THE CAMOUFLAGE OF THE MONSTER
DON'T check your brains at the portals of the Federal Reserve "Bunking"
System. That is what its touters and ballyhooers want you to do.
Federal Reserve bureaucrats and its beneficiaries and its hirelings and
an artfully subsidized press have really put the "prop" in propaganda.
They would have you believe--and literally hundreds of columns of
inspired writings have been used to make you believe--that the Federal
Reserve System is composed of twelve independent Federal Reserve Banks,
each one especially devoted to fostering industry in its own regional
territory.
Such is not the fact. The fact is that the Federal Reserve System is in
truth a huge Central Bank, managed, manipulated, directed and operated
from Washington by the Federal Reserve Board. There sits the spider and
there the web is woven--spreading all over the U.S.A.--in which are
enmeshed the victims.
You can read--if you want to waste your time--oodles of language about
how the Boards of Directors of these twelve Federal Reserve Banks are
seated in office and how part of them are elected by member banks
and how part of them are appointed by the Federal Reserve Board. You
can--if you want to waste more of your time--absorb messes of artfully
worded verbiage about the duties of the Boards of Directors. But
it's all "gammon and spinach," it's all artful camouflage. _The real
government of the Federal Reserve Banking System and of its twelve
Federal Reserve Banks and branches is in the absolute dictatorial
control of the Federal Reserve Board at Washington._ It is all
contained in one little joker of just thirty words. Here it is. Read
it. "_Any compensation that may be provided by Boards of Directors of
Federal Reserve Banks for directors, officers or employees shall be
subject to the approval of the Federal Reserve Board._" In every one
of the twelve Federal Banks every director, every Governor, every one
of the Deputy Governors, Federal Reserve Agents, Cashiers, Assistant
Cashiers, Controllers, Secretary, Counsel, Assistant Counsel, Clerks,
Stenographers, Messengers and Watchmen--in short, the whole horde of
Federal Reserve bureaucratic parasites--are subject to the approval of
the Federal Reserve Board at Washington because _their compensation
is subject to the approval of the Federal Reserve Board_. You know
that the hands that hold the money rule the enterprise. You know
that approval or disapproval of compensation is in effect "hiring
and firing." You know that "approval of compensation" is simply a
euphonious bit of language or smoke screen behind which really sits an
enthroned autocracy. No matter how many "conferences" are held between
Governors of Federal Reserve Banks, between Federal Reserve Agents and
with the Federal Advisory Council--"conferences" which during 1921 cost
you $22,716--the Federal Reserve Board at Washington is the supreme
and final dictator of the personnel and of the pay of its 10,313
employees and of its 231 officers. The Federal Reserve Board as to
the compensation of this horde--and hence as to its personnel--is an
absolute autocracy from whose order there is no appeal! It draws its
expense account from a practically bottomless treasury without let,
hindrance, supervision or veto! Kaiserdom and Czardom in their palmiest
days drew from no such lake of liquid gold as draws the Federal Reserve
Board at Washington. Set that down on your mental tablets and proceed
to the next camouflage station.
Here it is. Federal Reserve propaganda--with a practical limitless
expense account to further it--would have you believe that its favored
coterie of 231 officials are top notch bankers. Take a look at this
as it really is. The bankers whom you know and with whom you do your
business and to whom you entrust your money and from whom you borrow
your money have taken their own money and the money of their associates
and contributed the capital of their banks and put it at risk. They
wager their own money that they are good bankers. They have initiative
and confidence in their own ability and they prove that they have by
putting up their own money before they ask you to entrust yours to
their keeping. The officers of the Federal Reserve Banks don't put
up a copper cent, a plugged nickel, or a thin dime of capital. The
capital which they manipulate is commandeered by law for their use at
a petty six per cent rate. They may charge--and they have charged--as
high as eighty-seven per cent in one of their Shylockeries, but six
per cent is all that those who furnish the capital can claim. In 1919
the Federal Reserve System sandbagged out of other people's money a
profit of 110 per cent, in 1920 160 per cent and in 1921 79 per cent.
In 1919 its stockholders received 104 per cent less than their capital
really earned, in 1920 154 per cent less than their capital really
earned, and in 1921 73 per cent less than their capital really earned.
For the three years of 1919, 1920 and 1921 the average net profits of
the Federal Reserve System were 116 per cent and the real owners of
the capital were gypped legally--but none the less gypped--out of an
average of 110 per cent for each of those three years. Do you suppose
that officers of any bank not legally so buttressed could "get away"
with any such proposition? You know they couldn't--and hold their jobs.
