In recent American history, remarkable and knowledgeable authorities denounced the racket of the Federal Reserve. Here are some of their quotes:
Wright Patman (1893-1976) was a Democratic representative from Texas, who served in the U.S. Congress from 1929 to his death on March 7, 1976. He was chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.
Here are excerpts from what he said on September 29, 1941, as reported in the Congressional Record of the House of Representatives (pages 7582-7583):
“When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money... I am saying to you in all sincerity, and with all the earnestness that I possess, it is absolutely wrong for the Government to issue interest-bearing obligations. It is not only wrong: it is extravagant. It is not only extravagant, it is wasteful. It is absolutely unnecessary.
“Now, take the Panama Canal bonds. They amounted to a little less than $50,000,000 — $49,800,000. By the time they are paid, the Government will have paid $75,000,000 in interest on bonds of less than $50,000,000. So the Government is paying out $125,000,000 to obtain the use of $49,800,000. That is the way it has worked all along. That is our policy. That is our system. The question is: Should that policy be continued? Is it sane? Is it reasonable? Is it right, or is it wrong? If it is wrong, it should be changed.
“Now, I believe the system should be changed. The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks.
“I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.
“We have what is known as the Federal Reserve Bank System. That system is not owned by the Government. Many people think that it is, because it says `Federal Reserve'. It belongs to the private banks, private corporations. So we have farmed out to the Federal Reserve Banking System that is owned exclusively, wholly, 100 percent by the private banks — we have farmed out to them the privilege of issuing the Government's money. If we were to take this privilege back from them, we could save the amount of money that I have indicated in enormous interest charges.” (End of Patman's 1941 speech.)
Under Patman, a little booklet summarizing his views, in the form of questions and answers, called “A Primer On Money”, was prepared by the Sub-committee on Domestic Finance, House of Representatives, Committee on Banking and Currency — 88th Congress, 2nd session, August 4th, 1964. Here are excerpts:
Q.: Who has the right to create money in the United States?
A.: Under the Constitution, it is the right and duty of Congress to create money. It is left entirely to Congress.
Q.: To whom has the Congress delegated this money-creating right?
A.: To the banking system, that is, to the Federal Reserve System and to the commercial banks of the country.
Q.: If the Government can issue bonds, why can't it issue money, and save the interest?
A.: A few clear-headed and firm individuals, such as Abraham Lincoln, have insisted that the Government should.
The late Thomas A. Edison stated the matter this way: If our Nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good also. It is absurd to say that our country can issue $30 million in bonds, and not $30 million in currency. Both are promises to pay: but one promise fattens the usurer, and the other helps the people.
However, it has long been one of the political facts of life that private banks must be allowed to create the lion's share of the money, even if not all of the money. Thus there is little opposition to the Government's printing bonds, and then permitting the banks to create the money with which to buy those bonds; but proposals that the Government itself create the money instead of the bonds have always set off tremendous political upheavals. For example, Abraham Lincoln set off a political furor when he insisted upon having the Government issue $346 million in money (the so-called “greenbacks”) instead of issuing interest-bearing bonds, and paying interest on the money.
Q.: If the Government issued more money instead of Government bonds, isn't there a danger that the Government would issue too much money, and cause inflation?
A.: No. It is no more or no less inflationary for the private banks to create $1 billion of new money than it is for the Government to create $1 billion of new money. Furthermore, as an agency of the Government, the Federal Reserve System decides in any case the total amount of money to be created.
Louis Thomas McFadden (1876-1836) was chairman of the House Committee on Banking and Currency from 1920 to 1931. He said, on June 10, 1932:
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the nation's debt. The depredations and iniquities of the Fed has cost enough money to pay the national debt several times over. ”
Jack Metcalf, Washington State Senator for 20 years, and U.S. Congressman from 1995 to 2000, a republican senator in Washington, waged a war to abolish the Federal Reserve and restore to Congress its power to issue money, a power that is clearly stated in the U.S. Constitution:
”Our most basic document, the U.S. Constitution, states in Article 1, Section 8: `The Congress shall have the power to coin money and regulate the value thereof.' Nowhere is there the slightest hint of authorization to delegate that power even to another governmental institution — much less to a private banking system. That is absolutely outside the most broad interpretation possible.”
In 1986, Metcalf single-handedly persuaded the National Conference of State Legislators to endorse unanimously a resolution urging states to challenge the constitutionality of the Federal Reserve. He wrote a book, “The 200-year debate”, and undertook a campaign to educate the population on the workings of the banking system. One of his favorite ways to explain the workings of the Fed is to tell the story of the “Federal Reserve saloon”:
“Four cowboys put up their belongings as collateral to borrow a deck of cards. The hitch is that each of the four must bring back 14 cards at the end of the evening — a mathematical impossibility (there are only 52 cards in all, that is to say, 13 to each). In the end, one player ends up with only 10 cards and loses his belongings... that is the problem with the Fed. It creates money to make loans but doesn't create the money to pay the interest.”
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