> Chapter Six
The Federal Government declares the
Federal Reserve Privately Owned
Fed sets ownbudget
Fed was never audited
Politicians and Big Business
Object to Fed Audit
Social Security Largest Economic
Fiasco In History
Eighteen Trillion Debt Can the System Live ?
What well known people say
about the Social Security Trust Fund
Excerpts of the Privacy Act
Chapter Six
Federal Court Declared Fed Is Privately Owned ...... B8
Fed Owned By Mega bankers-Establishment Comes Clean ...... 89
Fed Sets Own Budget ...... 90
Control Of Money Spells People Control ...... 91
Bank Exempt From Audit ...... 9P
Rockefeller's Allies Battle Proposed Audit ...... 93 A Bill Making The Twelve Federal Reserve Districts
The Property Of The American People ...... 9 i
Fed Is Not Being Audited ...... 95
Famous Critics Of The Fed...... 96 Social Security Shown To Be The Largest Economic
Fiasco In History ...... 9"
The Cover Up-Even Dukakis Was Fooled ...... 9;
The Hidden Numbers Game ...... 9 7
$18,000,000,000,000.00, Give Or Take A Trillion ...... 99
Hollings: "i want a divorce"
After The Cover-Up: The Scandal ...... 99
Can The System Live? ...... 99
Excerpts From The Privacy Act...... ' n
Here's What Well Known People Are Saying About The Social Security Trust Fund:
Federal Court Declared
Fed is Privately Owned
James Townsend is chairman of Redeem Our Country (ROC), the purpose of which is to abolish the Federal Reserve System, P.O. Box 333, Fullerton, Calif, 92632. He also is editor and publisher of the "National Educator," from which this article is excerpted.
BY JIM TOWNSEND
The Federal Reserve banks are privately owned, locally controlled, separate corporations. Who says so? In "Lewis vs. United States, the Ninth Circuit Court says so.
This, after years of senators, and members of the House of Representatives denying the Federal Reserve banks were privately owned, the Ninth Circuit Court has finally, officially, given the lie to the scam imposed on the people of this nation 70 years ago.
The court's decision has vast implications. Now that the bankers' hoax has been legally exposed, what impact will it have on the paper issued as Federal Reserve notes?
As private bankers, it would appear they have no more right to issue and circulate their paper than does the local counterfeiter. In fact, if one could choose between the two, the local counterfeiter would be the one chosen, because he charges no interest on his paper.
The Federal Reserve counterfeiter not only distributes worthless paper, he collects interest by loaning it into circulation.
The court decision has been known for more than three months, but the kept media has been as quiet as a mouse.
Neither the printer nor electronic media has found it newsworthy, even though the ramifications will be mind-boggling.
Key members of the two houses of Congress were advised of the court findings, but, the public has not heard even a '- peep from the guardians of the public welfare. In fact, no one will admit to knowing anything about it. But they do know, and the question is, "What are they going to do about it?"
IMAGINATION STAGGERED
There are so many things that come to mind when one realizes the Federal Reserve banks have been operating un-Constitutionally for all these years that it staggers the imagination. What about homes the Federal Reserve member ,_ banks have foreclosed?
What about the interest the United States has been paying on foreign loans negotiated by these same private bankers? Is this not a gift of the people's funds?
What about the interest the Federal Reserve banks now collect on the national debt? Would that not be declared illegal under the circuit court decision?
COURT QUOTED
Below, for the benefit of our readers, we are reprinting the main part of the Ninth Circuit Court's findings:
Examining the organization and function of the Federal Reserve banks, and applying the relevant factors, we conclude that the Reserve banks are not federal instrumentalities for purposes of the Federal Torts Claim Act, but are independent, privately owned and locally controlled corporations.
Each Federal Reserve bank is a separate corporation owned by commercial banks in its region. The stock holding commercial banks elect two thirds of each bank's nine-member board of directors. The remaining three directors are appointed by the Federal Reserve Board.
The Federal Reserve Board regulates the Reserve banks, but direct supervision and control of each bank is exercised by its board of directors (See 12 USC 301.) The "United States vs. Orleans," 425 US 807, 96 SCt 1971, 48 LEd 2d 390 (1976), the Supreme Court held that a community action agency was not a federal agency or instrumentality for purposes of the act, even though the agency was organized under federal regulations and heavily funded by the federal government.
Because the agency's day-to-day operation was not supervised by the federal government, but by local officials, the court refused to extend federal tort liability for the [negligence] of the agency's employees. Similarly, the Federal Reserve banks, though heavily regulated, are locally controlled by their member banks.
