– Senate.gov

“This Act establishes the most gigantic trust on earth… The worst legislative crime of the ages is perpetrated by this banking and currency Bill.”

– Charles A. Lindbergh, Sr (father of famous aviator), Congressman in his book Banking and Currency and The Money Trust, 1913

“The Congress shall have Power… To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures [see on the origin of the Gold Standard] …”

– Article One, Section Eight of the U.S. Constitution

“The name of Central Bank is carefully avoided, but the ‘Federal Reserve Association’, the name given to the proposed central organization, is endowed with the usual powers and responsibilities of a European Central Bank.”

– Nation Magazine, January 19, 1911

The Federal Reserve Act was proposed in 1908 by Nelson Aldrich - whose unique daughter married unique Rockefeller’s son - in the Aldrich-Vreeland Act after the Panic of 1907.

The Act created the “Federal Reserve System” which transferred control of the money supply from Congress [see above Article One, Section Eight of the U.S. Constitution] to the banking system. Though the Treasury still coins and prints our money under the authority of Congress, neither the Treasury nor the Congress has the slightest thing to do with its issue or regulating the value thereof.

The Act was signed by President Woodrow Wilson - under the influence of Colonel House - founder of the CFR (controlled by Rockefeller) - on December 23, 1913 during the night (see timeline below) eighty years after President Jackson repelled the charter of the Second Bank Of United States.

The Incredible Timeline

The Federal Reserve Act was scheduled during the unlikely hours of 1.30 am to 4.30 am - were most members probably sleeping ? - on Monday 22 December 1913, at which 20 to 40 substantial differences in the House and Senate versions were supposedly described, deliberated upon, debated, reconciled and voted upon in a near-miraculous four-and-a-half to nine minutes per item, at that late hour.

At 4.30 am, a prepared report of this Committee was handed to the printers. Senator Bristow of Kansas, the Republican leader, stated on the Congressional Record that the Conference Committee had met without notifying them, and that Republicans were not present and were given no opportunity either to read or sign the Conference Committee report. The Conference report is normally read on the Senate floor. The Republicans did not even see the report. Some senators stated on the floor of the Senate that they had no knowledge of the contents of the Bill.

At 6.02 PM on 23 December, when many members had already left the Capital for the Christmas holiday, the very same day that the Bill was hurried through the House and Senate, President Woodrow Wilson signed the Federal Reserve Act of 1913 into law.

The book “the Creature from Jekyll Island” tells the story behind the curtain.

“…One unsolved economic problem of the day is how to get rid of the Federal Reserve…”

– Milton Friedman

Region: In a Region interview with your friend and former colleague George Stigler, we posed a question about the quality of the Fed’s economic research efforts. Stigler said, “I don’t feel very confident commenting about that. I’ve been told by Milton Friedman that one of the perversities of history is that when the quality of the Washington staff is high, policy is pretty poor, and in the years when policy has been very good, the staff has been low quality. Now if you want to explore that, you’ll have to interview him.” Did George Stigler understand you correctly?

Friedman: I probably said some such thing in my discussions with George, but I’ve not made a systematic study. I believe that it was based on one major phenomenon that stuck in my mind. In my special field of interest of money, there is no doubt that a large fraction of all of the economists who work more or less full time on monetary research are employed by the Federal Reserve. Many of them have made important contributions to monetary analysis and theory going back to the 1920s, when Winfield Reiffler, Walter Stewart and Emmanuel Goldenweiser were all contributing to understanding monetary institutions. I have no doubt that the Federal Reserve has made a positive contribution to monetary research, which I suppose I ought to set off on the account as a credit against a terribly poor policy performance. If I were to make up a balance sheet for the Federal Reserve, I could name many credit items on the research side, very few on the policy side.

The interesting thing to me has always been that the most important contributions to understanding of monetary theory and monetary institutions have not come from Washington during the decades in which I’ve been active. The Federal Reserve Bank of St. Louis in the 1950s, ’60s and ’70s was by far and away the pre-eminent producer of significant monetary research within the System. More recently, several other regional banks, including your own, have joined them and have made important contributions. Certainly the Minneapolis bank, with the contribution of its personnel to the development of rational expectations, has been an important contributor to monetary theory. All of the regional banks publish bulletins—required by law I guess. Some hardly ever publish material of general interest to students of monetary theory and policy, but most do, even if only occasionally. It would be invidious for me to mention names without a more careful study—though offhand, I can recollect such articles in the bulletins of four regional banks other than St. Louis and Minneapolis.

