Montana labor news., 1946-08-29
BY JERRY VOORHIS

ny JERR1 NOORtlS
When the Federal Reserve Act was
passed in 1913, a lot of people believed
that the twelve central Federal Re
serve banks created by that act were
going to be government institutions.
But they were not then made so and
never have been. Every penny OF stock
in the Federal Reserve banks belongs
to the private member banks Of the
Federal Reserve System. In the words
Of the late Senator Glass OF Virginia
who, as author Of the Federal Reserve
Act, certainly should have known,
THE Government does not own one
dime Of proprietary interest in the
Federal Reserve Banks"
The first essential step in the build
ing of a scientific monetary system
in America is for Congress to purchase
from the member banks all the capital
stock of the central Federal Reserve
Banks and make them government in
situations. This would cost us about
S154,000 900.
Thomas jefferson once said, IF the
American people eve allow private
banks to control the issue of their
currency, first by initiation and then
by deflation. the banks and corpora
tons that grow up around them will
deprive the people of their property
until their children wake up homeless
on the continent their fathers con
quered."
Today oyer 80 per cent Of all the
business of the twelve central Federal
Reserve Banks consists of creating
money and using it to buy interest
bearing bonds and notes of the U. S.
government. They are the central
bank of issue Of the United states. No
central bank of issue ever should be-
long to anyone except the whole peo-
pie Of the nation. The people of Eng
land have just completed making the
Bank Of England a government in
stitution. 1t is high time the American
people did likewise with the central
Federal Reserve Banks.
In a paper entitled THE Nature of
the Federal Reserve Banks written
by Mr.. f. "A. Goldenwiser, chief Of the
research division Of the Federal Re-
serve board, we find this statement:
"The Reserve bank derives the
funds available for its loans and in
vestments from powers conferred
upon it by Congress. The capital it
has is prescribed by Congress and
constitutes a small part of the funds
at its disposal. The other sources OF
the funds of the Reserve banks are
its power to issue notes and to ac-
cept and create deposits"
Note the words create deposits II
is with these created deposits that
bonds of the United States are bought
The Federal Reserve Banks have
capital stock Of only s154,00o 600 But
today they W over S22,oel qoanVv
OF government bonds, notes, and bills
The American people must some time
pay out Of taxes that amount of money
plus interest on it to these banks And
yet the Federal Reserve Banks bought
these government bonds ard notes
with what is called "Rescrye Bank
credit" which is nothing more nor less
than the credit Of the United states.
1t is figures written on the bank hooks.
which cost the banks nothing 70 create
but which the government ifself
guarantees and stands behind with all
its resources. If the Federal Reserve
Banks had belonged to the government
our nation would be $4,000, Vpo 'ooo
less in debt than it is today For theh
whenever Reserve Bank credit was
created it would have been err dlted TO
the account Of the American people
instead Of being debited AGAINST the
people and credited to private banks
According to the terms OF the FED
eral Reserve Act, Federal Reserve
Notes. to be issued al the discretion
Of the Federal Reserve Board TOR the
purpose Of making advance 70 Fed
eral Reserve banks through the ed
eral Reserve agents as hereinafter
set forth and for no Other purposes,
are hereby authorized IN other
words, Federal Reserve notes can be
made available to member banks of
the system for tehir use. but not TO
the United States government unless
1t pays interest upon them, should II
Treasury OF the United states seek to
borrow any such money (Which Is the
today it would have to borrow It at
interest from a private banking insti-
tntions. Nevertheless. every Federal Re
serve note bears upon It's face these