Unlike typical federal agencies, each bank is empowered to hire and fire employees at will. Bank employees do not participate in the Civil Service Retirement System. They are covered by worker's compensation insurance, purchased by the bank, rather than the Federal Employees Compensation Act.
Employees traveling on bank business are not subject to federal travel regulations and do not receive government employee discounts on lodging and services.
WE TOLD YOU SO
There you have it. The high-biding, swindling Federal Reserve banks are just what we have for years said they were: private corporations which have bankrupted the nation.
We now owe a bigger debt than the total net worth of the country. We pay this privileged and pampered class of counterfeiters almost 20 cents of every tax dollar collected--and it's going up.
As Thomas Edison said, "It's foolish to say we can issue a bond that is good, but not a dollar bill."
The time has come to return to a Constitutional money system that puts into circulation a debt-free dollar. Debt-free money would save the Social Security System and put millions of unemployed workers back to work.
Fed Owned by MegabankersEstablishment Comes Clean
VINCE RYAN... Chairman of the Board.
The influential Washington Post--America's newspaper of political record--has candidly admitted that the megabanks that make up the Federal Reserve System are privately owned. This is perhaps the first time this fact has been acknowledged by an Establishment newspaper.
Invariably, until now, when the Fed is discussed in any of the Establishment's controlled newspapers, magazines or journals (or in any of the broadcast media), the privately owned and operated Federal Reserve banks are characterized as "federal" entities. As demonstrated in the pages of this special report on the Fed, they are not federal, however, The Federal Reserve banks are private entities. That the Post has acknowledged this is indeed significant.
This admission appeared in an article published October 3, 1989 as part of the Post's regular feature "The Federal Page," reporting on Congress and the bureaucracy.
Interestingly the article did not focus on the ownership of the Federal Reserve banks. The reference to the private nature of the Fed was buried within the closing paragraphs of an article that detailed a new pay hike for the employees of the Federal Reserve System's Board of Governors.
The board is the seven-member, presidentially appointed body that governs the affairs of the Federal Reserve System, and thus of the nation's economy. (It is in this sense only that the Fed is actually federal.)
The Federal Reserve System is composed of the heads of the 12 privately-owned regional Federal Reserve banks, dominated by the influential Federal Reserve Bank of New York which is largely under the control of the Rockefeller family and their corporate allies.
NEW PAY SCHEDULE
The article noted that under the direction of Alan Greenspan, chairman of he board of governors, the Fed has set in place a new pay schedule "to meet competition from the private sector for key senior workers."
Incredibly enough, Congress has no say whatsoever regarding in-house Fed pay hikes--this being part and parcel of the Fed's vaunted "independent" status--and, it might be added, immunity--from independent, outside audits of its internal spending and the monetary policies it conducts.
The Fed, in fact, is authorized to set any pay schedule it wishes; that is, free to spend the taxpayer's dollars at will. In the past, though, the Fed has generally followed civil service pay schedules.
Under the latest pay hike, set to go into effect immediately, current salaries within the Fed system range from $11,614 a year to $85,000 for employees who are impositions below that of board officers. Salaries for board officers (on seven different levels) range from $62,200 to $140,000, the latter figure itself considerably higher than the salary of $89,500 paid to the chairman of the Fed's board of governors.
(The six remaining board members receive $82,500 a year--a salary, like that of the chairman's, that is set by law. A PRIVATE CORPORATION
However, as the Post noted in the intriguing paragraph in question (revealing the private nature of the Fed), "The new pay schedule, which covers all 1,500 board employees, is not quite as high as those in effect in the private sector orat the Federal Reserve Bank of New York, which like the 11 other regional Federal Reserve banks, technically is a private corporation free to set pay as it wishes, according to a board spokesman." (Emphasis added.)
It is appropriate that this revelation would appear in the pages of the Post. After all, it was none other than the Post's founder, financier and Wall Street money wizard, Eugene Meyer, who was one of the early members of the Federal Reserve System's board of governors.
'The Fed isn't afraid to admit in the pages of a friendly newspaper like the Post that it's really a private entity," says Vince Ryan, chairman of the Board of Policy of Liberty Lobby, the populist institution that is spearheading the fight on Capitol Hill to audit the Fed.
"After all," said Ryan, 'The Post is a reliable voice that primarily functions as an 'in-house' journal for the Washington Establishment.
Ryan encourages citizens to continue in their efforts to convince members of Congress to sign on as cosponsors of current legislation which would mandate regular congressionally supervised audits of the Fed as well as other reforms that would bring the Fed under the control of Congress and the American people.
