From Congress With Love
Vol: 111 Issue: 23 Thursday, December 23, 2010
Ninety-eight years ago today, the 63rd Congress of the United States’ unexpected Christmas gift to America was the Christmas Eve passage of the Federal Reserve Act.
The United States had not had a central bank since the 2nd Bank of the United States was killed by Andrew Jackson in 1845, mainly because nobody wanted it.
In 1908 the Congress created a National Monetary Commission which proposed what was then called the Aldrich Plan after its architect, Senator Nelson Aldrich of Rhode Island.
The Plan called for the establishment of a National Reserve Association with 15 regional district branches and 46 geographically dispersed directors primarily from the banking profession.
The Reserve Association would make emergency loans to member banks, create money, and act as the fiscal agent for the U.S. government.
State and nationally chartered banks would have the option of subscribing to specified stock in their local association branch.
The outline to the Plan had been formulated in a secret meeting on Jekyl Island in November 1910 in which Aldrich and other well-connected financiers attended. Together, those present at the Jekyl Island meeting represented one sixth of the world’s wealth.
Since the Aldrich Plan essentially gave full control of this system to private bankers, it was opposed by a majority of states, primarily in the rural and western states. Indeed, the Pujo Committee, formed by the Republican majority to investigate the Money Trust and its interlocking directorates, quickly rejected it.
Control of the Congress shifted to the Democrats in 1912. The Democrats won on a platform of opposition to the “so-called Aldrich bill for the establishment of a central bank.” (In other words, they lied.)
In 1913, President Woodrow Wilson began pushing for something called “banking reform.”
The Aldrich Plan was renamed the Federal Reserve Act and was the brainchild of a German immigrant and member of European banking royalty named Paul Warburg, who later became its first governor.
The House passed the Federal Reserve Act on December 22nd 298-60 with 76 Congressmen (primarily from the west) not voting because they were on their way home for Christmas.
Still, it would have passed, albeit by a much smaller margin.
On December 23rd, any lawmaker that lived west of the Mississippi was either on his way home for Christmas or he wasn’t going. Consequently, on December 23rd, 1913, of the Senate’s 95 members, 27 were on the road.
The remaining sixty-eight senators passed the Federal Reserve Act by a vote of 43 to 25. Had the full Senate been in session, the Federal Reserve Act would likely have failed, 52 to 43.
The Federal Reserve Act passed without a single nay vote from the Democratic side that was elected on a platform of opposition to it.
The Federal Reserve Act created the greatest and most powerful money trust in the history of mankind. So, let’s take a quick look at what the Sixty-Third Congress has done for America.
A basket of goods that had cost $100 in 1845 when the 2nd Bank lost its charter cost $110.14 in 1913 when Congress met to ‘fix’ the economy. What cost $100 in 1913 cost $96.45 sixty-eight years earlier.
Prices remained stable because there was a finite money supply. Money was backed by gold and unless somebody found more gold, the money supply stayed the same. A decent living wage in 1845 was about the same thing it was in 1913.
The average hourly wage for a bricklayer in 1913 was seventy-five cents an hour. Once the Federal Reserve “fixed” things, wages started going up. By 1925, the same bricklayer was making $1.50 an hour.
Where did the extra money come from? The Federal Reserve expanded the money supply. And what had cost $1.50 in 1913 cost $2.65 in 1925.
In 1929 the Fed contracted the money supply, sparking the Crash and the Great Depression t
o follow. At the peak of the Depression, unemployment hit 24.9% and bricklayers were making $1.30 an hour, if they could find work.
But thanks to the manipulated money shortage, prices fell. What cost $1.50 in 1925 fell to $1.15 by 1934. Still, there is a gap between wages and costs that never balances.
In 1933, the government confiscated all privately held gold and then sold it off to satisfy its debts to the very banks that owned the Federal Reserve that created the liquidity ‘crisis’ in the first place. The second World War provided new opportunities for central bankers world-wide.