Region: In your early writings, you argued that deposit insurance was a worthwhile development. Here at the Minneapolis Federal Reserve we’ve taken the position that deposit insurance, now at virtually 100 percent, has a perverse effect and should be reformed in a way that would bring more market discipline. Where do you stand on the question of deposit insurance?

Friedman: Circumstances alter cases and I believe that both views are correct. Anna Schwartz and I in our Monetary History were discussing the situation after the financial collapse of the 1930s. We said then and believed then, and I still do, that the Federal Reserve had failed to do what it was originally set up to do. It had permitted a collapse of the monetary system, it had permitted perfectly sound banks to fail by the thousands because of liquidity problems, although it had been set up in 1913 with the objective of preventing that kind of a situation. And we argued in the book that since the Fed had failed and showed no sign that it was not going to continue to fail in pursuing its function, something else was needed to perform the function for which it had originally been established and that the Federal Deposit Insurance Corporation would serve that function. Interestingly enough, it did for some 40 years. From 1934 to the early ’70s, there were very few bank failures. And there were essentially no runs on banks because of liquidity problems. So it did serve a useful function for 40 years.

In my opinion, what destroyed the usefulness of deposit insurance was the inflation of the 1970s for which the Federal Reserve has to bear major responsibility. That inflation had the effect of destroying the net worth of financial enterprises, particularly the savings and loan institutions, which were borrowing short and lending long. They had mortgages and the like outstanding at fixed relatively low rates of interest. When the cumulative inflation of the 1970s inevitably led to a rise in the interest rates they had to pay, the result was to wipe out the net worth of the proprietors of those enterprises. Once the net worth of the enterprises was destroyed, deposit insurance did have a very perverse influence. In order for deposit insurance to work, there has to be some private personal incentive for safe banking. That incentive was provided by the net worth of the proprietors of financial institutions. Eliminate that net worth and deposit insurance created a win-win position for proprietors of those enterprises to engage in risky activities.

Region: In your new book, Money Mischief, you discuss monetary union. What are your thoughts on Europe’s plan for one currency?

Friedman: I believe it will not come to an achievement in my lifetime. It may in yours, but I’m not sure that’s true either.

Region: Why is that?

Friedman: Because I do not believe that at the moment, a single European currency is either feasible or desirable. Let me restate that. It would be highly desirable if Europe could have a common money, a single unified money, just as it’s desirable for the United States that we have a single unified currency. But in order for that to be possible or desirable, you have to have a unified currency over an area in which people and goods move relatively freely, and in which there is enough homogeneity of interest so that severe political strains are not raised by divergent developments in different parts of the area.

Let me illustrate. In the United States, right now you have much more severe economic problems in New England, in the Northeast in general, than you have elsewhere. If the Northeast were a separate country with a different language from the rest of the country, with a supposedly national government, it would be very tempted to resort to devaluation. What prevents it from doing that now is that we are a nation with one language, one political structure, a recognition that one region or another may have difficulties relative to other regions. Some years ago it was the South that had this problem.

Now come to Europe. Will there be as much tolerance for that kind of an adjustment as between France, on the one hand let’s say, Germany, Italy, Spain, Sweden, and so forth? I’m very dubious that those preconditions for a successful unified currency exist on the European continent. That’s looking at the ultimate.

Now consider the process you have to go through to get to a unified currency. In order to have a truly unified currency, not a collection of separate national currencies joined by temporarily fixed exchange rates like the European Monetary System or the International Monetary Fund was in its earlier days - in order to have a truly unified currency, you either need to have no central bank, as with a commodity currency like a gold standard for example, or you need to have at most one true central bank: one authority that can issue money. In the United States that authority is the Federal Open Market Committee of the Federal Reserve System. It’s one. The Federal Reserve Bank of Minneapolis issues currency notes on which the bank’s name appears, but you can’t decide how much to issue. That decision is made in Washington by the Federal Open Market Committee.

In order to have a comparable situation in Europe, you have to eliminate the Bank of France, the Bank of Italy, the Deutsche Bundesbank, the Bank of England and so forth. You have to have one true central bank with full authority. The plans that are being made call for such a central bank, but it’s a long cry from calling for it and having it. After all, the Treaty of Rome, which I believe was signed in 1957, called for eliminating all customs and tariff barriers among the Common Market nations. They still have not all been eliminated some 35 years later. So to call for something is one thing, to do it is a very different thing. And even the central bank that’s called for is going to be run by essentially a committee of representatives from France, from Germany, from England, and so on. I cannot see that kind of institution as having the same ability to withstand political pressures internally in these various areas that the Federal Reserve’s Federal Open Market Committee has.