No body of stockholders in the U.S.A., unless legally chained, would
endure a profit of 116 per cent and a dividend of but 6 per cent! And
no bank officers in the U.S.A., unless legally permitted, would attempt
to "put over" any such proposition. You know it. Peg that and proceed
to the next proposition.
What is the absolute, final and unquestionable test of a good banker,
a real top notcher in his business? It is the volume of deposits
which he attracts. That is the ultimate test of his ability and
integrity--the confidence he inspires in his institution as measured
by the volume of money entrusted to it! That volume of deposits must
be obtained, retained and increased in the face of the hottest kind of
hot competition. It is the absolute ability and integrity meter of a
successful banker. There is no other. Are these strutting, preening,
vociferating and vociferous Federal Reserve bankers measured--or
measurable--by that standard? Do they battle for their deposits and
by those deposits and the volume of them win their spurs? They do
not. Their mass of deposits--the largest on earth--are dumped into
their banks by law, conscripted into their coffers. They are not won
in competition. Federal Reserve bankers don't prove their ability by
competition--they smugly admit it. At this writing over $1,800,000,000
of deposits are in their coffers, conscripted there as were soldiers in
the World War by law!
And not only that, but that vast mass of deposits--the hugest on
earth--is handed to them free of interest charge. All other banks in
large American cities not only compete with each other for the deposits
of country banks, but pay interest on them at a minimum of 2 per cent
per annum. Federal Reserve bankers pay no interest--not even to the
Government. If a National Bank wants Government deposits it must put
up the unquestioned security to get them and then must pay interest on
them, but Federal Reserve bankers do neither! Not much competition for
Federal Reserve bankers there, is there? Peg that proposition and look
at the next one.
Here it is. The loans of a bank are the life of a bank. From the
interest upon them comes practically the sole earnings of a bank
and upon their repayment depends the solvency of a bank. The credit
department of a bank is its solar plexus. Loans must be successfully
made to men engaged in every variety of industry, some secured, some
unsecured and in amounts varying from a few hundreds of dollars to
hundreds of thousands of dollars. In May, 1922, the loans and discounts
of the National City Bank of New York amounted to $506,840,494--larger
by over $200,000,000 than all the "earning assets" of the Federal
Reserve Bank of New York. But there is a greater difference than even
in these figures and here it is. The bulk of the loans of the Federal
Reserve System are made to its member banks and require very slight, if
any, credit ability. The bulk of the people in the U.S.A. are loaning
money to banks--when they make their deposits--without interest and
unsecured, while the Federal Reserve System is engaged largely in
making loans to banks at rates up to 87 per cent and mostly secured at
that! In other words, what the bulk of the people of the U.S.A. do who
are bank depositors is to loan banks money for nothing or at a very low
rate of interest and unsecured, while the Federal Reserve System loans
the banks money often at altitudinous rates and often secured at that!
Or to put it another way, Federal Reserve bureaucracy draws fabulous
profits for doing practically for the banks what the people of the
U.S.A. are daily doing for nothing!
Sum up some of these differences between National and State Banks and
Federal Reserve parasitism.
National and State bankers put up their own capital and risk their own
money. Federal Reserve bankers commandeer their capital and risk not a
penny of their own.
National bankers make practically over a large term of years about
12 per cent net profits and Federal Reserve bankers make the most
fabulous profits ever registered on bank ledgers--during the three
years last past an average of 116 per cent.
National and State bankers earn their deposits in the hottest kind of
competition. Federal Reserve bankers conscript their deposits--without
a scintilla of effort.
National and State bankers pay interest to the Government for
Government deposits and give security besides. Federal Reserve bankers
pay no interest and give no security for Government deposits.
National and State bankers pay interest upon deposits of other banks.
Federal Reserve bankers do not pay any interest.
The capital of National Banks is commandeered into the capital of
Federal Reserve Banks at a petty six per cent and their reserve
deposits are conscripted at no per cent and then they are graciously
permitted to borrow their own money at altitudinous rates!
Which are really the better and more necessary bankers--the National
and State bankers or the Federal Reserve System of parasitical
camouflage? Which is the more necessary, the National and State bankers
close to the people, bearing the risk at petty profits or the Federal
Reserve bankers distant from the people bearing practically no risk
but reaping profits which would make Shylock frenzy with envy?
Isn't the Federal Reserve System as now constituted and as now
administered really a Federal Reserve "Bunking" System astutely
camouflaged, smoke screened by artful propaganda and by legalized
privilege and favoritism? Isn't it in truth and in fact a commandeering
and conscripting monster of finance, politically manipulated, with the
most extravagant salaries, buildings, expense accounts and the most
fabulous profits in all human history?