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| ISBN-13: | 9781490713458 |
|---|---|
| Publisher: | Trafford Publishing |
| Publication date: | 10/10/2013 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| File size: | 669 KB |
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WEALTH BY STEALTH
America's Trojan Horse
By Rolf Hackmann
Trafford Publishing
Copyright © 2013 Rolf HackmannAll rights reserved.
ISBN: 978-1-4907-1347-2
CHAPTER 1
Ownership Of Federal Reserve System
This is a subject of great secrecy and, seemingly, an even greater deal of intentional disinformation. The sources contributing to the subject are so far apart in time and opinions, that they obscure more tracks than they open in a reasonable, credible manner. The most frustrating result is that claims, facts, and conjecture are often indistinguishable.
One thing, however, is absolutely certain: whereas the U.S. government had to acquire a 20% share of the capital stock in both the First Bank of the United States (1791-1811), and the Second Bank (1816-1836), there is no mention anywhere that the U.S.
government has any share, neither small nor sizable, in the Federal Reserve Bank System. This fact alone firmly suggests a special status outside the official government structure, which is confirmed by statements and other evidence laid down below.
What all three central bank models have in common, though, is their 20-year charter, which was rescinded in the first two cases, when it came up for renewal. But, here lies the first puzzle as far as the Fed is concerned. Judging by the history of the first two central banks, the provision laid down in Section 341, Second of the Federal Reserve Act, 1913, did potentially present a direct threat to the bank's longevity. It spelled out very clearly that lawmakers expected it not to survive maximally 20 years of operation: "To have succession for a period of twenty years from its organization unless it is sooner dissolved by an Act of Congress, or unless its franchise becomes forfeited by some violation of law."
This passage had to be a high priority concern for the Fed, and by some means or another it was overcome by a change in the language of the law, well ahead of the 20-year deadline. 12 U.S. Code—§341, General Enumeration of Powers restated the above charter requirement in the following manner: "Second, To have succession after February 25, 1927, until dissolved by Act of Congress or until forfeiture of franchise for violation of law." It clearly removes the 20-year limit on the Fed's franchise, but still leaves the question, why Congress had this fundamental change of heart, and reversed itself so many years before the expiry of the franchise, at whose initiative and authority.
Regardless of how the change was introduced, the idea of franchising a full-fledged private bank as a government agency is puzzling enough, just as is this point: how could a bona-fide member of the federal government be expected to commit a violation of the law and, if such unthinkable situation should arise, why terminate the charter instead of offering remedial guidance and support by Congress.
The answer must be seen in the fact, that the Fed was recognized by the U.S. parliament as a truly private institution just like the first two central bank were in their days. This was exactly the key issue that divided the legislative on the nature of a future central bank for so many years between 1907 and 1913. One side of the debate was for the institution of a central bank based on the private banking cartel, the "Money Trust" from the East coast, while the other side was adamantly for a national bank run in the public's interest free of control by the bankers. Well, the bankers won out.
This complicated issue of a 20-year franchise, in view of America's tortured banking history, was certainly overcome and laid to rest under the distractions of the great depression, which was set in motion by the Federal Reserve according to their own admission. But why? One of the primary duties of the Fed according to the 1913 Federal Reserve Act, clearly spelled out its responsibility for preventing just such economic disaster. A plausible explanation might be the Fed's intention to squelch a revival of the franchise issue once and for all by occupying peoples' minds with overwhelming economic problems, and turn the economic misfortunes into a strong argument for the bank's continued mission.
Another puzzling clause in the Act attracts special attention. It reads: "Stock not held by member banks shall not be entitled to voting power." It obviously suggests stock is being held by outsiders, but for some reason a deterrence was needed to prevent unwanted parties from looking to acquire a share for themselves. It makes little sense in view of such stock most likely would have been subject to special restrictions, like the stock held by the private Federal District member banks being barred from trading on any exchange, as is the case for stock held by private member banks of the twelve Federal District banks. On the other hand, the phrase may be seen as a purposeful precaution. Without voting power, the stockholders do not become a public record, their identity is hidden for good. (Source: Krautkramer). See also comments from Mountain Vision below.
The Fed's Official Position
It is, therefore, well to start with the Fed's published statement: "The Federal Reserve System is not "owned by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspect.
Federal Reserve Board: As the nation's functional central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered to be an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government." (Source: FactCheck.org. Board of Governors of the Federal Reserve System, "Frequently Asked Questions: Who Owns The Federal Reserve?" Web site accessed March 21, 2008).
