BANKING USA

THE HISTORY OF USA ...

Money has always been difficult to move around, particularly if there is too much of it, especially since someone can steal it. Somewhere along the line, people discovered they could leave their money—gold, silver or other valuables—on deposit with a gold or silver merchant—the forerunner of the modern banker. The merchant would provide his client with a receipt showing that he indeed had their gold and silver. It was not long before the certificates themselves began to trade as money. 

Voila! Banking was born.

Before long, bankers and people realized everyone had their valuables piled in the same storage area and everyone had certificates of deposit. So it would be easy for people to issue notes requesting the banker to move valuables from one person’s gold pile to the other person’s gold pile and charge the seller a small fee for the banker’s time and trouble in keeping this all straight. Thus the concept of the bank note or checking came into existence.

Had banking limited itself to handling other peoples’ money for a fee, very little would have happened to move the world toward the problems that we are seeing today. However, after a while, bankers noticed that they were just moving piles of gold back and forth but that, for the most part, few people ever came and actually asked for their gold. They were happy to just trade the certificates that assured them their gold was safely on deposit with the banker down the street.

That’s where bankers saw their opportunity. Since few people ever came and asked for all their gold at any one time, they could loan out the gold and silver to third parties and charge them interest for the use of their depositors’ money. The people who had gold on deposit wouldn't know that it was their gold he was loaning out and the people taking out loans would assume it was the bank’s. The only thing the bankers had to do was to keep everyone conned into thinking that their gold was there all the time.

If the cat ever got out of the bag, everyone would realize they’d been had and would run to the bank to withdraw their money before anyone else could get there, since there obviously wouldn't be enough to go around. Unfortunately, history has been full of runs on financial institutions when the cat did get out. Most of the time people lost everything they had.

After numerous runs on banks in both the history of the world and the short history of our country, a new system would be birthed in the 20th century that would purport to solve this problem, but in reality it just globalized it.

1911 Jekyll Island – The Federal Reserve is Born

There were two fateful meetings which changed the economic course of the world. 

The first of these was a meeting that took place in the fall of 1911 on Jekyll Island, off the coast of Georgia. 

At a New Jersey railway station on a bitterly cold November night, a special sealed railway car attached to the end if a train headed for Georgia rolled out. The car was owned by Senator Nelson Aldrich of Rhode Island and the car’s occupants represented more than one-fourth of the world’s wealth. 

They were:

Senator Nelson W. Aldrich, Senate whip, Chairman of the National Monetary Commission and business associate of J.P. Morgan, father-in-law of John D. