The life of the spirit may be fairly
represented in diagram as a large acute-angled triangle divided horizontally into unequal parts with the narrowest segment uppermost. The lower the segment the greater it is in breadth, depth, and area.The whole triangle is moving slowly, almost invisibly forwards and upwards. Where the apex was today the second segment is tomorrow; what today can be understood only by the apex and to the rest of the triangle is an incomprehensible gibberish, forms tomorrow the true thought and feeling of the second segment. At the apex of the top segment stands often one man, and only one. His joyful vision cloaks a vast sorrow. Even those who are nearest to him in sympathy do not understand him. Angrily they abuse him as charlatan or madman. So in his lifetime stood Beethoven, solitary and insulted. Wassily Kandinsky (1866 –1944)


Showing posts with label United States of America. Show all posts
Showing posts with label United States of America. Show all posts

Wednesday, November 28, 2012

Aynd Rand: The virtue of selfishness (1961)

       The Monument 
               Builders 



What had once been an alleged ideal is now a ragged skeleton rattling like scarecrow in the wind over the whole world, but men lack the courage to glance up and to discover the grinning skull under the bloody rags. That skeleton is socialism. Fifty years ago, there might have been some excuse (though not justification) for the widespread belief that socialism is a political theory motivated by benevolence and aimed at the achievement of men’s wellbeing. Today, that belief can no longer be regarded as an innocent error. Socialism has been tried on every continent of the globe. In the light of its results, it is time to question the motives of socialism’s advocates. The essential characteristic of socialism is the denial of individual property rights; under socialism, the right to property (which is the right of use and disposal) is vested in “society as a whole,” i.e., in the collective, with production and distribution controlled by the state, i.e., by the government. Socialism may be established by force, as in the Union of Soviet Socialist Republics—or by vote, as in Nazi (National Socialist) Germany. The degree of socialization may be total, as in Russia—or partial, as in England. Theoretically, the differences are superficial; practically, they are only a matter of time. The basic principle, in all cases, is the same. The alleged goals of socialism were: the abolition of poverty, the achievement of general prosperity, progress, peace and human brotherhood. The results have been a terrifying failure—terrifying, that is, if one’s motive is men’s welfare. 

Instead of prosperity, socialism has brought economic paralysis and/or collapse to every country that tried it. The degree of socialization has been the degree of disaster. The consequences have varied accordingly. England, once the freest and proudest nation of Europe, has been reduced to the status of a second-rate power and is perishing slowly from hemophilia, losing the best of her economic blood: the middle class and the professions. The able, competent, productive,  independent men are leaving by the thousands, migrating to Canada or the United States, in search of freedom. They are escaping from the reign of mediocrity, from the mawkish poorhouse where, having sold their rights in exchange for free dentures, the inmates are now whining that they’d rather be Red than dead. In more fully socialized countries,  famine  was the start, the insignia announcing socialist rule—as in Soviet Russia, as in Red China, as in Cuba.

In those countries, socialism reduced the people to the unspeakable poverty of the pre-industrial ages, to literal  starvation, and has kept them on a stagnant level of misery. No, it is not “just temporary,” as  socialism’s apologists have been saying—for half a century. After forty-five years of government planning, Russia is still unable to solve the problem of feeding her population. As far as superior productivity  and speed of economic progress are concerned, the question of any comparisons between capitalism and socialism has been answered once  and for all—for any honest person—by the present difference between West and East Berlin. Instead of peace, socialism has introduced a new kind of gruesome lunacy into international relations—the “cold war,” which is a state of chronic war with undeclared periods of peace between wantonly sudden invasions—with Russia seizing one-third of the globe, with socialist tribes and nations at one another’s throats, with socialist India invading Goa, and communist China invading socialist India.

An eloquent sign of the moral corruption of our age is the callous complacency with which most of the socialists and their sympathizers, the “liberals,” regard the atrocities perpetrated in socialistic countries and accept rule by terror as a way of life—while  posturing as advocates of “human brotherhood.” In the 1930’s, they did protest against the atrocities of Nazi Germany. But, apparently, it was not an issue of principle, but only the protest of a rival gang fighting for the same territory—because we do not hear their voices any longer. In the name of “humanity,” they  condone and accept the following: the abolition of all freedom and all rights, the expropriation of all property, executions without trial, torture chambers, slave-labor camps, the mass slaughter of countless millions in Soviet Russia—and the bloody horror of East Berlin, including the bullet-riddled bodies of fleeing children. 

