"I sincerely believe, with you, that banking establishments are
more dangerous than standing armies; and that the principle of spending money
to be paid by posterity, under the name of funding, is but swindling futurity
on a large scale." - Thomas Jefferson.
There were numerous attempts in the 1880's to create a central
bank in America - most of these attempts point back to the Rothschilds. It is
interesting that both the original American banking houses that represented
Rothschild - August Belmont and the Erlangers - funded the North and the South
respectively during America's Civil War. Abraham Lincoln saw the power play
behind this masquerade as one bank was seemingly played against the other. The
invisible hand underneath was never seen by the multitudes. Lincoln did see it,
for he had resisted the pressure to create in America a central private bank
that would print its money. He also spotted the "divide-and-conquer" movement
where the North was pitted against the South with both sides financed by the
same money elite.
Abraham Lincoln battled for the right of Congress and
the Treasury to hold the awesome power of coining money. He knew that to
surrender this power to private banks was ultimately to surrender the
sovereignty of America. Adams and Jefferson had warned of this all along.
Defying the hidden bankers, Lincoln issued the greenbacks. Interestingly,
Lincoln was soon assassinated.
"The money power preys upon the nation in times of peace &
conspires against it in times of war. It is more despotic than monarchy, more
insolent than autocracy, more selfish than bureaucracy. It denounces, as public
enemies, all who even question its methods or throw light upon its crimes. I
have two great enemies, the Southern Army in front of me & the financial
institutions at the rear, the latter is my greatest foe.
Forty years later John
Pierpont Morgan created the Panic of 1907 where the stock market fell nearly
50% from its peak in 1906, the economy was in recession, and there were
numerous runs on banks and trust companies.
Early in 1907, Jacob Schiff
of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, warned
that "unless we have a Central Bank with adequate control of credit resources,
this country is going to undergo the most severe and far reaching money panic
in its history."
The primary cause of the Panic of 1907 was a
retraction of loans by some banks that began in New York and soon spread across
the nation, leading to the closings of banks and businesses. Complete ruin of
the national economy was averted when J.P. Morgan stepped in by organizing a
team of bank and trust executives who redirected money between banks, secured
further international lines of credit, and bought plummeting stocks of healthy
Morgan gained numerous holdings, as well as his bid to be
the Rothschild's number-one American agent. J.P. Morgan's real feat and service
to Rothschild in the Panic of 1907 was that he created a mood in America to
believe that a central bank would prevent such a panic from occurring again and
thus became receptive to a central bank. The severity of the downturn was such
that it eventually pressured the United States Congress to accept the proposal
by a group of bankers to pass the Federal Reserve Act (or Glass-Owen Bill),
essentially a blueprint of the Nelson W. Aldrich plan that had been defeated in
Senate Republican leader and financial
expert Nelson Aldrich headed the National Monetary Commission set up following
the Panic of 1907. Aldrich set up two commissions one to study the
American monetary system in depth and the other, headed by Aldrich himself, to
study the European central-banking systems and report on
Centralized banking was met with much opposition from politicians,
who were suspicious of a central bank and who charged that Aldrich was biased
due to his close ties to wealthy bankers such as J.P. Morgan and his daughter's
marriage to John D. Rockefeller, Jr.
In 1910, Aldrich and executives
representing the banks of J.P. Morgan, Rockefeller, and Kuhn, Loeb, & Co.,
secluded themselves for 10 days at Jekyll Island, Georgia. The executives
included Frank Vanderlip, president of the National City Bank of New York,
associated with the Rockefellers; Henry Davison, senior partner of J.P. Morgan
Company; Charles D. Norton, president of the First National Bank of New York;
and Col. Edward House, who would later become President Woodrow Wilson's
closest adviser and founder of the Council on Foreign Relations. There, Paul
Warburg of Kuhn, Loeb, & Co. directed the proceedings and wrote the primary
features of the Federal Reserve Act.
This bill allowed a group of
bankers to create, buy the shares, and own the Federal Reserve System in 1913.
Morgan's own bank, The Morgan Guaranty Trust, was allowed to be among the inner
circle of primary owners of the Federal Reserve.
Despite the importance
of the Jekyll Island meeting, it remained a secret to both the public and the
government until journalist Bertie Charles Forbes wrote an article about it in
1916, three years after the Federal Reserve Act was passed.
The Federal Reserve Act called for the creation of 12 private
regional Federal reserve banks acting as fiscal agents for the U.S. Treasury
each with its own branches, board of directors and district boundaries, and the
System was to be headed by a seven member Federal Reserve Board made up of
public officials appointed by the President. Also created as part of the
Federal Reserve System was a 12 member Federal Advisory Committee and a single
new United States currency, the Federal Reserve Note.
