Congressman Louis T. McFadden Chairman House Banking Currency
"Meanwhile and on account of it, we ourselves are in the midst of the greatest
depression we have ever known. From the Atlantic to the Pacific, our Country has been
ravaged and laid waste by the evil practices of the Fed and the interests which control
them. At no time in our history, has the general welfare of the people been at a lower
level or the minds of the people so full of despair.
"Recently in one of our States, 60,000 dwelling houses and farms were brought
under the hammer in a single day. 71,000 houses and farms in Oakland County, Michigan,
were sold and their erstwhile owners dispossessed. The people who have thus been driven
out are the wastage of the Fed. They are the victims of the Fed. Their children are the
new slaves of the auction blocks in the revival of the institution of human slavery.
The Scheme of the Fed
"In 1913, before the Senate Banking and Currency Committee, Mr. Alexander Lassen
made the following statement: "The whole scheme of the Fed with its commercial paper
is an impractical, cumbersome machinery- is simply a cover to secure the privilege of
issuing money, and to evade payment of as much tax upon circulation as possible and then
control the issue and maintain, instead of reducing interest rates. It will prove to the
advantage of the few and the detriment of the people. It will mean continued shortage of
actual money and further extension of credits, for when there is a shortage of money
people have to borrow to their cost.' "A few days before the Fed passed, Senator Root
denounced the Fed as an outrage on our liberties. He predicted: 'Long before we wake up
from our dream of prosperity through an inflated currency, our gold- which alone could
have kept us from catastrophe- will have vanished and no rate of interest will tempt it to
"If ever a prophecy came true, that one did.
"The Fed became law the day before Christmas Eve, in the year 1913, and shortly
afterwards, the German International bankers, Kuhn, Loeb and Co. sent one of their
partners here to run it.
"The Fed Note is essentially unsound. It is the worst currency and the most
dangerous that this Country has ever known. When the proponents of the act saw that the
Democratic doctrine would not permit them to let the proposed banks issue the new currency
as bank notes, they should have stopped at that. They should not have foisted that kind of
currency, namely, an asset currency, on the United States Government. They should not have
made the Government [liable on the private] debts of individuals and corporations, and,
least of all, on the private debts of foreigners. "As Kemerer says: 'The Fed Notes,
therefore, in form, have some of the qualities of Government paper money, but in
substance, are almost a pure asset currency possessing a Government guarantee against
which contingency the Government has made no provision whatever.'
"Hon. L.J.Hill, a former member of the House, said, and truly: "They are
obligations of the Government for which the United States received nothing and for the
payment of which at any time, it assumes the responsibility: looking to the Fed to recoup
"If this United States is to redeem the Fed Notes, when the General Public finds
it costs to deliver this paper to the Fed, and if the Government has made no provisions
for redeeming them, the first element of unsoundness is not far to seek.
"Before the Banking and Currency Committee, when the bill was under discussion Mr.
Crozier of Cincinnati said: 'The imperial power of elasticity of the public currency is
wielded exclusively by the central corporations owned by the banks. This is a life and
death power over all local banks and all business. It can be used to create or destroy
prosperity, to ward off or cause stringencies and panics. By making money artificially
scarce, interest rates throughout the Country can be arbitrarily raised and the bank tax
on all business and cost of living increased for the profit of the banks owning these
regional central banks, and without the slightest benefit to the people. The 12
Corporations together cover y and monopolize and use for private gain- every dollar of the
public currency and all public revenue of the United States. Not a dollar can be put into
circulation among the people by their Government, without the consent of and on terms
fixed by these 12 private money trusts.'
"In defiance of this and all other warnings, the proponents of the Fed created the
12 private credit corporations and gave them an absolute monopoly of the currency of these
United States- not of the Fed Notes alone- but of all other currency! The Fed Act
providing ways and means by which the gold and general currency in the hands of the
American people could be obtained by the Fed in exchange for Fed Notes- which are not
money- but mere promises to pay.
"Since the evil day when this was done, the initial monopoly has been extended by
vicious amendments to the Fed and by the unlawful and treasonable practices of the Fed.
Money for the Scottish Distillers
"Mr. Chairman, if a Scottish distiller wishes to send a cargo of Scotch whiskey to
these United States, he can draw his bill against the purchasing bootlegger in dollars and
after the bootlegger has accepted it by writing his name across the face of it, the Scotch
distiller can send that bill to the nefarious open discount market in New York City where
the Fed will buy it and use it as collateral for a new issue of Fed Notes. Thus the
Government of these United States pay the Scotch distiller for the whiskey before it is
shipped, and if it is lost on the way, or if the Coast Guard seizes it and destroys it,
the Fed simply write off the loss and the government never recovers the money that was
paid to the Scotch distiller.
"While we are attempting to enforce prohibition here, the Fed are in the
distillery business in Europe and paying bootlegger bills with public credit of these
United States. "Mr. Chairman, by the same process, they compel our Government to pay
the German brewer for his beer. Why should the Fed be permitted to finance the brewing
industry in Germany either in this way or as they do by compelling small and fearful
United States Banks to take stock in the Isenbeck Brewery and in the German Bank for
brewing industries? "Mr. Chairman, if Dynamit Nobel of Germany, wishes to sell
dynamite in Japan to use in Manchuria or elsewhere, it can drew its bill against the
Japanese customers in dollars and send that bill to the nefarious open discount market in
New York City where the Fed will buy it and use it as collateral for a new issue of Fed
Notes- while at the same time the Fed will be helping Dynamit Nobel by stuffing its stock
into the United States banking system.
"Why should we send our representatives to the disarmament conference at
Geneva- while the Fed is making our Government pay Japanese debts to German Munitions
"Mr. Chairman, if a German wishes to raise a crop of beans and sell them to a
Japanese customer, he can draw a bill against his prospective Japanese customer in dollars
and have it purchased by the Fed and get the money out of this Country at the expense of
the American people before he has even planted the beans in the ground. "Mr.
Chairman, if a German in Germany wishes to export goods to South America, or any other
Country, he can draw his bill against his customers and send it to these United States and
get the money out of this Country before he ships, or even manufactures the goods.
"Mr. Chairman, why should the currency of these United States be issued on the
strength of German Beer? Why should it be issued on the crop of unplanted beans to be
grown in Chili for Japanese consumption? Why should these United States be compelled to
issue many billions of dollars every year to pay the debts of one foreigner to another
foreigner? "Was it for this that our National Bank depositors had their money taken
out of our banks and shipped abroad? Was it for this that they had to lose it? Why should
the public credit of these United States and likewise money belonging to our National Bank
depositors be used to support foreign brewers, narcotic drug vendors, whiskey distillers,
wig makes, human hair merchants, Chilean bean growers, to finance the munition factories
of Germany and Soviet Russia?