When one observes the nightmare of the desperate efforts made by hundreds of thousands of people struggling to escape from the socialized countries of Europe, to escape over barbed-wire fences, under machine-gun fire—one can no longer believe that socialism, in any of its forms, is motivated by benevolence and by the desire to achieve men’s welfare. No man of authentic benevolence could evade or ignore so great a horror on so vast a scale. Socialism is not a movement of the  people. It is a movement of the intellectuals, originated, led and controlled by the intellectuals, carried by them out of their stuffy ivory towers into those bloody fields of practice where they unite with their allies and executors: the thugs. 

What, then, is the motive of such intellectuals? Power-lust. Power-lust— as a manifestation of helplessness, of self-loathing and of the desire for the unearned. The desire for the unearned has two aspects: the unearned in matter and the unearned in spirit. (By “spirit” I mean: man’s consciousness.) These two aspects are necessarily inter-related, but a man’s desire may be focused predominantly on one or the other. The desire for the unearned in spirit is the more destructive of the two and the more corrupt. It is a desire for unearned greatness; it is expressed (but not defined) by the foggy murk of the term “prestige.” The seekers of unearned material benefits are merely financial parasites, moochers, looters or criminals, who are too limited in number and in mind to be a threat to civilization, until and unless they are released and legalized by the seekers of unearned greatness.

Unearned greatness is so unreal, so neurotic a concept that the wretch who seeks it cannot identify it even to himself: to identify it, is to make it impossible. He needs the irrational,  undefinable slogans of altruism and collectivism to give a semiplausible form to his nameless urge and anchor it to reality—to support his own self-deception more than to deceive his victims. “The public,” “the public interest,” “service to the public” are the means, the tools, the swinging pendulums of the power-luster’s selfhypnosis. Since there is no such entity as “the public,” since the public is merely a number of individuals, any claimed or implied conflict of “the public interest” with private interests means that the interests of some men are to be sacrificed to the interests and wishes of others. Since the concept is so
conveniently undefinable, its use rests only on any  given gang’s ability to proclaim that “The public, c’est moi”—and to maintain the claim at the point of a gun.

No such claim has ever been or can ever be maintained without the help of a gun—that is, without physical force. But, on the other hand, without that claim, gunmen would remain where they belong: in the underworld, and would not rise to the councils of state to rule the destinies of nations. There are two ways of claiming that “The public,  c’est moi”: one is practiced by the crude material parasite who clamors for government handouts in the name of a “public” need and pockets what he has not earned; the other is practiced by his leader, the spiritual parasite, who derives his illusion of “greatness”—like a fence  receiving stolen goods—from the 
power to dispose of that which he has not earned and from the mystic view
of himself as the embodied voice of “the public.”
(407) 847-2005

Of the two, the material parasite is psychologically healthier and closer to reality: at least, he eats or wears his loot. But the only source of satisfaction open to the spiritual parasite, his only means to gain “prestige” (apart from giving orders and spreading terror),  is the most wasteful, useless and meaningless activity of all: the building of public monuments. Greatness is achieved by the productive effort of a man’s mind in the pursuit of clearly defined, rational goals. But a delusion of grandeur can be served only by the switching, undefinable chimera of a public monument— which is presented as a munificent gift to the victims whose forced labor or extorted money had paid for it—which is dedicated to the service of all and none, owned by all and none, gaped at by all and enjoyed by none.

This is the ruler’s only way to appease his obsession: “prestige.” Prestige—in whose eyes? In anyone’s. In the eyes of his tortured victims, of the beggars in the streets of his kingdom, of the bootlickers at his court, of the foreign tribes and their rulers beyond the borders. It is to impress all those eyes—the eyes of everyone and no one—that the blood of generations of subjects has been spilled and spent. One may see, in certain biblical movies, a graphic image of the meaning of public monument building: the building of the pyramids. Hordes of starved, ragged, emaciated men straining the last effort of their inadequate muscles at the inhuman task of pulling the ropes that drag large chunks of stone, straining like tortured beasts of burden under the whips of overseers, collapsing on the job and dying in the desert sands—that a dead Pharaoh might lie in an imposingly senseless structure and thus gain eternal “prestige” in the eyes of the unborn of future generations.

Temples and palaces are the only monuments left of mankind’s early civilizations. They were created by the same means and at the same price—a price not justified by the fact that primitive peoples undoubtedly believed, while dying of starvation and exhaustion, that the “prestige” of their tribe, their rulers or their gods was of value to them somehow. Rome fell, bankrupted by statist controls and taxation, while its emperors were building coliseums. Louis XIV of France taxed his people into a state of indigence, while he  built the palace of Versailles, for his contemporary monarchs to envy and for modern tourists to visit. The marble-lined Moscow subway, built by the unpaid “volunteer” labor of Russian workers, including women, is a public monument, and so is the Czarist-like luxury of the
champagne-and-caviar receptions at the Soviet embassies, which is  needed—while the people stand in line for inadequate food rations—to
“maintain the prestige of the Soviet Union.”

