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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