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As a general rule, the most successful man in life
is the man who has the best information
Should we leave the creation
of new money in the hands of bankers or place its creation solely with our
government?
“The
financial system used by all national economies worldwide is actually founded
upon debt. To be direct and precise, modern money is created in parallel with
debt…
The
creation and supply of money is now left almost entirely to banks and other
lending institutions. Most people imagine that if they borrow from a bank,
they are borrowing other people's money. In fact, when banks and building
societies make any loan, they create new money. Money loaned by a bank is not
a loan of pre-existent money; money loaned by a bank is additional money
created. The stream of money generated by people, businesses and governments
constantly borrowing from banks and other lending institutions is relied upon
to supply the economy as a whole. Thus the supply of money depends upon
people going into debt, and the level of debt within an economy is no more
than a measure of the amount of money that has been created.” Michael
Rowbotham, ‘The Grip of Death’
US Federal
Reserve – the Fed
On the night of November 22, 1910 a delegation of
the nation’s leading financiers, led by Senator Nelson Aldrich, left
New Jersey for a very secret ten day meeting on Jekyll Island, Georgia.
Aldrich had previously led the members of the
National Monetary Commission on a two year banking tour of Europe. He had yet to write a report regarding the trip, nor had he
yet offered any plans for banking reforms.
Accompanying Senator Aldrich to Jekyll Island were:
- Frank Vanderlip,
president of the National City Bank of New York, associated with the
Rockefellers
- Henry P. Davison, senior partner of J.P. Morgan
Company, regarded as Morgan’s personal emissary
- Charles D. Norton, president of the Morgan
dominated First National Bank of New York
- Col. Edward House, who would later become
President Woodrow Wilson's closest adviser and founder of the Council on
Foreign Relations
- Benjamin Strong, a lieutenant of J.P. Morgan
- Paul Warburg, a recent immigrant from Germany
who had joined the banking house of Kuhn, Loeb and Company, New York
directed the proceedings and wrote the primary features of what would be
called the Aldrich Plan.
After the Jekyll Island visit the National Monetary
Commission “wrote” the Aldrich Plan which formed the basis for
the Federal Reserve system.
"In 1912 the National Monetary Association,
under the chairmanship of the late Senator Nelson W. Aldrich, made a report
and presented a vicious bill called the National Reserve Association bill. This
bill is usually spoken of as the Aldrich bill. Senator Aldrich did not write
the Aldrich bill. He was the tool, if not the accomplice, of the European
bankers who for nearly twenty years had been scheming to set up a central
bank in this Country and who in 1912 has spent and were continuing to spend
vast sums of money to accomplish their purpose."
Congressman Louis T. McFadden on the Federal Reserve Corporation: Remarks in
Congress, 1934
After several failed attempts to push the Federal
Reserve Act through Congress, a group of bankers funded and staffed Woodrow
Wilson's campaign for President. He had committed to sign a slightly
different version of the Federal Reserve Act than Aldrich’s Plan.
In 1913, Senator Aldrich pushed the Federal Reserve
Act through Congress just before Christmas when much of Congress was on
vacation. When elected president Woodrow Wilson passed the FED.
The Federal Reserve Bank (FED) is a privately owned
company (Wikipedia describes the Fed as a complex business-government partnership
that rules the financial world) that controls, and profits immensely by
printing money through the US Treasury and regulating its value.
“Some [most] people think the Federal Reserve
Banks are U.S. government institutions. They are not … they are private
credit monopolies which prey upon the people of the U.S. for the benefit of
themselves and their foreign and domestic swindlers, and rich and predatory
money lenders. The sack of the United States by the Fed is the greatest crime
in history. Every effort has been made by the Fed to conceal its powers, but
the truth is the Fed has usurped the government. It controls everything here
and it controls all our foreign relations. It makes and breaks governments at
will.” Congressional Record 12595-12603 — Louis T.
McFadden, Chairman of the Committee on Banking and Currency (12 years) June
10, 1932
“… we conclude
that the [Federal] Reserve Banks are not federal … but are independent,
privately owned and locally controlled corporations … without
day-to-day direction from the federal government.” 9th
Circuit Court in Lewis vs. United States, 680 F. 2d 1239 June 24, 1982
The FED began with approximately 300 people, or
banks, that became owners (stockholders purchased stock at $100 per share) of
the Federal Reserve Banking System. The Fed is privately owned - 100% of its
shareholders are private banks, the stock is not publicly traded and none of
its stock is owned by the US government.
The US government pushed through the Sixteenth Amendment (which exempted income
taxes from constitutional requirements regarding direct taxes)
restarted an income tax on Americans to pay the interest to the FED and
reorganized the IRS to collect the monies – the interest -
“owed” to the FED from its citizens.