The great distinction of the United States of America, up to the last few decades, was the modesty of its public monuments. Such monuments as did exist were genuine: they were not erected for “prestige,” but were functional structures that had housed events of great historical importance. If you have seen the austere simplicity of Independence Hall, you  have seen the difference between authentic grandeur and the pyramids of “public-spirited” prestige-seekers. In America, human effort and material resources were not expropriated for public monuments and public projects, but were spent on the progress of the private, personal, individual well-being of individual citizens. America’s greatness lies in the fact that her actual monuments are not public.

The skyline of New York is a monument of a splendor that no pyramids or palaces will ever equal or approach. But America’s skyscrapers were not built by public funds nor for a public purpose: they were built by the energy, initiative and wealth of private individuals for personal profit. And, instead of impoverishing the people, these skyscrapers, as they rose higher and higher, kept raising the people’s  standard of living—including the inhabitants of the slums, who lead a life of luxury compared to the life of an ancient Egyptian slave or of a modern Soviet Socialist worker. Such is the difference—both in theory and practice—between capitalism
and socialism.

It is impossible to compute the human suffering, degradation, deprivation and horror that went to pay for a single, much-touted skyscraper of Moscow, or for the Soviet factories or mines or dams, or for any part of their loot-andblood-supported “industrialization.” What we do know, however, is that forty-five years is a long time: it is the span of two generations; we do know that, in the name of a promised abundance, two generations of human beings have lived and died in subhuman  poverty; and we do know that today’s advocates of socialism are not deterred by a fact of this kind. Whatever motive they might assert,  benevolence  is one they have long since lost the right to claim. The ideology of socialization (in a neo-fascist form) is now floating, by default, through the vacuum of our  intellectual and cultural atmosphere.

Observe how often we are asked for undefined “sacrifices” to unspecified purposes. Observe how often the present administration is invoking “the public interest.” Observe what prominence the issue of international prestige has suddenly acquired and what grotesquely suicidal policies are justified by references to matters of “prestige.”  Observe that during the recent Cuban Ayn Rand –  crisis—when the factual issue concerned nuclear missiles and nuclear war— our diplomats and commentators found  it proper seriously to weigh such things as the “prestige,” the personal feelings and the “face-saving” of thesundry socialist rulers involved.

There is no difference between the  principles, policies and practical results of socialism—and those of any  historical or prehistorical tyranny. Socialism is merely democratic absolute monarchy—that is, a system of absolutism without a fixed head, open to seizure of power by all comers, by any ruthless climber, opportunist, adventurer, demagogue or thug. When you consider socialism, do not fool yourself about its nature. Remember that there is no such dichotomy as “human rights” versus “property rights.” No human rights can exist without property rights. Since
material goods are produced by the mind and effort of individual men, and are needed to sustain their lives, if the producer does not own the result of his effort, he does not own his life. To deny property rights means to turn men into property owned by the state. Whoever claims the “right” to “redistribute” the wealth produced by others is claiming the “right” to treat
human beings as chattel.

When you consider the global devastation perpetrated by socialism, the  sea of blood and the millions of victims, remember that they were sacrificed, not for “the good of mankind” nor for any “noble ideal,” but for the festering vanity of some scared brute or some pretentious mediocrity who craved a mantle of unearned “greatness”—and that the monument to socialism is a pyramid of public factories, public theaters and public parks, erected on a foundation of human corpses, with the figure of the ruler posturing on top, beating his chest and screaming his plea for “prestige” to the starless void above him.

                                                               

                                                                                                                                                                December 1962

Saturday, September 15, 2012

Eustace Mullins: Secrets of the federal reserve (1923-2010)

Eustace Mullins - Public Enemy No. 1, circa 1952    
Chapter Ten
      The Money 
               Creators
        