Lindbergh Sr., the most vocal opponent of the bill and a member of the House
Banking and Currency Committee, who on the day before the Federal Reserve Act
was passed told Congress:
"This is the Aldrich bill in disguise
The worst legislative
crime of the ages is perpetrated by this banking bill
The banks have been
granted the special privilege of distributing the money, and they charge as
much as they wish
This is the strangest, most dangerous advantage ever
placed in the hands of a special privilege class by any Government that ever
existed. The system is private...There should be no legal tender other than
that issued by the government
The People are the Government. Therefore the
Government should, as the Constitution provides, regulate the value of money."
(Congressional Record, 1913-12-22)
President Wilson named Warburg and other prominent experts to
direct the new system, which began operations in 1915 and played a major role
in financing the Allied and American war efforts. Warburg was the only
appointee asked to appear before the Senate, whose members questioned him about
his interests in the central bank and his ties to Kuhn, Loeb, & Co.'s
With virtually all the banks on the brink of collapse, President
Roosevelt succeeded in establishing the Federal Reserve Board as the authority
in banking. Independent banks were not forced to join the Federal Reserve
System. But those that did not found they could not transact business through
any member bank.
The central bank can inflate the currency; it can
reallocate funds to distressed areas through loans; and it can create money out
of thin air through the use of "fractional
banking." The central banking system now determines interest rates for
virtually every bank in the country. A change in the reserve requirement or
discount policy will affect the lives of every American, regardless of their
Boom and Bust
The actions of The Federal Reserve Board have proven to be the
first cause in the death of our economy. The stop-&-go monetary policy
created by these institutions makes business conditions unpredictable &
thus inhibits investment & productivity. They have also been proven
susceptible to political pressure for cheaper credit. When governments control
a money supply, even indirectly, they have always throughout history abused
that power. Inflationary creation of base money serves to enlarge the
governments command over real resources in a way hidden from the people. The
wealth-redistributive power of money injections makes it suitable for use as a
vote-buying tool. It should be obvious: The monetary disorders of nations can
only be caused by their existing monetary authorities, especially in the
absence of any real competition, competition, which is the only force which
keeps commercial action honest.
The assumption that government has an
inherent role in money & banking, (apart from setting standards, as they do
with inches and feet, ounces and pounds, minutes and hours) is as preposterous
as believing they have a place competing with any private business. In history
when banking was most stable it was closest to pure laissez-faire operation.
Whenever a nation was growing well, was creative, inventive, & productive
you will find a banking system very close to free-enterprise competitive
banking. Having politicians & bureaucrats in charge of the money supply is
like having Dracula in charge of a blood bank. The banking systems of the
western world are the complete & only cause of recessions, inflations,
'stagflations' depressions, panics & runs.
Benjamin Franklin made a visit to England in 1763 and while there
he was asked to explain the prosperity of the colonies while on the other hand,
England was suffering a bust, he replied: "That is simple. It is only because
in the colonies we issue our own money. It is called 'Colonial Scrip' and it is
issued in the proper proportions to the demands of trade & industry.
It was not very long until this information was brought to the
Rothschild's Bank, and they saw that here was a nation ready to be exploited;
here was a nation setting up an example that they could issue their own money
instead of the money coming through the banks.
The Rothschild's Bank
caused a bill to be introduced in the English Parliament, which provided that
no colony of England could issue its own money. "Thus, they had to use English
money. The colonies were compelled to discard their money and mortgage
themselves to the Rothschild's Bank of England to get money. Then, for the
first time in the history of The United States, money began to be based on
debt. Benjamin Franklin stated that in one year from that date the streets of
the colonies were filled with the unemployed.
Central banking is barbarous
Writing in 2005, James
Turk said central banking is barbarous for the following reasons:
- Money is a product of the free market. It is a fundamental
building block of our society because it allows people to interact with one
another in the market process. Money existed long before governments and
central banks began 'managing' it. Tragically, instead of being a neutral and
unhindered tool in commerce fair to one and all, money has now become a matter
of force and decree, which is disruptive to the market process and therefore
harmful to society.
- Prior to the creation of the Bank of England, every exchange in
this interchange of activity we call the market process traded value for value.
In other words, gold was exchanged for land, silver for food, etc. - assets
were traded for assets. The Bank of England changed this process by creating
money substitutes. Its banknotes are not a tangible asset like gold or silver.
Banknotes are merely money substitutes and not money itself. Money substitutes
are a liability of the bank issuing that paper currency, which brings with it
all sorts of payment risk that one does not have when using tangible assets as
- Central banks act in secrecy, and consequently, they are not
held accountable. They consider themselves - and act as if - they are above the
law. What's more, this secrecy favors the insiders, and it is this fundamental
principle upon which central bank market intervention has been constructed,
including, for example, the ongoing intervention in the gold market.