Both sides would blow stuff up, necessitating loans to buy new stuff . . . to blow up. Each side would also steal each other’s stuff, creating a new market for stolen stuff plus more loans to replace the stuff that got stolen.
It worked great in the First World War. At the Treaty of Versailles in 1919, among those representing the United States was Paul Warburg, first governor of the Federal Reserve. Among Germany’s representatives was Max Warburg, head of the Kaiser’s Secret Service during the war.
Representing Great Britain was Sir William Wiseman, a partner in Warburg, Koehn and Loeb. Among the provisions of the Treaty was the transfer of Germany’s wealth to the victorious Allies in the form of war reparations.
The transactions were to be handled by the Swiss-based Bank of International Settlements, headed by Fritz Warburg.
How was all this financed? In 1945, the average hourly wage had fallen from $1.50 in 1920 to $1.15 in 1945, but prices remained relatively stable. What cost $1.50 in 1920 cost $1.47 in 1945.
The difference was how much wealth was stolen by the banks.
Cumulatively, this is what the Sixty-Third Congress accomplished for America with its midnight passage of the Federal Reserve 98 years ago today.
A dollar fifty in today’s money has the same buying power as did three copper pennies ninety-eight years ago today. To live as well as you could in 1913 on a buck fifty an hour, you would need to make $32.15 an hour today.
Except in 1913 there was no IRS, no income tax, and no sales tax. So you’d really have to make about fifty bucks an hour today to match the purchasing power of $1.50 per hour in wages.
In real terms, according to the US government’s inflation calculator, that’s an inflation rate of two thousand, one hundred and ten percent!
The 111th Congress ended forever when Nancy Pelosi reluctantly ended her four year reign of terror yesterday, banging her gavel to close what was one of the most ‘productive’ Congressional terms since the 63rd passed into history ninety-eight years ago today.
Only two weeks into its first year, it passed an $800 billion stimulus bill, the largest single expenditure in American history – a theft that even made some members of the Federal Reserve blush.
If there were any jobs saved, the evidence points to the jobs of federal workers and vested members of the United Auto Workers unions.
The bill was passed based on a promise it would keep unemployment below 8%. Once it passed 10% and real unemployment approached Depression era levels, the 111th jumped into action, increasing unemployment benefits to almost two years.
Then it wiped out the used car industry with its “Cash for Clunkers” incentive program that did exactly nothing, other than mandate the destruction of perfectly serviceable used cars and spend tax dollars to subsidize the sale of new cars, most of which would have been sold anyway.
Since nobody in the 111th read the bill before passing it, nobody noticed that a huge majority of the “Cash for Clunkers” stimulus went to foreign car manufacturers until after it was gone.
Having saved the jobs of federal workers, foreign automakers and labor union members, created an unfunded federal unemployment insurance scheme, destroyed the US used-car industry and given away billions in taxpayer money to banks that didn’t need it, the 111th turned its attention to something else nobody wanted or needed.
Despite America’s dire fiscal circumstances and overwhelming evidence that the American public did not support it, the majority of Democrats rammed through a new health care entitlement that certainly will raise taxes, federal spending and the deficit to new heights if the bill takes full effect on its scheduled date in 2014.
It also places added pressure on existing entitlements Medicare and Medicaid, which are underfunded.
Noted the Washington Times, “Obamacare may be the worst piece of legislation passed by any Congress since the Smoot-Hawley Tariff Act guaranteed the Great Depression.”
The 111th Congress failed to enact a budget or pass a single appropriations bill for this year, spending the whole year campaigning against the spending bills it passed the year before and saving anything for which they feared accountability until the post-election lame-duck session.
In the final hours leading up to its death by gavel yesterday, it tried to legislate a tax increase, pass another trillion dollar omnibus bill, increased unemployment benefits for another two years and repealed the ban on gays openly serving in the military despite warnings from military leaders and polls showing a majority of front-line troops opposed it.
That’s what the 111th left under America’s tree. The last Congress to leave America a gift this expensive ended ninety-eight years ago today.
No wonder Nancy Pelosi is so proud.