The editorial page of The New York Times, January 18, 1920, carried an interesting comment on the Federal Reserve System. The unidentified writer, perhaps Paul Warburg, stated, "The Federal Reserve is a fount of credit, not of capital." This is one of the most revealing statements ever made about the Federal Reserve System. It says that the Federal Reserve System will never add anything to our capital structure, or to the formation of capital, because it is organized to produce credit, to create money for credit money and speculations, instead of providing capital funds for the improvement of commerce and industry. Simply stated, capitalization would mean the providing of notes backed by a precious metal or other commodity. Reserve notes are unbacked paper loaned at interest. On July 25, 1921, Senator Owen stated on the editorial page of The New York Times, The Federal Reserve Board is the most gigantic financial power in all the world. Instead of using this great power as the Federal Reserve Act intended that it should, the board....delegated this power to the banks, threw the weight of its influence toward the support of the policy of German inflation." The senator whose name was on the Act saw that it was not performing as promised. After the Agricultural Depression of 1920-21, the Federal Reserve Board of Governors settled down to eight years of providing rapid credit expansion of the New York bankers, a policy which culminated in the Great Depression of 1929-31 and  helped paralyze the economic structure of the world. Paul Warburg had resigned in May, 1918, after the monetary system of the United States had been changed from a bond-secured currency to a currency based upon commercial paper and the shares of the Federal Reserve Banks. Warburg returned to his five hundred thousand dollar a year job with Kuhn, Loeb Company, but he continued to determine the policy of the Federal Reserve System, as President of the Federal Advisory Council and as Chairman of the Executive Committee of the American Acceptance Council. From 1921 to 1929, Paul Warburg organized three of the greatest trusts in the United States, the International Acceptance Bank, largest acceptance  bank  in  the  world,  Agfa  Ansco  Film  Corporation,  with headquarters in Belgium, and I.G. Farben Corporation whose American branch Warburg set up as I.G. Chemical Corporation. The Westinghouse Corporation is also one of his creations. In the early 1920s, the Federal Reserve System played the decisive role in the re-entry of Russia into the international finance structure. Winthrop and Stimson continued to be the correspondents between Russian and American bankers, and Henry L. Stimson handled the negotiations concluding in our  recognition of the Soviet after Roosevelt’s election in 1932. This was an anti-climax, because we had long before resumed exchange relations with Russian financiers. The Federal Reserve System began  purchasing Russian gold in 1920,and Russian currency was accepted on the Exchanges. According to Colonel Ely Garrison, in his autobiography, and according to the United States Naval Secret Service Report on Paul Warburg, the Russian Revolution had been financed by the Rothschilds and Warburgs, with a member of the Warburg family carrying the actual funds used by
Lenin and Trotsky in Stockholm in 1918. An article in the English monthly"Fortnightly", July, 1922, says:

"During the past year, practically every single capitalistic institution has been restored. This is true of the State Bank, private banking, the Stock Exchange, the right to possess money to unlimited amount, the right of inheritance, the bill of exchange system, and other institutions and practices involved in the conduct  of private industry and trade. A great part of the former nationalized industries are now found in semi-independent trusts." The organization of powerful trusts in Russia under the guise of Communism made possible the receipt of large amounts of financial and technical help from the United States. The Russian aristocracy had
been wiped out because it was too inefficient to manage a modern industrial state. The international financiers provided funds for Lenin and Trotsky to overthrow the Czarist regime and keep Russia in the First World War. Peter Drucker, spokesman for the oligarchy in America, declared in an article in the Saturday Evening Post in 1948, that:

"RUSSIA IS THE IDEAL OF THE MANAGED ECONOMY TOWARDS WHICH WE ARE MOVING."

In Russia, the issuance of sufficient currency to handle the needs of their economy occurred only after a government had been put in power which had absolute control  of the people. During the 1920s, Russia issued large quantities of so-called "inflation money", a managed currency. The same "Fortnightly" article (of July, 1922) observed that:

 "As economic pressure produced the ‘astronomical dimensions system’ of currency; it can never destroy it. Taken alone, the system is selfcontained, logically perfected, even intelligent. And it can perish only through the collapse or destruction of the political edifice which it decorates." "Fortnightly" also remarked, in 1929, that:

"Since 1921, the daily life of the Soviet citizen is no different from that of the American citizen, and  the  Soviet  system  of  government  is  more economical."
Admiral Kolchak, leader of the White Russian armies, was supported by the international bankers, who sent British and American troops to Siberia in order to have a pretext for printing Kolchak rubles. At one time in 1920, the bankers were manipulating on the London Exchange the old Czarist rubles, Kerensky rubles and Kolchak rubles, the values of all three fluctuating according to the movements of the Allied troops aiding Kolchak. Kolchak also was  in possession of considerable amounts of gold which had been seized by his armies. After his defeat, a trainload of this gold disappeared in Siberia. At the Senate Hearings in 1921 on the Federal Reserve System, it was brought out that the system had been receiving this gold. Congressman Dunbar questioned Governor W.P.G. Harding of the Federal Reserve Board as follows: 

