WHAT THE MONSTER DOES WITH ITS LOOT
THIS chapter is going to be like a tack--short but pointed. Federal
Reserve apologists--on and off the floor of Congress--when driven
into their last retreat always take their final stand and make their
last play in the "franchise tax" stronghold. Their assertion is
in effect that no matter what may be the abuses and sandbaggeries
and extravagances of this system the "big money" gets back to the
Government in the shape of the mythical "franchise tax." Here is where
you get the facts precisely as they are. What became of the lootage of
the Federal Reserve System for the year 1921 and what proportion of it
did your Government get?
The gross takings of the Federal Reserve System--extracted from
American production and industry--amounted to $122,864,605. That's
what it euphoniously calls its "earnings." First there came out
the gigantic expense account, of which you have already read, of
$36,066,065, leaving $86,798,540, which the monster calls its "current
net earnings." There is then added to this $360,856, which in previous
years had been deducted for "depreciation on U.S. Bonds," which didn't
finally "depreciate." There is also added $131,536 under an "all other"
blanket--much favored in the Federal Reserve System vocabulary. You
now have $87,290,932 "current net earnings." From this are deducted
$1,251,675 for "depreciation allowance on bank premises;" $2,861,500
for "reserve for possible losses" which probably won't occur; $400,000
"reserve for self insurance"--whatever that is; $49,295 "reserve for
depreciation on U.S. Bonds"--which probably won't depreciate now that
they have been sandbagged out of the hands of the original purchasers;
$641,237 sandbagged out under the favorite "all other" Federal Reserve
blanket. Here are $5,203,707 gone out in mere bookkeeping entries
with the real money which these entries represent still in Federal
Reserve custody. This leaves $82,087,225. From this is deducted a petty
$6,119,673 dividends paid on the capital commandeered. From this is
deducted $15,993,086 to be added to the already swollen Federal Reserve
Surplus Account. And there is left just $59,974,466 for the much touted
franchise tax.
If you have followed these figures you have seen that in order to
get a petty "franchise tax" of $59,974,466 into the hands of your
Government, it cost you just exactly $62,890,139 to collect it--the
precise difference between the Federal Reserve "earnings" and the
amount paid into the Government. Ask yourself, is a tax of $59,974,466,
which costs $62,896,139 to collect a "painless tax?" Is there any more
painful tax levied on American industry? That's what this ballyhooed
"franchise tax" amounted to in 1921 and all it amounted to--a tax of
$59,974,466, which cost $62,890,139 to collect!