Region: The New School of Classical Economics (among others, Sargent, Wallace, Prescott, Lucas) argues that the best way to study economics is within the general equilibrium models. They stress the importance of the institution’s arrangements: the rules of the game. What is your view on this approach?

Friedman: I believe that the approach has much to offer us, but I also believe that its proponents, like all proponents of fresh approaches, tend to carry a good thing too far. I would say it has had too much influence up to date. It has made a real contribution, but it is by no means the only, or necessarily even the most useful, approach.

Region: If you were advising the Federal Reserve, what would you say are the unsolved economic problems of the day?

Friedman: One unsolved economic problem of the day is how to get rid of the Federal Reserve.

Today he’s ranting in a video on Yahoo Finance as well as on his blog about his former employer Merrill Lynch. His critics sounds sincere and reasonable against Corporate Fraud as if Wall Street Analysts like he used to be were innocent at this game.

But in this “Economics of Innocent Fraud”, to borrow the title of last John Kenneth Galbraith’s Book, are journalists, medias, Economists as innocent as they would like to portray themselves ?

My Answer next week … Hold On Folks !

He also explains how the public realm is effectively controlled by the private sector. The arms industry is but one example of this: “While the Pentagon is still billed as being of the public sector, few doubt the influence of corporate power in its decisions.” He also looks at the financial world which “sustains a large, active, well-rewarded community based on compelled but seemingly sophisticated ignorance,” and in particular the Federal Reserve System, “our most prestigious form of fraud, our most elegant escape from reality.”

In 1803, Malthus published a major revision to his first edition, as the same title second edition; his final version, the 6th edition, was published in 1826. The excerpt below is from this last edition where he still advises to “court the return of the plague” on the poor.

Excerpt from Book IV, Chapter V
6th edition, 1826. Library of Economics and Liberty. Free online, full-text searchable.

“court the return of the plague” on the poor

By Thomas Malthus:

“It is an evident truth that, whatever may be the rate of increase in the means of subsistence, the increase of population must be limited by it, at least after the food has once been divided into the smallest shares that will support life. All the children born, beyond what would be required to keep up the population to this level, must necessarily perish, unless room be made for them by the deaths of grown persons. … To act consistently therefore, we should facilitate, instead of foolishly and vainly endeavouring to impede, the operations of nature in producing this mortality; and if we dread the too frequent visitation of the horrid form of famine, we should sedulously encourage the other forms of destruction, which we compel nature to use. Instead of recommending cleanliness to the poor, we should encourage contrary habits. In our towns we should make the streets narrower, crowd more people into the houses, and court the return of the plague. In the country, we should build our villages near stagnant pools, and particularly encourage settlements in all marshy and unwholesome situations. But above all, we should reprobate specific remedies for ravaging diseases; and those benevolent, but much mistaken men, who have thought they were doing a service to mankind by projecting schemes for the total extirpation of particular disorders. If by these and similar means the annual mortality were increased … we might probably every one of us marry at the age of puberty, and yet few be absolutely starved.“

• The Draka Society is a Totalitarian Democracy based on oligarchical collectivism

“Citizens enjoy a considerable measure of freedom. As the Draka Karl von Shrakenberg explains it to an American journalist “the Domination is not a totalitarian dictatorship of the Nazi type…oligarchical collectivism is probably the best term. The citizen body as a whole is our idol, not the State or its officers; they merely execute and co-ordinate. And citizens all have the same fundamental interests, which means that criticism – tactical criticism - can safely be allowed. Which makes for greater efficiency”. In fact, as Stirling puts it in the numerous and rather interesting Appendices in which he describes those details of Draka society, technology and history that cannot easily be worked into the narrative: “For the Citizen population, the Domination is a rather mild authoritarianism. There is an elected government, and a fair degree of freedom of speech and association. However, fundamental criticism (e.g. of serfdom) is not permitted, and the power of the Security Directorate has tended to gradually increase. Since there is a large degree of uniformity of opinion among the citizen population, that is not felt as much of a hardship.” Citizen opinion is reflected in (free and fair!) election results, which give the pro-status quo Draka League a consistent 70%, with groups like the pro-free-market Liberals and the socially-liberal Rationalists the sort of miserable single-figure percentages with which any readers who have been involved in political efforts to offer western electorates any similar radical alternatives to the social status quo will be only too familiar! The Assembly thus elected itself elects the Head of State, the Archon, for a 20-year-term by a two-thirds majority. The Archon appoints the heads of the Government Directorates – Security, War, Technical (technology & science), Conservation, Eugenics, Transportation etc. but all are answerable to the elected Assembly. Provided they do not – as few do – question the fundamental ideological basis of their society, Draka Citizens perceive themselves as politically free. As they are: exactly as free, no more and no less, with exactly the same constraints on what they may do with our freedom, as we British and American citizens are today. If anything, Draka Citizens prize their freedom more than do ours. Individuality of thought and action is valued, even in the military, Draka “were disciplined enough, but lacked the sort of meekness that obeyed bureaucratic dictates without question”. Unlike many of our Britons and Americans, alas.”