Alan Greenspan has made the same point differently stating that: "the unelected Federal Reserve is actually accountable to nobody." According to Greenspan, nobody in the U.S. government can overrule anything that the Federal Reserve does which, if true, would put the Fed above U.S. law, establishing a sovereign entity within the country. (Source: Personal Liberty Digest).
These are baffling pronouncements, as everything on this globe is owned by someone or something. All organizations, companies, industries, products, patents, and assets of any kind are owned by private persons, a bevy of stockholders, or public organizations at the local, municipal, state or federal level. Short of becoming akin to the oracle of Delphi with such obscure statements, one has to wonder why the Fed is covering itself under such a cloak of secrecy.
Having a global visibility, run by people of extreme power and importance, making decisions of worldwide impact in the economic, financial, and political spheres of mankind, it is hard to accept such disclaimers as rational representation of clearly palpable facts.
On this very point, Milton Friedman expressed his own thoughts in this manner: "The power to determine the quantity of money.... is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power ... Any system which gives so much power and so much discretion to a few men, (so) that mistakes—excusable or not—can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic—this is the key political argument against an independent central bank." (Milton Friedman).
The claim of being a non-for-profit organization will be further explored below in the section concerning the Fed's financial autarky.
Mr. Greenspan's view of a sovereign-like independence for the Fed, is only partially factual. Officially, the Board of Governors is an "independent agency of the federal government." Also, there are contradictions to his views according to the following comments provided by the Fed itself:
Other Sources
Deliberately obscuring the actual ownership of the Federal Reserve System with official, yet broad and general pronouncements for public consumption, raises several fundamental questions:
1. Does it matter who actually owns and controls the Central Bank of America?
2. If it does, how can the factual ownership be established and evaluated against a fully American-owned money authority?
3. Why is it so important for whatever interest group is hiding behind the veil of secrecy to disguise its true nature before the whole world?
4. What national pedigree do other central banks in the world represent?
Not getting any tangible and plausible help from the Fed itself, only raises the level of curiosity. Since someone must have felt a need to establish this enigmatic being, it may be worth going back once more to the origins and sputtering developments of the American banking system culminating ultimately in the Fed, and find the parental masterminds creating this orphan and for what purpose.
This takes the investigation back to 1912, when a handful of Wall Street bankers and politicians went on a top secret hunting excursion to Jekyll Island in Georgia to lay the groundwork for a National Central Bank for the United States, a goal that had eluded the Money Trust on Wall Street since the beginning of the republic.
Yes, there had been two attempts with the First Bank of the United States chartered by the U.S. government in 1791 for a period of 20 years. It went extinct with President Madison's veto when it came up for renewal in 1811.
The next attempt established the Second Bank of the United States only five years later in 1816. It ended like the first one, when President Jackson refused to extend the bank's 20-year charter in 1836 in a most violent public rejection: "You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.".
Both banks were modeled after the Bank of England, which had tried so hard o maintain a permanent foothold in the former colony, exactly the reason for the fledgling States to renounce any vestiges of their former masters. The true power behind the Second Bank was not its president Nicholas Biddle, who acted only as lieutenant for its principal stock holder in the bank, Baron James de Rothschild of Paris. (Source: Bob Livingston).
Taking the year 1776 as the arbitrary birth year for the United States, and 1913 as the beginning of the Federal Reserve System, means that the States existed for 136 years without a truly functional and effective Central Bank. If one further and generously accepts the first two attempts at a Central Bank and deduct 40 years for their tenure, the United States were still without a Central Bank, deserving the name, for close to a century. Whichever time frame one chooses, it was due to the tug-of-war between the interests of the newly independent nation and the foreign money interests trying to entrench themselves here.
The third and truly successful attempt by the outsiders at establishing a central bank here came with the passage of the Federal Reserve Act in 1913. It had evolved over a number of years initiated by the Aldrich-Vreeland Act of 1908, which established the National Monetary Commission to study banking and currency reform with a special interest in founding the real Central Bank of America.
The name Aldrich carries a special significance for the creation of the Federal Reserve System. Nelson Aldrich was undoubtedly a true financial expert in his day, who closely studied the European central banking systems for years which made him change his mind in favor of a central banking model for the U.S. over the government-issued bond system he had previously advocated. He also was clearly a high ranking political power as a congressional senator and Senate Republican leader.
His profile is further enhanced by the fact that he was the father-in-law of John D. Rockefeller, Jr. and having close personal ties with New York's banking elite, and the Money Trust, personified by J.P. Morgan. This makes him a sort of insider for the big money banks on the East Coast, and thus partial to their aspirations.
