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CHAPTER 10 - The
Money Creators
The editorial page of The New York Times, January 18, 1920, carried an
interesting comment on the Federal Reserve System. The unidentified writer,
perhaps Paul Warburg, stated,
"The Federal Reserve is a fount of credit, not
of capital."
This is one of the most revealing statements ever made about
the Federal Reserve System. It says that the Federal Reserve System will
never add anything to our capital structure, or to the formation of capital,
because it is organized to produce credit, to create money for credit money
and speculations, instead of providing capital funds for the improvement of
commerce and industry. Simply stated, capitalization would mean the
providing of notes backed by a precious metal or other commodity. Reserve
notes are unbacked paper loaned at interest.
On July 25, 1921, Senator Owen stated on the editorial page of The New York
Times,
The Federal Reserve Board is the most gigantic financial power in all
the world. Instead of using this great power as the Federal Reserve Act
intended that it should, the board....delegated this power to the banks,
threw the weight of its influence toward the support of the policy of German
inflation."
The senator whose name was on the Act saw that it was not
performing as promised.
After the Agricultural Depression of 1920-21, the Federal Reserve Board of
Governors settled down to eight years of providing rapid credit expansion of
the New York bankers, a policy which culminated in the Great Depression of
1929-31 and helped paralyze the economic structure of the world. Paul
Warburg had resigned in May, 1918, after the monetary system of the United
States had been changed from a bond-secured currency to a currency based
upon commercial paper and the shares of the Federal Reserve Banks. Warburg
returned to his five hundred thousand dollar a year job with Kuhn, Loeb
Company, but he continued to determine the policy of the Federal Reserve
System, as President of the Federal Advisory Council and as Chairman of the
Executive Committee of the American Acceptance Council.
From 1921 to 1929, Paul Warburg organized three of the greatest trusts in
the United States, the International Acceptance Bank, largest acceptance
bank in the world, Agfa Ansco Film Corporation, with headquarters in
Belgium, and I.G. Farben Corporation whose American
branch Warburg set up as I.G. Chemical Corporation. The Westinghouse
Corporation is also one of his creations.
In the early 1920s, the Federal Reserve System played the decisive role in
the re-entry of Russia into the international finance structure. Winthrop
and Stimson continued to be the correspondents between Russian and American
bankers, and Henry L. Stimson handled the negotiations concluding in our
recognition of the Soviet after Roosevelt's election in 1932. This was an
anti-climax, because we had long before resumed exchange relations with
Russian financiers.
The Federal Reserve System began purchasing Russian gold in 1920, and
Russian currency was accepted on the Exchanges. According to Colonel Ely
Garrison, in his autobiography, and according to the United States Naval
Secret Service Report on Paul Warburg, the Russian Revolution had been
financed by the Rothschilds and Warburgs, with a member of the Warburg
family carrying the actual funds used by Lenin and Trotsky in Stockholm in
1918.
An article in the English monthly "Fortnightly", July, 1922, says:
"During the past year, practically every single capitalistic institution has
been restored. This is
true of the State Bank, private banking, the Stock Exchange, the right to
possess money to
unlimited amount, the right of inheritance, the bill of exchange system, and
other institutions and
practices involved in the conduct of private industry and trade. A great
part of the former
nationalized industries are now found in semi-independent trusts."
The organization of powerful trusts in Russia under the guise of Communism
made possible the receipt of large amounts of financial and technical help
from the United States. The Russian aristocracy had been wiped out because
it was too inefficient to manage a modern industrial state. The
international financiers provided funds for Lenin and Trotsky to overthrow
the Czarist regime and keep Russia in the First World War. Peter Drucker,
spokesman for the oligarchy in America, declared in an article in the
Saturday Evening Post in 1948, that:
"RUSSIA IS THE IDEAL OF THE MANAGED ECONOMY TOWARDS WHICH WE ARE
MOVING."
In Russia, the issuance of sufficient currency to handle the needs of their
economy occurred only after a government had been put in power which had
absolute control of the people. During the 1920s, Russia issued large
quantities of so-called "inflation money", a managed currency. The same
"Fortnightly" article (of July, 1922) observed that:
"As economic pressure produced the 'astronomical dimensions system' of
currency; it can never
destroy it. Taken alone, the system is self-contained, logically perfected,
even intelligent. And it can perish only through the collapse or destruction
of the political edifice which it decorates."
"Fortnightly" also remarked, in 1929, that:
"Since 1921, the daily life of the Soviet citizen is no different from that
of the American citizen,
and the Soviet system of government is more economical."
Admiral Kolchak, leader of the White Russian armies, was supported by the
international bankers, who sent British and American troops to Siberia in
order to have a pretext for printing Kolchak rubles. At one time in 1920,
the bankers were manipulating on the London Exchange the old Czarist rubles,
Kerensky rubles and Kolchak rubles, the values of all three fluctuating
according to the movements of the Allied troops aiding Kolchak. Kolchak also
was in possession of considerable amounts of gold which had been seized by
his armies. After his defeat, a trainload of this gold disappeared in
Siberia. At the Senate Hearings in 1921 on the Federal Reserve System, it
was brought out that the System had been receiving this gold.