DUNBAR: "In other words, Russia is sending a great deal of gold to the European countries, which in turn send it to us?"
HARDING: "This is done to pay for the stuff bought in this country and to create dollar exchange."
DUNBAR: "At the same time, that gold came from Russia through Europe?"
HARDING: "Some of it is thought to be Kolchak gold, coming through Siberia, but it is none of the Federal Reserve Banks’ business. The Secretary of the Treasury has issued instructions to the assay office not to take any gold which does not bear the mint mark of a friendly nation." Just what Governor Harding meant by "a friendly nation" is not clear. In 1921, we were not at war with any country, but Congress was already beginning to question the international gold dealings of the Federal Reserve System. Governor Harding could very well shrug his shoulders and say that it was none of the Federal Reserve Banks’ business where the gold came from. Gold knows no nationality or race. The United States by law had ceased to be interested in where its gold came from in 1906, when Secretary of the Treasury Shaw made arrangements with several of the larger New York banks (ones in which he had interests) to purchase gold with advances of cash from the United States Treasury, which would then purchase the gold from these banks. The Treasury could claim that it did not know where its gold came from since their office only registers the bank from which it made the purchase. Since 1906, the Treasury has not known from which of the international gold merchants it was buying its gold. The international gold dealings of the Federal Reserve System, and its active support in helping the League of Nations to force all the nations of Europe and South America back on the gold standard for the benefit of international gold merchants like Eugene Meyer, Jr. and Albert Strauss, is best demonstrated by a classic incident, the sterling credit of 1925. J.E. Darling wrote, in the English periodical, "Spectator", on January 10, 1925 that:

"Obviously, it is of the first importance to the United States to induce England to resume the gold standard as early as possible. An American controlled Gold Standard, which must inevitably result in the United States becoming the world’s supreme financial power, makes England a tributary and satellite, and New York the world’s financial centre." Mr. Darling fails to point out that the American people have as little to do with this as the British people, and that resumption of the gold standard by Britain would benefit only that small group of international gold merchants who own the world’s gold. No wonder that "Banker’s Magazine" gleefully remarked in July, 1925 that:

"The outstanding event of the past half year in the banking world was the restoration of the gold standard." The First World War changed the status of the United States from that of a debtor nation to the position of the world’s greatest creditor nation, a title formerly occupied by England. Since debt is money, according to the Governor Marriner Eccles of the Federal Reserve Board, this also made us the richest nation of the world. The war also caused the removal of the headquarters of the world’s acceptance market from London to New York, and Paul Warburg became the most powerful trade acceptance banker in the world. The mainstay of the international financiers, however, remained the same. The gold standard was still the basis of foreign exchange, and the small group of internationals who owned the gold controlled the monetary system of the Western nations. Professor Gustav Cassel wrote in 1928: "The American dollar, not the gold standard, is the world’s monetary standard. The American Federal Reserve Board has the power to determine the purchasing power of the dollar by making changes in the rate of discount, and thus controls the monetary standard of the world." If this were true, the members of the Federal Reserve Board would be the most powerful financiers in the world. Occasionally their membership includes such influential men as Paul Warburg or Eugene Meyer, Jr., but usually they are  a rubber-stamp committee for the Federal Advisory Council and the London bankers.

       In May, 1925, the British Parliament passed the Gold Standard Act, putting Great Britain back on the gold standard. The Federal Reserve System’s major role in this event came out on March 16, 1926, when George Seay, Governor of the Federal Reserve Bank of Richmond, testified before the House Banking and Currency Committee that:

"A verbal understanding confirmed by correspondence, extended Great Britain a two hundred million dollar gold loan or credit. All negotiations were conducted between Benjamin Strong, Governor of the Federal Reserve Bank of New York and Mr. Montagu Norman, Governor of the Bank of England. The purpose of this loan was to help England get back on the gold standard, and the loan was to be met by investment of Federal Reserve funds in bills of exchange and foreign securities." The Federal Reserve Bulletin of June, 1925, stated that: "Under its arrangement with the Bank of England the Federal Reserve Bank of New York undertakes  to  sell  gold  on  credit  to  the  Bank  of England from time to time during the next two years, but not to exceed $200,000,000 outstanding at any one time." A two hundred million dollar gold  credit had been arranged by a verbal understanding between the  international bankers, Benjamin Strong and Montagu Norman. It was  apparent by this time that the Federal Reserve System had other interests at heart than the financial needs of American business and industry. Great Britain’s return to the gold standard was further facilitated by an additional gold loan of a hundred million dollars from J.P. Morgan Company. Winston Churchill, British Chancellor of the Exchequer, complained later that the cost to the British government of this loan was $1,125,000 the first year, this sum representing the profit to J.P. Morgan Company in that time.
The matter of changing the discount rate, for instance, has never been satisfactorily explained. Inquiry at the Federal Reserve Board in Washington elicited the reply that "the condition of the money markets is the prime consideration behind  changes in the rate." Since the  money market is in New York, it takes no imagination  to deduce that New York bankers may be interested in changes of the rate and often attempt to influence it. Norman Lombard, in the periodical "World’s Work" writes that: "In their consideration and disposal of proposed changes of policy, the Federal Reserve Board should follow the procedure and ethics observed by our court of law. Suggestions that there should be a change of rate or that the Reserve Banks should buy or sell securities may come from anyone and with no formality or written argument. The suggestion may be made to a Governor or Director of the Federal Reserve System over the telephone or at his club over the luncheon table, or it may be made in the course of a casual call on a member of the Federal Reserve Board. The interests of the one proposing the change need not be revealed, and his name and any suggestions he makes are usually kept secret. If it concerns the matter of open market operations, the public has no inkling of the decision until the regular weekly statement appears, showing changes in the holdings of the Federal Reserve Banks. Meanwhile, there is no public discussion, there is no statement of the reasons for the decision, or of the names of those opposing or favoring it."