- Central banks have freed governments from the need of having to
ask their citizens - through their elected representative - for more taxes.
Central banks can acquire government debt and
use it to create currency out of 'thin air' for governments to spend on their
latest whim. What's worse, through their policies that create inflation,
central banks enable governments to steal from their citizens.
- There are several tools in the central banks' arsenal, and one
of them is disinformation, which they regularly practice. For example, central
banks have come to make us believe that inflation is "rising prices". But wet
streets do not cause rain. By changing the definition of inflation to one of
"rising prices" rather than what it really is - monetary debasement engineered
by central banks - the true culprit - which is the central banks themselves -
is masked, which leads into the next point.
- Not only are central banks guilty of disinformation, deception
is one of their most frequently used tools. The history of banking is replete
with examples that demonstrate not just a lack of disclosure, but rather,
outright deception. To give just one example, look how central banks today
account for their gold loans. They carry gold in the vault and gold out on loan
as one line item on their balance sheet. In effect, central banks are saying
they can ignore the truthful disclosure established by generally accepted
accounting principles, and they can as a result report cash and accounts
receivable as one and the same thing. Accounting like that would make even the
people at Enron blush, but it also highlights the seventh point.
- Central banks have in effect turned the market into a command
economy. The power to create money out of thin air brings with it the much
greater power to control a nation's economy and therefore the economic destiny
of millions. Central bankers today are no different than the former Soviet
Union politburo members, who pulled strings and pushed buttons to try making
the economy - which means each and every one of us who participate in the
economy - bend to their beck and call. But it is not only the economic destiny
of millions that is determined by central banks, which brings us to the eighth
reason central banking is barbarous.
- Central bankers and their comrades in government know that this
command economy power forces them to walk a fine line between prosperity and
economic collapse, given the inherent fragility of this credit-based monetary
system they operate. To try reducing this ever-growing fragility - in a vain
attempt to make it easier for central banks to effectively and totally control
this command economy - governments take away peoples' freedom to act. Central
banks usher in controls (like the reporting now required by the Patriot Act)
and policies (ever hear of the 'too big to fail' doctrine that underwrites bad
decisions at banks with taxpayer money) to perpetuate their stranglehold on
power regardless whether they are doing a good or bad job - and it is usually
bad - in commanding the economy.
- The command economy that central banks operate encourages the
growth of debt, rather than savings. Banks want to expand their balance sheets
- i.e., make more loans - in order to earn greater profits, and governments
want central banks to accommodate this objective because the resulting credit
expansion provides opportunities to acquire new things, which create an
illusion of prosperity that makes people believe their wealth is rising. The
result of this debt-induced, pseudo-prosperity is a complacent populace, the
net effect of which tends to perpetuate government power and politicians'
perquisites. Instead of following a sound and time-tested 'pay as you go'
policy, consumers, businesses and governments have adopted a new creed - 'buy
now and pay later'. So the mountain of debt that exists in the US today, and
the excessive consumption that continues to enlarge that mountain, is directly
the result of central banks and their need to grow more debt to avoid the
inevitable 'bust' that would follow if this growth in debt were to stop.
Newsletter writer Richard Russell explains it very simply in just three words -
"inflate or die". That reality explains why Ben Bernacke (presently the
chairman of the President's Council of Economic Advisors, but a former Federal
Reserve governor who reportedly is being considered to replace Alan Greenspan
as chairman) has said that he would in effect drop $100 bills from helicopters
if necessary to inflate the economy.
- What central banks do domestically, they also do to the
international monetary system. Thus, the inherent fragility and the huge
structural imbalances arising from cross-border trading exist today because of
central bank actions. The automaticity of the classical gold standard ensured
that imbalances such as trade deficits were relatively short-lived. In
contrast, present central bank policies have perpetuated the long running US
trade deficits, which are now several decades old. What's worse, the US trade
deficits are growing. The debt being created to finance these deficits impacts
the monetary environment of each US trading partner. So central bank engineered
imbalances are not just domestic problems; they also have global implications.
Source: James Turk, "The
'Barbarous Relic' - It's Not What You Think", September 14, 2005
The Relationship Between the
Federal Reserve Act and the Federal Income Tax
"What is needed here is a return to the Constitution of the
United States. We need to have a complete divorce of Bank and State. The old
struggle that was fought out here in Jackson's day must be fought over again...
The Federal Reserve Act should be repealed and the Federal Reserve Banks,
having violated their charters, should be liquidated immediately. Faithless
Government officers who have violated their oaths of office should be impeached
and brought to trial. Unless this is done by us, I predict that the American
people, outraged, robbed, pillaged, insulted, and betrayed as they are in their
own land, will rise in their wrath and send a President here who will sweep the
money changers out of the temple." - Congressman Louis
© Copyright 1999-2008 Jeremiah Project