  contrary, every single member of the Federal Reserve Board and its  Regional Banks is an ardent believer in fiat money and an adversary of  gold! In President Wilson's era it was impossible to conceive that the  role of gold could ever cease. In President Clinton's era it is impossible  for policy makers to visualize that gold has any role at all.   Wednesday, December 17, 1913   On Wednesday the powerful behind-the-scenes pressure for the  Federal Reserve Act surfaced when the White House     93     The Federal Reserve Conspiracy   announced that it expected the Senate to pass a currency bill before  Saturday, that the House would accept this Senate version of the bill  without changes and the bill would then go to the President for  signature on Christmas eve. The flaw with this hurry-up scenario was  that on Wednesday Senator Root's warnings about price inflation had  some effect and a Democratic Party caucus was called, during the short  dinner recess in the evening, to consider two of Root's proposals: (a)  that the note issue should be limited by law and (b) that the gold reserve  should be increased to 50 percent with a heavy tax on "depletions"  below this level.   After discussion the note limitation amendment was rejected, but  the caucus did adopt a proposal to increase the gold reserve to 40  percent while requiring that a portion of regional reserve bank earnings  be set aside as a gold reserve. It is interesting to note that the  Democratic majority was well aware of the discipline of gold and it was  not the intent of Congress in 1913 in any way to reject, or even limit  this discipline. In brief, the present day attempt to demonetize gold by  phasing it out of the monetary system was not only rejected by the  Congress of 1913 but the dangers of any such demonetization were  recognized as ominous for the welfare of the United States.   Even after the caucus, criticism was to be heard from a few  Senators. Senator Crawford of South Dakota didn't like the private  monopoly aspects at all:   ...you are simply creating a bank of big bankers, a bank to  help big banks, but for which you assess the little banks to get the  capital. The little banks are simply commanded to carry wood and  water for the big banks. You say to the Vanderlips and the  Hepburns and the Morgans and the Reynoldses, "come in with  your short term paper and get the money" but you say to the  Smiths and     94     The Money Trust Cons Congress   the Browns and the Joneses from the small country districts, "go  somewhere else with your long term farmers paper; we cannot  discount it. "   The intriguing aspect of the Wednesday evening is that while a  majority of Congress understood more or less the idea that the system  would be inflationary, they were apparently unwilling to bring  themselves to vote against the bill.   Thursday, December 18, 1913   By Thursday effective opposition had crumbled, and to speed  passage the Senate operated under a 15-minute rule. By this device half  a dozen Hitchcock amendments were disposed of and others proposed  in the previous night's Democratic Party caucus given little attention.  The debate records serious doubts and differences of opinion coupled  with predictions that the bill would become law before Christmas and  signed on Monday or Tuesday of the following week. The opposition  was sidetracked. Problems were overlooked. Fundamental questions,  including the possibility of inflation, were bypassed by the leadership.  One senses almost an air of panic - to pass a "currency bill," at whatever  cost. Consequently, although the bill was known to be defective, the  New York Times for Friday, December 19 ran its reporting under the  head, "Near end of tight on currency bill." The White House  promptly announced that it was considering names for Governor of the  Federal Reserve Board. The first name to be floated out of the White  House was that of James J. Hill of the Great Northern Railroad. It was  proposed by international banker James Speyer - confirming the behind-  the-scenes activity of bankers.     95     The Federal Reserve Conspiracy   Friday, December 19, 1913   On Friday, December 19, the Friday before Christmas when  Congressional thoughts were more on Christmas trees than money  trees, the Senate passed President Wilson's currency bill without further  ado by an overwhelming vote of 54 to 34. Every Democrat in the  Senate, plus six Republicans and one Progressive Republican, voted for  the Federal Reserve system. Against the Federal Reserve were 34  Republicans. As a sop to criticism, the bill included a so-called "radical  amendment," i.e. that Congressmen could not serve on Federal Reserve  Boards.   Bankers, not unexpectedly, were reported to be "relieved" by the  passage of the bill - but not fully satisfied and still pressed for changes  in committee. William A. Gaston, President of the National Shawmut  Bank, spent some days in Washington in conference with members of  the House and Senate Currency Committees and commented: "...The  prospective conference changes will make the bill more workable for  the banks.