Fed Sets Own Budget
The Federal Reserve System sets its own budget. Congress has absolutely no control over the manner in which the privately owned financial monopoly spends its money.
(Cynics might say that's all well and good in the best spirit of free enterprise. But on the other hand, it might be noted that there's no spirit of free enterprise as far as the Fed is concerned. The Fed represents monopoly finance capitalism at its worst.)
According to a classified report prepared for the Joint Economic Committee of Congress in 1984, the Fed earned more than $16.5 billion, but it kept $1 billion for its own expenses.
'The Fed each year spends over $1 billion of the taxpayers' money with no guidance or direction from any elected body," said the report.
It concludes that the Fed is a branch of government and, as such, should be brought into the congressional appropriations process, that its spending should be determined by the elected representatives of the taxpayers whose money it is appropriating--or misappropriating as the case may be.
Here the report echoes the myth promulgated by the Fed itself; that the megabankers' monopoly is a government agency. Instead, a federal court has ruled that the Fed is, as many Americans now know full well, a privately owned, privately controlled money system.
In any event, if the Fed were, in fact, a government agency, which it so clearly is not, that is all the more reason why it should be audited, particularly its monetary policies, and why its budget should be subject to congressional oversight.
If Congress had any guts, it would do something about it!
Control of Money
spells People Control
The Federal Reserve regulates America's federally chartered banks and controls the nation's flow of money. Its executives are a seven-member board of governors and presidents of the 12 Federal Reserve Banks. About every six weeks, the governors meet with the president of the New York Fed and presidents of four other regional banks, who serve one-year rotating terms, to determine the nation's monetary policy.
The Federal Reserve Board regulates the U.S. money supply by:
Changing the "discount rate," the interest rate at which banks can borrow from the Federal Reserve. Ordering banks to hold larger money reserves, thereby restricting money supply to the public. Ordering banks to sell government securities, which drains the banks' available lending reserves. Buying government securities from banks, thereby increasing the banks' lending reserve.
Two Measures Recommended toBring Banks Into Line
While serving in Congress, then-Rep. Jerry Voorhis recommended two measures that could be adopted that would bring the Federal Reserve System into line and make it accountable to Congress and the American people.
According to Voorhis: 'The Federal Reserve banks should become the property of the American people, and they should be operated as one central bank of issue under a specific mandate passed by the Congress. Their sole purpose should be to serve the general welfare of all the American people, their agriculture, commerce and industry, by providing at all times a dollar of steady, stable and constant buying power."
Voorhis said that his proposal--that Congress buy the Fed from its private owners--rested on what he called "two utterly unassailable principles of justice and good government:
'That the power of original creation of money is an inalienable right of government and cannot be delegated away to any private agencies without violating the fundamental sovereignty of a nation.
"And that whatever profit or advantages come about from the original creation of any volume of the medium of exchange--whether by coinage or printing of money or by expansion of credit--should always accrue to the people generally and never to any privileged or selected group of them."
Voorhis said that adoption of the measures he proposed would result in the following:
The Fed could be required to maintain a low-interest rate policy, and the intolerable interest drain on the resources of agriculture, industry and individuals could be eased. Prices would come down sharply as a result. And employment, particularly in the home construction industry, would revive. What's more, he said, farming would be more profitable and less costly to conduct as a business enterprise.
Voorhis believed, additionally, that the Fed could be required to do the job it was originally conceived to do: accommodate he American economy through a proper monetary supply geared to economic growth, without an increase in the national debt.
"A property audited Fed," said Voorhis, "could be compelled to pay back the nations' treasury not part but all of the income the Fed derives by creating the nation's money. And as is the case for all other government agencies, the Fed's necessary expenses would be provided by congressional appropriation."
Furthermore, when the economy was in recession, the Fed could be required to purchase non-interest-bearing U.S. bonds to increase the money supply, thereby cutting what Voorhis called "the nefarious knot" that ties America's money supply to the never-ending increase In the national debt.
Voorhis also said that under a reformed money system (as proposed in his legislation), a government-controlled Fed could be required to institute selective credit regulations and, if more action were needed, to raise reserve requirements in the commercial banks.
According to Voorhis, "A privately owned central bank of issue [such as the Fed] is as bad or worse than no central bank at all."
IT SURE IS. THOMAS JEFFERSON SAID, ITS WORSE THAN A STANDING ARMY AGAINST US!
Bank Exempt From Audit
The banking committee of the American Institute of Certified Public Accountants (AICPA) has put together a 198-page book of requirements and guidelines for its member CPAs to use for auditing banks.
But the biggest and most powerful banking monopoly in the United States--the Federal Reserve System--goes unaudited by Congress.