The economy is owned collectively

“The economy is decidedly non-Capitalist. Large scale industry is owned, mostly jointly, by the State, the free-employee Guilds, and the Landholders’ League. The latter is a co-operative of large plantation holders (not, strictly, landowners, as land is held from the State in heritable usufruct, revocable on neglect or misuse). There is also a thriving small business sector, mostly in arts, crafts, skills and handmade luxury goods. Almost all Citizens own at least a few serfs as domestic servants. The plantation holders, whose lifestyle is reminiscent of a mixture of the antebellum South and Classical Rome, may own hundreds of serfs, mostly field hands but also house servants, stewards etc. Most serfs, however, live in barrack-like compounds of up to 10,000, working in factories, mines etc. Conditions are somewhat boarding-school-like but food and medical treatment is adequate – a great improvement on conditions for most in our Third World, and they are also protected from being the victims of wars, famines etc. Even crime is very rare, because punished with condign forcefulness.The Draka enforce total submission and obedience with the utter ruthlessness necessary when you are outnumbered many to one by your slaves. Submission and obedience which may extend to Citizens availing themselves of suitably attractive serfs’ bodies (though Race Purity Laws ban female Citizens from such use of male serfs, until 100% effective contraception enables their relaxation) But given that, their ethos requires that serfs be decently treated and looked after. The implicit bargain is “Obedience and submission: protection and guidance”. As one Citizen character puts it, “they have to obey, and be punished if they don’t. Beyond that, no harm in kindness”. Serfs being gratuitously neglected or ill-treated by their owners are liable to confiscation and resale by the State, and a Citizen who neglects or gratuitously ill-treats his serfs is held in low esteem by his fellows, much as a 19th century English squire who similarly ill-used his horses or hounds would have been. Many Draka value their favourite serfs with genuine affection as dog-lovers value their dogs or equestrians their bloodstock. Serfs are, in any case, valuable property not to be ruined or wasted. Eventually, the aim is to dispense with the need for coercion altogether “obedience is not enough: in the long run, the objective is domestication”.

The Draka Citizens, moreover, do not merely declare themselves to be the Master Race. They try their hardest to actually be it; morally – they are imbued with an ethic of honour (upheld if need be by recourse to duelling), duty, courage, ferocious to their enemies but treating their friends with decency and kindliness, the qualities of what Nietzsche called a Herrenmoral and physically - from the age of five, Citizen children spend two-thirds of their year in single-sex boarding schools, in which physical fitness is almost a religion.

Science, culture and the arts are not neglected. Military service in the Citizen Force is universal for both sexes (who have achieved social equality in a natural and PC-free way – here Stirling begs to differ from Nietzsche’s somewhat misogynistic view!), and any Citizen who is later found to be below the required standard of fitness for his or her age is liable to a six-month recall to the Colours. Those Citizens retarded or otherwise inherently defective are “put in a comfortable institution, sterilized and encouraged in life-shortening vices”. The Domination in some respects consciously models itself on Sparta, although it values creativity more. As a society at war with the rest of humanity – “there aren’t many of us and nobody loves us” is a common Draka saying – and one that knows that it cannot stably share a planet with an equally inherently global-hegemonist Americanism, the art of war necessarily holds a central place in Draka society. In any case, the virtues it inculcates are valued by the Draka, who would agree with Nietzsche in The Joyous Science “We rejoice in everything, which, like ourselves, loves danger, war and adventure – which does not make compromises, nor let itself be captured, conciliated or faced”.