-"   Edmund D. Hulbert, Vice President of Merchants Loan and Trust  Company, added to this: "...on the whole it is a sound bill and will do  much toward putting banking and currency on a sound footing. " (4)   W. M. Habliston, Chairman of the First National Bank of  Richmond, stated, "It will result in an elastic currency which will avert  panics," and Oliver J. Sands, President of the American National Bank,  commented that   The passage of the currency measure will have a beneficial  effect upon the country at large and its operation will help  business. It seems to me the beginning of an era of general  prosperity....   The only reported objection from bankers came from Charles  McKnight, President of National Bank for Western Pennsylvania: "It  will do the country no good...."     96     The Money Trust Cons Congress   Saturday, December 20, 1913   After passage of the Owen bill in the Senate the measure was sent  to a joint House-Senate conference to iron out the major differences  between the Glass bill from the House and the Owen bill from the  Senate. This conference excluded all Republican members. The  conference then met for four hours on Saturday evening, December 20,  at which time at least 20 (some say 40) major points of difference in the  two versions were uncovered, in addition to minor disagreements in  language requiring over 100 corrections. In most of these minor items  the Senate yielded to the House. However, none of the 20 (40) major  differences were discussed in this Saturday evening conference, and it  was generally agreed that Monday passage of the joint bill was  extremely unlikely. As reported by the New York Times (December 21,  1913), "The points seriously at issue embody practically all the  substantial Senate amendments."   In an effort to work out some of the major differences, the  conferees agreed to meet all day Sunday. Further, on this Saturday the  full House met and refused to accept the Senate version of the bill by a  vote of 294 to 59 and then proceeded to pass amendments binding on  the House conferees.   By Saturday evening, December 20, 1913, the following were  some of the principal major points of dispute between the House and  the Senate and reflected significant, fundamental differences in the  approach to a currency bill:   First - the number of regional reserve banks,   Second - the question of guarantee of deposits,   Third - the amount of gold reserve to be required against the  circulating notes,   Fourth - the changes with respect to domestic acceptance in the  case of domestic and foreign trade,   Fifth - the changes in the reserve provisions,     97     The Federal Reserve Conspiracy_     Sixth - the right of member banks to use the notes of the Federal  reserve banks for reserve purposes,   Seventh - the status of the two percent Government bonds used as  security for national bank notes,   Eighth - the Senate's provision with respect to an increase in  national bank circulation.   This was the legislative position late Saturday night.   Sunday, December 21, 1913   Quite what happened on this Sunday in Washington, D.C. we  shall never know for sure.   What we do know is that on Sunday morning the Senate-House  conferees were faced with more than 20 (some say 40) fundamental  differences on a critically important bill - a bill to affect the lives of  every American then and in the future. Yet, the following Monday  morning the New York Times (December 22) reported on the front page,  "Money Bill may be law today." The Times reported that in some  undisclosed way the House-Senate conferees had adjusted their  differences. The "newspaper of record" put it this way:   With almost unprecedented speed, the conference to adjust  House and Senate differences on the currency bill practically  completed its labors early this morning (Monday 22nd). On  Saturday the conferees did little more than dispose of the  preliminaries, leaving forty essential differences to be thrashed out  Sunday.  The "almost unprecedented" speed in the conference probably   occurred at a most unlikely time - between 1:30 a.m. and 4 a.m.   Monday, December 22. Let's look at that critical Monday in more   detail.     98     The Money Trust Cons Congress   Monday, December 22, 1913   At midnight Sunday, December 21, either 20 or 40  (depending on the source) major points of disagreement required  resolution. At 11 p.m. Monday, 23 hours later, the House voted  298 to 60 and passed the Federal Reserve Act. During this brief  23 hours the major differences were reconciled, worded, sent to  the printer, set up in type, proofread, printed, distributed, read by  every member of the House, discussed, pondered, weighed,  deliberated, debated -and voted upon. This miracle of speediness,  never equaled before or after in the U.S. Congress, is ominously  comparable to the rubber stamp lawmaking of the banana  republics.     Mon. Dec. 22, 1913    1:30a.m. -    4:30a.m.    House-Senate con  ferees adjust 20  (40) major differ-  ences in the two  bills.      4:30 a.m      Report handed to  printers    12 1/2 hours from  conference to  printed report    7:00 a.m      Proofs read      1:00 p.m.      Printed copies  delivered from  printers      2:00 p.m      Printed report on  Senate desks with  notification of a  meeting at 4 p.m.     99     The Federal Reserve Conspiracy     4:00 p.m.     