Congressman
Dunbar questioned Governor W.P.G. Harding of the Federal Reserve Board as
follows:
DUNBAR: "In other words, Russia is sending a great deal of gold to the
European countries, which in turn send it to us?"
HARDING: "This is done to pay for the stuff bought in this country and to
create dollar exchange."
DUNBAR: "At the same time, that gold came from Russia through Europe?"
HARDING: "Some of it is thought to be Kolchak gold, coming through Siberia,
but it is none of the Federal Reserve Banks' business. The Secretary of the
Treasury has issued instructions to the assay office not to take any gold
which does not bear the mint mark of a friendly nation."
Just what Governor Harding meant by "a friendly nation" is not clear. In
1921, we were not at war with any country, but Congress was already
beginning to question the international gold dealings of the Federal Reserve
System. Governor Harding could very well shrug his shoulders and say that it
was none of the Federal Reserve Banks' business where the gold came from.
Gold knows no nationality or race. The United States by law had ceased to be
interested in where its gold came from in 1906, when Secretary of the
Treasury Shaw made arrangements with several of the larger New York banks
(ones in which he had interests) to purchase gold with advances of cash from
the United States Treasury, which would then purchase the gold from these
banks. The Treasury could claim that it did not know where its gold came
from since their office only registers the bank from which it made the
purchase. Since 1906, the Treasury has not known from which of the
international gold merchants it was buying its gold.
The international gold dealings of the Federal Reserve System, and its
active support in helping the League of Nations to force all the nations
of Europe and South America back on the gold standard for the benefit of
international gold merchants like Eugene Meyer, Jr. and Albert Strauss, is
best demonstrated by a classic incident, the sterling credit of 1925.
J.E. Darling wrote, in the English periodical, "Spectator", on January 10,
1925 that:
"Obviously, it is of the first importance to the United States to induce
England to resume the gold standard as early as possible. An American controlled Gold Standard, which
must inevitably
result in the United States becoming the world's supreme financial power,
makes England a
tributary and satellite, and New York the world's financial centre."
Mr. Darling fails to point out that the American people have as little to do
with this as the British people, and that resumption of the gold standard by
Britain would benefit only that small group of international gold merchants
who own the world's gold. No wonder that "Banker's Magazine" gleefully
remarked in July, 1925 that:
"The outstanding event of the past half year in the banking world was the
restoration of the gold
standard."
The First World War changed the status of the United States from that of a
debtor nation to the position of the world's greatest creditor nation, a
title formerly occupied by England. Since debt is money, according to the
Governor Marriner Eccles of the Federal Reserve Board, this also made us the
richest nation of the world. The war also caused the removal of the
headquarters of the world's acceptance market from London to New York, and
Paul Warburg became the most powerful trade acceptance banker in the world.
The mainstay of the international financiers, however, remained the same.
The gold standard was still the basis of foreign exchange, and the small
group of internationals who owned the gold controlled the monetary system of
the Western nations.
Professor Gustav Cassel wrote in 1928:
"The American dollar, not the gold standard, is the world's monetary
standard. The American
Federal Reserve Board has the power to determine the purchasing power of the
dollar by making
changes in the rate of discount, and thus controls the monetary standard of
the world."
If this were true, the members of the Federal Reserve Board would be the
most powerful financiers in the world. Occasionally their membership
includes such influential men as Paul Warburg or Eugene Meyer, Jr., but
usually they are a rubber-stamp committee for the Federal Advisory Council
and the London bankers.
In May, 1925, the British Parliament passed the Gold Standard Act, putting
Great Britain back on the gold standard. The Federal Reserve System's major
role in this event came out on March 16, 1926, when George Seay, Governor of
the Federal Reserve Bank of Richmond, testified before the House Banking and
Currency Committee that:
"A verbal understanding confirmed by correspondence, extended Great Britain
a two hundred
million dollar gold loan or credit. All negotiations were conducted between
Benjamin Strong,
Governor of the Federal Reserve Bank of New York and Mr. Montagu Norman,
Governor of the
Bank of England. The purpose of this loan was to help England get back on
the gold standard,
and the loan was to be met by investment of Federal Reserve funds in bills
of exchange and
foreign securities."
The Federal Reserve Bulletin of June, 1925, stated that:
"Under its arrangement with the Bank of England the Federal Reserve Bank of
New York
undertakes to sell gold on credit to the Bank of England from time to time
during the next two
years, but not to exceed $200,000,000 outstanding at any one time."
Continue chapter 10
Foreword
to Secrets of the Federal Reserve
Chapter
1
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2 -
3 -
4 -
5 -
6 -
7 -
8 -
9 -
10 -
11 -
12 -
13 -
14
ADDENDUM
BIBLIOGRAPHY
BIOGRAPHIES
INDEX
Taking Back Your Power
by Allen Aslan Heart
WHAT CAN YOU DO? Stop playing THEIR game. Take back
your power. Stop paying taxes that are not legal or lawful. Stop paying
bills you don't really owe. Stop using THEIR money. There ARE ways if you
open your mind and look for the gaps in their fences that keep the sheeple
in their pasture. Are you chattel or a real person? You are the one who
makes that choice.
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Secrets
of the Federal Reserve by Eustace
Mullins