They also rejoice in beauty and the natural world around them. Their capital, Archona (on the site of our Pretoria) is typical of Draka cities: “marble and tile public buildings and low-rise office blocks, parks and broad avenues, the University campus and pleasant, leafy suburbs with the gardens for which the city was famed….In the centre of Archona, where the Avenue of Triumph met the Way of the Armies, there was a square with a victory monument. A hundred summers had turned the bronze green and faded the marble plinth; about it were gardens of unearthly loveliness where children played between the flowerbeds. The statue showed a group of Draka soldiers on horseback; their weapons were the Ferguson rifle-muskets and double-barrelled dragoon pistols of the eighteenth century. Their leader stood dismounted, reins in one hand, bush-knife in the other. A black warrior knelt before him, and the Draka’s boot rested on the man’s neck “. Such politically incorrect monuments aside, Draka cities are spacious and green, their buildings designed for beauty as well as function. Beauty their society values as an end in itself. As an Arch-Strategos (Field Marshal) observes in congratulating one of his junior officers for winning the Archon’s Prize for a book of poems: “The Glory of the Race is accomplishment, and beauty is as much so as power”.

Another accomplishment of the Race is avoiding wrecking the planet. The Draka are keen conservationists, even if, as a critic among their American enemies sneers, it is “an aristocrat’s conservationism”. Vast areas – over 15% of Draka territrory initially, later much more - are set aside as nature reserves, cleared of human populations, unless, as with the pygmies of the Ituri forest, they and their unspoilt way of life are to be conserved too. Third World populations are brought under control as we have signally failed to do. The Draka restore wolves and leopards to the Europe they have conquered. Partly to hunt themselves, partly to deter potential runaway serfs. But also because they are wild and beautiful and the Draka value both.

Both the beauty and the conservation are, Stirling implicitly and provocatively suggests, only made possible by the neo-Nietzschean stratification of society. An endless supply of cheap serf labour makes building beautiful buildings, from the cities to the mansion houses of the rural Draka Plantations, economical as they are not in consumerist society. Thus indeed were built Versailles and the Parthenon. The Citizens are endowed by serf labour and domestic servants with the leisure to create art, literature and culture which the creative elements in our society often lack in the daily scrabble to make a living. The serfs themselves are not materially deprived, but nor are they encouraged to consume endless gadgetry and resources the world cannot afford to provide for so many. Nor do they rot their minds with TV etc. Instead, they put their leisure time to healthier use, producing a healthy folk culture, music, song, customs etc instead of consuming mind-rotting Hollywood trash.

A society dominated by landed and cultured aristocrats, rather than ruled by the imperatives of corporate greed, is able to value beauty and nature above profit. In any case, cheap serf labour makes profit pull in less harmful directions. For example, economic as well as social imperatives will lead to fields being tilled by hand, since hands are cheaper as well as environmentally kinder than machines. Also, hereditary landholders in a stable society can afford to and will think ahead to conserve the land and its life over the long term for their descendants, rather than chemically raping it in quest of a fast buck a la our modern agribusiness. A Draka saying: “Live as if you were going to die tomorrow: farm as if you were going to live forever”. “

– George Orwell in his essay “James Burhnam and THE MANAGERIAL REVOLUTION”

Previous member of the Trotskyite organization and disenchanted by Marxian visions of the Soviet state, James Burnham (1905-1981) broke all ties to communism and to socialism in general.

He wrote The Managerial Revolution in 1941, during the world’s second great war. Surrounded by political upheaval and faced with a majority of the world’s population in economic unrest, Burnham perhaps felt compelled to analyze the world at an economic level.

George Orwell has well summarized his thesis as this:

‘Capitalism is disappearing, but Socialism is not replacing it. What is now arising is a new kind of planned, centralised society which will be neither capitalist nor, in any accepted sense of the word, democratic. The rulers of this new society will be the people who effectively control the means of production: that is, business executives, technicians, bureaucrats and soldiers, lumped together by Burnham, under the name of “managers”. These people will eliminate the old capitalist class, crush the working class, and so organise society that all power and economic privilege remain in their own hands. Private property rights will be abolished, but common ownership will not be established. The new “managerial” societies will not consist of a patchwork of small, independent states, but of great super-states grouped round the main industrial centres in Europe, Asia, and America. These super-states will fight among themselves for possession of the remaining uncaptured portions of the earth, but will probably be unable to conquer one another completely. Internally, each society will be hierarchical, with an aristocracy of talent at the top and a mass of semi-slaves at the bottom.’