Republican members  of conference go to  Conference room -to  be told that a bill had  already been  concluded.     5 hours from printed  final report to House  vote.     6:00 p.m.     Printed conference  report submitted to the  House by   Congressman Glass -  most House members  go to the restaurant for  dinner while the bill is  read (1 1/2 hours).     7:30 p.m     Debate begins with a  20 minute speech by  Glass.     11:00 p.m.     The House votes 298  to 60 in favor of the  Federal Reserve Act.     The manner in which the Federal Reserve bill was handled by the  Democratic majority and specifically by banker-politician Senator  Owen and banker-politician Carter Glass is reflected in a complaint on  the Senate floor     100     The Money Trust Cons Congress   by Senator Bristow of Kansas, the Republican leader, in which he  explains why he would not sign the conference report:   Mr. LA FOLLETTE: Would it disturb the Senator to inform  us who did participate in this conference and whether any Senator  declined to participate?   Mr. BRISTOW: As to those who participated in the  conference I am not advised. I was a member of the committee of  conference appointed by the President of the Senate, but I had no  knowledge as to the meeting of the conferees until after the report  as it is before us had been made, printed, and placed upon the  desks of Senators. I was then notified by the chairman of the  committee that there would be a meeting of the committee of  conference at 4 o'clock, two hours after this report of the  committee of conference of the two Houses of Congress on the bill  (H.R. 7837) to provide for the establishment of Federal reserve  banks, for furnishing an elastic currency, affording means of  rediscounting commercial paper, and to establish a more effective  supervision of banking in the United States, and for other  purposes, had been placed upon my desk. I, in company with the  Senator from Minnesota (Mr. Nelson), visited the room where we  were invited to appear. We found the chairman of the committee  and the Democratic members of the committee of conference there,  and were given to understand that they had perfected the  conference report. We were then invited to express our opinion of  it, but I preferred to express my opinion where it might appear in  the Record, rather than in the     101     The Federal Reserve Conspiracy   privacy of the committee room, and that I shall undertake to do  this morning.   I see this report is signed by the Democratic members of the  committee. Of course, I did not sign it because I was not invited to  sign it, and I should not have done so, anyway, for I did not know  at the time the report was prepared what it contained, and I had  no opportunity of ascertaining what it contained.^   In brief, the Republican leader did not know what was in the Act  nor was he given the opportunity to find out what was in the Act. Later  in debate Bristow directly accused Owen of inserting provisions for the  profit of his own bank.   There were major abuses of the legislative process in the passage  of the Federal Reserve Act - sufficient to void the act. If we have a  society that lives by rules then there is no Federal Reserve Act.   Both Finance Committee Chairmen, Congressman Glass and  Senator Owen, had conflict of interest with personal banking interests  and stood to gain from the bill. Meetings to discuss the bill were held  without knowledge of committee members. Decisions were arrived at  and established without the knowledge and agreement of members.  Major sections of the bill were settled without consultation and  railroaded into final form. There is indisputable evidence of outside  banking influence upon Congress.   The Federal Reserve Act is, even from our superficial  investigation, suspect legislation. Most of Congress had no idea of the  contents of the final bill and certainly none had the opportunity to  reflect and consult with the broad base of the electorate. A private  money monopoly was granted to a few national bankers under suspect  circumstances.     102     The Money Trust Cons Congress   As Congressman Lindbergh stated on December 23, 1913:   This Act established the most gigantic trust on earth. When  the President signs this bill, the invisible government by the  Monetary Power will be legalized. The people may not know it  immediately but the day of reckoning is only a few years  removed....     103     The Federal Reserve Conspiracy     Chart 9-2: STAGE TWO: WOODROW WILSON IN DEBT  TO THE MONEY TRUST      George Perkins     .Cleveland  Bodge  $51,3t0     104     The Money Trust Cons Congress     Endnotes to Chapter Nine:   (1) Congressional Record: Senate, February 8, 1915.   (2) op. cit.   (3) op. cit.   (4) New York Times, December 20, 1913.   (5) Congressional Record: Senate, December 23, 1913, p. 1468.     105     The Federal Reserve Conspiracy      Paul Volcker, employee of Chase Manhattan Bank and  Chairman of the Federal Reserve System in the 1970s.     106     Chapter Ten:  THE FEDERAL RESERVE TODAY   

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