No wonder, Aldrich became the vital link between the American legislative and the group of bankers sequestering themselves in Jekyll Island in November of 1910 to draft a central banking bill to be submitted for congressional approval by no other than Aldrich himself as the Aldrich Plan, which after stormy discussions pro and con became the basis for the Federal Reserve Act signed by President Wilson into law in December of 1913.
It is interesting to see the names, positions, and affiliations of the people involved in drafting the Aldrich Plan, which took them 10 days of intense committee work and discussions before reaching a final version all could agree to. Not a single member affixed its signature to the document, because any whiff of involvement by the big money banks would have killed the draft plan outright, given their reputation in the public's opinion at that time.
The list of participants besides the above-mentioned Nelson Aldrich included: Frank A. Vanderlip, president of the National City Bank of New York, associated with the Rockefeller oil interests; Henry Davison, senior partner of J.P. Morgan Company; Charles D. Norton, president of Morgan's First National Bank of New York; Col. Edward House, who became one of the closest advisors to President Woodrow Wilson and founder of the Council on Foreign Relations; and finally, Paul Warburg of Kuhn, Loeb, & Co., a close associate of the Rothschild interests and the Bank of England. He acted as director of the proceedings and author of the primary features of the draft bill. He coined the title "Federal Reserve System" to avoid the political conflicts of a proposal for the unpopular Central Bank label. (Source: Wikipedia).
A final authority on the historic developments surrounding the creation of the Fed is Colonel Ely Garrison, confidant and financial adviser to Presidents Theodore Roosevelt and Woodrow Wilson. In his book entitled: "Roosevelt, Wilson, and the Federal Reserve Law" Garrison commented: "Paul Warburg is the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London." (Source: Bob Livingston).
It is mentioned elsewhere, how all nationally chartered banks from the pre-Fed era are legally member banks of the Fed, and can influence Fed decisions through their representatives on its Board of Governors appointed by the President of the United States. Other commercial banks can elect to be members of the regional Federal Reserve banks by their own choice, and one might assume play the role of small fry in the decisions taken by the Board. It is also interesting to remember that these decisions are beyond critical review by any American power of the executive, legislative, or judicial according to Mr. Greenspan's statement quoted above.
An interesting morsel of information may be added to illustrate the quizzical nature and actual role of the Fed. In July of 2002, Congress enacted the Sarbanes-Oxley Act (SOX) in response to the widespread fraudulent reporting and accounting scandals that had become public knowledge in the U.S.A. and abroad. It tightened the regulatory environment for corporations as far as rules and enforcement policies for financial disclosures, adherence to accounting standards, and observance of securities regulations were concerned. Debates in Congress leading up to the SOX Act apparently touched on aspects of the Fed requiring changes in the Federal Reserve Act. It was to President Bush's credit that he kept the Fed out of all these discussions and maintaining a strict focus on financial institutions, in general. What it got President Bush is not known, but on September 26 of the same year, only two months after the law's enactment, Alan Greenspan was knighted by Her Majesty the Queen of England, presumably for backing President Bush and keeping discussions of the Fed out of the SOX debates on the floors of Congress. (Source: Krautkramer).
Greenspan served as Chairman of the Fed from 1987-2006. Bestowing one of the highest honors of the British Empire by Her Majesty the Queen herself on a foreign subject reveals the value of his service for the British crown and, implicitly, the remnant colonial status of the U.S.
(Continues...)
Excerpted from WEALTH BY STEALTH by Rolf Hackmann. Copyright © 2013 Rolf Hackmann. Excerpted by permission of Trafford Publishing.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Contents
Foreword, xiii,Part I The Background Of The U.S. Federal Reserve System,
Ownership Of Federal Reserve System, 34,
Funding The Fed, 50,
Statutory Fed Functions, 54,
Part II The History Of Fed Policies And Actions,
The Historic Record of FED Policies, 73,
Evaluation Of The Fed's Performance, 106,
Part III The American Banking System,
Commercial And Investment Banking, 179,
Part IV Derivatives—The Trigger Of The Crisis,
Derivatives Origin, Financial Role, And Contribution To Economic Collapse, 221,
Derivatives As Weapons Of Mass Destruction, 252,
The Mortgage Securitization Process, 273,
Part V The Actors Behind The Financial Crisis,
Part VI Economic Cost of Failed Policies,
A History of Major Financial Crises and Bailout Programs Since World War II, 405,
Part VII Miscellaneous Observations,
The Question Of Culpability, 475,
Does The Fed Play A Role In The New World Order?, 490,
Conclusions, 503,
Abolishing the Fed, 545,
Part VIII Appendix,
Bibliography, 555,
Glossary, 581,