The chances of the average citizen meeting a Governor of the Federal Reserve System at his club are also slight. The House Hearings on Stabilization of the Purchasing Power of the Dollar in 1928 proved conclusively  that the Federal Reserve Board worked in close cooperation with the heads of European central banks, and that the Depression  of 1929-31 was planned at a secret luncheon of the Federal Reserve Board and those heads of European central banks in 1927. The Board has never been made responsible to the public for its decisions or actions. The constitutional checks and balances seem not to operate in finance. The true allegiance of the members of the Federal Reserve Board has always been to the central bankers. The three features of the central bank, its ownership by private stockholders who receive rent and profit for their use of the nation’s credit, absolute control of the nation’s financial resources, and mobilization of the nation’s credit to finance foreigners, all were demonstrated by the Federal Reserve System during the first fifteen years of its operations. Further demonstration of the international purposes of the Federal Reserve Act of 1913 is provided  by the "Edge Amendment" of December 24, 1919, which authorizes the organization of corporations expressly for "engaging in international foreign banking and other international or foreign financial operations, including the dealing in gold or bullion, and the holding of  stock in foreign corporations." In commenting on this amendment, E.W. Kemmerer, economist from Princeton University, remarked that:

 "The federal reserve system is proving to be a great influence in the internationalizing of American trade and American finance." The fact that this internationalizing of American trade and American finance has been a direct cause for involving us in two world wars does not disturb Mr. Kemmerer. There is plenty of evidence to show how Paul Warburg used the Federal Reserve System as the instrument for getting trade acceptance adopted on a wide scale by American
businessmen. The use of trade acceptances,  (which are the currency of international trade) by bankers and corporations in the United States prior to 1915 was practically unknown. The rise of the Federal Reserve ystem exactly parallels the increase in the use of acceptances in this country, nor is this a coincidence. The men who wanted the FederalReserve System were the men who set up acceptance banks and
profited by the use of acceptances.

As early as 1910, the National Monetary Commission began to issue pamphlets and other propaganda urging bankers and businessmen in this country to adopt trade acceptances in their transactions. For three years the Commission carried on this campaign, and the Aldrich Plan included a broad provision authorizing the introduction and use of bankers’ acceptances into the American system of commercial paper. The Federal Reserve Act of 1913 as passed by Congress did not
specifically authorize the use of acceptances, but the Federal Reserve Board in 1915 and 1916 defined "trade acceptance", further defined by Regulation A Series of 1920, and further defined by Series 1924. One of the first official acts of the Board of Governors in 1914 was to grant acceptances a preferentially low rate of discount at Federal Reserve Banks. Since acceptances were not being used in this country at that
time, no explanation of business exigency could be advanced for this action. It was apparent that someone in power on the Board of Governors wanted the adoptance of acceptances.

The National Bank Act of 1864, which was the determining financial authority of the United States until November, 1914, did not permit banks to lend their credit. Consequently, the power of banks to create money was greatly limited. We did not have a bank of issue, that is, a central bank, which could create money. To get a central bank, the bankers caused money panic after money panic on the business
people of the United States, by shipping gold out of the country, creating a money shortage, and then importing it back. After we got our central bank, the Federal Reserve System, there was no longer any need for a money panic, because  the banks could create money. However, the panic as an instrument of power over the business and financial community was used again on two important occasions, in 1920, causing the Agricultural Depression, because state banks and trust companies had refused to join the Federal Reserve System, and in 1929, causing the Great Depression, which centralized nearly all power in this country in the hands of a few great trusts. A trade acceptance is a draft drawn by the seller of goods on the purchaser, and accepted by the purchaser, with a time of expiration stamped upon it. The use of trade acceptances in the wholesale market supplies short-term, assured credit to carry goods in process of production, storage, transit, and marketing. It facilitates domestic and foreign commerce. Seemingly, then, the bankers who wished to replace the open-book account system with the trade acceptance system were progressive men who wished to help American import-200
export trade. Much propaganda was issued to that effect, but this was not really the story. The open-book system, heretofore used entirely by American business people, allowed a discount for cash. The acceptance system discourages the use of cash, by allowing a discount for credit. The open-book system also allowed much easier terms of payment, with liberal extensions on the debt. The acceptance does not allow this, since it is a short-term credit with the time-date stamped upon it. It is out of the seller’s hands, and in the hands of a bank, usually an acceptance bank, which does not allow any extension of time. Thus, the adoption of acceptances by American businessmen during the 1920’s greatly facilitated the domination and swallowing up of small business into huge trusts, which accelerated the crash of 1929. Trade acceptances had been used to some extent in the United States before the Civil War. During that war, exigencies of trade had estroyed the acceptance as a credit medium, and it had not come back into favor in this country, our people preferring the simplicity and generosity of the open-book system. Open-book accounts are a single-name commercial paper, bearing only the name of the debtor.