Sir Josiah Stamp, president of the Rothschild Bank
of England and the second richest man in Britain in the 1920s, said the
following in 1927 at the University of Texas:
“The modern banking system manufactures money
out of nothing. The process is perhaps the most astounding piece of sleight
of hand that was ever invented. Banking was conceived in inequity and born in
sin. Bankers own the Earth. Take it away from them but leave them the power
to create money, and with a flick of a pen, they will create enough money to
buy it back again. Take this great power away from them and all great
fortunes like mine will disappear, for then this would be a better and
happier world to live in. But if you want to continue to be the slaves of
bankers and pay the cost of your own slavery, then let bankers continue to
create money and control credit.”
The FED banking system collects billions of dollars
in interest annually and distributes the profits to its shareholders - the
interest on bonds acquired with its newly-issued Federal Reserve Notes pays
the Fed’s operating expenses plus a guaranteed 6% return to its banker
shareholders.
The US Congress gave the FED the right to print
money at no interest to the FED. The FED creates money from nothing, loans it
out through banks and charges interest. The FED also buys government debt
with money from nothing, and charges U.S. taxpayers
interest.
The FED is the only for profit corporation in
America that is exempt from both federal and state taxes.
The Chicago Plan
In 1933, economists at the University of Chicago
put forward confidential proposals to roughly 40 individuals concerning
banking reform. After receiving feedback from a number of individuals the
proposals were re-written, the supplement "Long-time Objectives of Monetary
Management" was added as well as an appendix, "Banking and Business
Cycles."
Collectively, these recommendations have come to
be known as the Chicago Plan.
Irving Fisher was a strong advocate.
“The Best Economic Minds In The Country devised a reform plan.
Henry Simons from the University of Chicago created the proposal and
prominent economists from other universities joined him in what became known
as the “Chicago Plan.” Economists like Paul Douglas of the U of
C.; Frank Graham and Charles Whittlesley of
Princeton; Irving Fisher of Yale; Earl Hamilton of Duke; and Willford King of NYU, to name a few.” The 1930’s Chicago Plan Vs.
The American Monetary Act, Stephen
Zarlenga
The Chicago Plan called
for only the government to be able to issue the currency – banks would
no longer be able to create money by making loans.
"The essence of the 100% plan is to make money independent of
loans; that is to divorce the process of creating and destroying money from the
business of banking. A purely incidental result would be to make banking
safer and more profitable; but by far the most important result would be the
prevention of great booms and depressions by ending chronic inflations and
deflations which have ever been the great economic curse of mankind and which
have sprung largely from banking.” Irving Fisher
The Chicago Plan
recognized the distinction between money and credit:
- The power to
create money was to be removed from private banks by abolishing fractional
reserves – the mechanism through which the banking system creates
money
- The loan-making
function (banks) was to be separated from the money-creation function
(government). Bank lending was to be from deposited long-term savings
Although easily implementable
the Chicago Plan was never seriously considered by the day’s
government, instead, watered down alternative measures (institutionalized
Federal deposit insurance and the separation of commercial and investment
banking) were introduced in the Banking Act of 1935 which created the Federal Open Market
Committee (FOMC) who were charged with controlling the money supply through
open market operations using government securities.
After a mid-1930s recovery from the Great
Depression the US again entered Recession in 1937-1938 and the key elements
of the Chicago plan resurfaced in the July 1939 draft titled ‘A
Program for Monetary Reform’, this document was never published and never resulted in legislation.
Conclusion
“It is time to part with the fallacy that economic growth and
employment creation are the main duties of central banks...Economic agony and
financial disorder will continue until central banks decide to rehabilitate
monetary conditions and restore direct control of the money creation
process.” Dust off the Chicago Plan, Hossein Askari and Noureddine Krichene, atimes.com
Milton Friedman wrote “The creation of fiat currency should
be a government monopoly.”
Today monetary reform advocates are revisiting
the 1933 ‘Chicago Plan’ and the 1939 ‘A Program for
Monetary Reform’.
Perhaps it’s time some kind of monetary reform
was on all our radar screens. Is it on yours?
If not, maybe it should be.
Richard (Rick) Mills
rick@aheadoftheherd.com
www.aheadoftheherd.com
Richard is the owner of Aheadoftheherd.com and
invests in the junior resource/bio-tech sectors. His articles have been
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***
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This document is not and should not be
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Richard Mills has based this document on
information obtained from sources he believes to be reliable but which has
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or warranty and accepts no responsibility or liability as to its accuracy or
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subject to change without notice. Richard Mills assumes no warranty,
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Furthermore, I, Richard Mills, assume no
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