In shorter words, the characteristic feature of modern industrial societies is the rise of managers as the effective wielders of power, particularly in the economy. In capitalist societies this means that capitalists (in the sense of owners) are losing power; in state socialist or communist societies, that politicians or the working class are losing it.

His book heavily influenced George Orwell’s “Nineteen Eighty-Four” notably on Warfare. 1984 (which he wrote in 1948) envisaged a division of the world into three warring blocks, following James Burnham’s book. The Orwellian state in Britain, as part of Oceania (the Anglo-American block), depicted in 1984, would be based not on Stalin’s system but on INGSOC (the Newspeak acronym for “English Socialism”).

1. “We will not have any more crashes in our time.”
- John Maynard Keynes in 1927

2. “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

“There will be no interruption of our permanent prosperity.”
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

3. “No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”
- Calvin Coolidge December 4, 1928

4. “There may be a recession in stock prices, but not anything in the nature of a crash.”
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

5. “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

“This crash is not going to have much effect on business.”
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

“There will be no repetition of the break of yesterday… I have no fear of another comparable decline.”
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

6. “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

“Buying of sound, seasoned issues now will not be regretted”
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
- R. W. McNeal, financial analyst in October 1929

7. “The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.”
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

“Hysteria has now disappeared from Wall Street.”
- The Times of London, November 2, 1929

“The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.”
- Business Week, November 2, 1929

“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”
- Harvard Economic Society (HES), November 2, 1929

8. “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
- HES, November 10, 1929

“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929

“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929 “Financial storm definitely passed.”
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

9. “I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“I am convinced that through these measures we have reestablished confidence.”
- Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

10. “For the immediate future, at least, the outlook (stocks) is bright.”
- Irving Fisher, Ph.D. in Economics, in early 1930

11. “…there are indications that the severest phase of the recession is over…”
- Harvard Economic Society (HES) Jan 18, 1930

12. “There is nothing in the situation to be disturbed about.”
- Secretary of the Treasury Andrew Mellon, Feb 1930

13. “The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
- Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930

“… the outlook continues favorable…”
- HES Mar 29, 1930

14.”… the outlook is favorable…”
- HES Apr 19, 1930

15. “While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930

“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…”
- HES May 17, 1930

“Gentleman, you have come sixty days too late. The depression is over.”
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

16. “… irregular and conflicting movements of business should soon give way to a sustained recovery…”
- HES June 28, 1930

17. “… the present depression has about spent its force…”
- HES, Aug 30, 1930

18. “We are now near the end of the declining phase of the depression.”
- HES Nov 15, 1930

19. “Stabilization at [present] levels is clearly possible.”
- HES Oct 31, 1931

20. “All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
- President F.D. Roosevelt, 1933
Courtesy of Colin J. Seymour, June 2001
http://www.users.dircon.co.uk/~netking
20 June 2001

In “Frankenstein”, Mary Shelley tell cautionary tales of scientists abusing their creative powers to exist in another sphere where they cannot be directly blamed for their actions. Their aim is to build a supreme being who will also develop violent tendencies and commit crimes.

In “The Creature from Jekyll Island”, G. Edward Griffin tells the same kind of story except that the scientists are some knowledgeable and powerfull bankers and their Creature is the Federal Reserve Bank. Charles A. Lindbergh, Sr. in 1913, testified: “When the President signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.”

The players were Paul Warburg, a German-American Banker, Sen. Nelson Aldrich from the Republican Party - whose daughter married John D. Rockefeller’s unique son - who dominated the National Monetary Commission, Frank Vanderlip, Rockefeller’s Protege and President of National City Bank (Rockefeller’s banking house), Benjamin Strong, Vice-President of J.P. Morgan’s Banker’s Trust of New York.

The plot was setup after the severe panic of 1907: The Federal Reserve Act was proposed in 1908 by Nelson Aldrich in the Aldrich-Vreeland Act.

What they omit to say is that the same bank funded this private equity group which means they’re “selling” the mortgages … to themselves :). Don’t be in disbelief, apart from being able to tell lie by omission, the rationale behind is that they can also report higher gains on the sales than if they sold them on the open market. Doesn’t this remind you of Enron’s cooking?

This could mean that the Big Banks crisis is not yet fully discounted in the news as some “surprises” are still in the tube for the mass public.