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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