 Acceptances are two-name paper, bearing the name of the debtorand the creditor. Thus they became commodities to be bought and sold by banks. To the creditor, under the open-book system, the debt is a liability. To the acceptance bank holding an acceptance, the debt is an asset. The men who set up acceptance banks in this country, under the leadership of Paul Warburg, secured control of the billions of 201 dollars of credit existing as open accounts on the books of American businessmen.
Governor Marriner Eccles of the Federal Reserve Board stated before the House Banking and Currency Committee that: "Debt is the basis for the creation of money."
Large holders of trade acceptances got the use of billions of dollars worth of credit-money, besides the rate of interest charged upon the acceptance itself. It is obvious why Paul Warburg should have devoted so much time, money, and energy to getting acceptances adopted by this country’s banking machinery.

On September 4, 1914, the National City Bank accepted the first timedraft drawn on a national bank under provisions of the Federal Reserve Act of 1913. This was the beginning of the end of the open-book account system as an important factor in wholesale trade. Beverly Harris, vice-president of the National  City  Bank  of  New  York,  issued  a pamphlet in 1915 stating that: "Merchants using the open account system are usurping the functions of bankers." In The New York Times on June 14, 1920, Paul Warburg, Chairman of the American Acceptance Council, said: 

"Unless the Federal Reserve Board puts itself heart and soul behind the untrammeled development of acceptances as a prime investment forbanks of the Federal Reserve Banks the future safe and sound development of the system will be jeopardized."202
This was a statement of the purpose of Warburg and his bunch who wanted "monetary reform" in this country. They were out to get control of all credit in the United States, and they got it, by means of the Federal Reserve System, the acceptance system, and the lack of concern by the citizens. The First World War was a boon  to the introduction of trade acceptances, and the volume jumped to four hundred million dollars in 1917, growing through the 1920s to more than a billion dollars a year, which culminated in a high peak just before the Great Depression of
1929-31. The Federal Reserve Bank of  New York’s charts show that its use of acceptances reached a peak in November, 1929, the month of the stock market crash, and declined sharply thereafter. The acceptance people by then had gotten what they wanted, which was control of American business and industry. "Fortune Magazine" in February of 1950 pointed out that: "Volume of acceptances declined from $1,732 million in 1929 to $209 million in 1940, because of the concentration of acceptance banking in a few hands, and the Treasury’s low-interest policy, which made direct loans cheaper than acceptance. There has been a slight upturn since the war, but it is often cheaper for large companies to finance imports from their own coffers." In other words, the "large companies" more accurately, the great trusts, now have control of credit and have not needed acceptances. Besides the barrage of propaganda issued by the Federal Reserve System itself, the National Association of Credit Men, the American Bankers’ Association, and other fraternal organizations of the New York bankers devoted much time and money to distributing acceptance
propaganda. Even their flood of lectures and pamphlets proved insufficient, and in 1919 Paul Warburg organized the American Acceptance Council, which was devoted entirely to acceptance propaganda.

The first convention held by this association at Detroit, Michigan, on June 9, 1919, coincided with the annual convention of the National Association of Credit Men, held there on that date, so that "interested observers might with facility participate in the lectures and meetings of both groups," according to a pamphlet issued by the American Acceptance Council. Paul Warburg was elected President of this organization, and later became chairman of the Executive Committee of the American Acceptance Council, a position which he held until his death in 1932. The Council published lists of corporations using trade acceptances, all of them businesses in which Kuhn, Loeb Co. or its affiliates held control. Lectures given before the Council or by members of the Council were attractively bound and distributed free by the National City Bank of New York to the country’s businessmen. Louis T. McFadden, Chairman of the House Banking and Currency
Committee, charged in 1922 that the American Acceptance Council was exercising undue influence on the Federal Reserve Board and called for a Congressional investigation, but Congress was not interested. At the second annual convention of the American Acceptance Council,  held  in  New  York  on  December  2,  1920,  President  Paul Warburg stated:

"It is a great satisfaction to report that during the year under review it was possible for the American Acceptance Council to further develop and strengthen its relations with the Federal Reserve Board." During the 1920s Paul Warburg, who had resigned from the Federal Reserve Board after holding a position as Governor for a year in wartime, continued to exercise direct personal influence on the Federal Reserve Board by meeting with the Board as President of the Federal Advisory Council and as President of the American Acceptance Council. He was, from its organization in 1920 until his death in 1932, Chairman of the Board of the International Acceptance Bank of New York, the largest acceptance bank in the world. His brother, Felix M. Warburg, also a partner in Kuhn, Loeb Co., was director of the International Acceptance Bank and Paul’s son, James Paul Warburg, was Vice-President. Paul Warburg was also a director on other important acceptance banks in this country, such as Westinghouse Acceptance Bank, which were organized in the United States immediately after the World War, when the headquarters of the
international acceptance market  was moved from London to New York, and Paul Warburg became the most powerful acceptance banker in the world. Paul Warburg became an even more legendary figure by his memorialization as "Daddy Warbucks" in the comic strip, "Little Orphan Annie". The strip celebrated a homeless waif and her dog who are adopted by "the richest man in the world", Daddy Warbucks, a takeoff on "Warburg", who has almost magical powers and can accomplish anything by the power of his limitless wealth. Those in the know snickered when "Annie", the musical comedy version of this story, had a highly successful run of several years on Broadway, because the vast majority of the audience had no idea that this was merely another Warburg operation.

It was the transference of the acceptance market from England to this country which gave rise to Thomas Lamont’s ecstatic speech before the Academy of Political Science in 1917 that: "The dollar, not the pound, is now the basis for international exchange." Americans were proud to hear that, but they did not realize at what a price. Visible proof of the undue influence of the American Acceptance Council on the Federal Reserve Board, about which Congressman McFadden complained, is the chart showing the rate-pattern of the Federal Reserve Bank of New York during the 1920s. The Bank’s official discount rate follows exactly for nine years the ninety-day bankers’ acceptance rate, and the Federal Reserve Bank of New York sets the discount rate for the rest of the Reserve Banks. Throughout the 1920s the Board of Governors retained two of its first members, C.S. Hamlin and Adolph C. Miller. These men found themselves careers as arbiters of the nation’s monetary policy. Hamlin was on the Board from 1914 until 1936, when he was appointed Special Counsel to the Board, while Miller served from 1914 until 1931. These two men were allowed to stay on the Board so many years because they were both eminently respectable men who gave the Board a certain prestige in the eyes of the public. During these years one important banker after another came on the Board, served for awhile, and went on to better things. Neither Miller nor Hamlin ever objected to anything that the  New York bankers wanted. They changed the discount rate and they performed open market operation with Government securities whenever Wall Street wanted them to. Behind them was the figure of Paul Warburg, who exercised a continuous and dominant influence as President of the Federal Advisory Council, on which he had such men of common interests with himself as Winthrop Aldrich and J.P. Morgan. Warburg was never too occupied with his duties of organizing the big  international trusts to supervise the nation’s  financial structures. His influence from 1902, when he arrived in this country as immigrant from Germany, until 1932, the year of his death, was dependent on his European alliance with the banking cartel. Warburg’s son, James Paul Warburg, continued to exercise such influence, being appointed Franklin D. Roosevelt’s Director of the Budget when that great man assumed office in 1933, and setting up the Office of War Information, our official propaganda agency during the Second World War. In The Fight for Financial Supremacy, Paul Einzig, editorial writer for the London Economist, wrote that:

"Almost immediately after World War I a close cooperation was established between the Bank of England and the Federal Reserve authorities, and more especially with the Federal Reserve Bank of New York.* This cooperation was largely due to the cordial relations existing between Mr. Montagu Norman of the Bank of England and Mr. Benjamin Strong, Governor of the Federal Reserve Bank of New York until 1928. On several occasions the discount rate policy of the Federal Reserve Bank of New York was guided by a desire to help the Bank of England.

* William Boyce Thompson (Wall Street operator) commented to
Clarence Barron, Nov. 27, 1920, "Why should the Federal Reserve Bank
have private wires all over the country and talk daily by cable with the
Bank of England?" p. 327 "They Told Barron".There has been close cooperation in the fixing of discount rates between London and New York."
__________________________
86 Paul Einzig, The Fight For Financial Supremacy, Macmillan, 1931 




From SECRETS OF THE FEDERAL RESERVE
The London Connection 
By Eustace Mullins

http://thetruthnews.info/secretfed.pdf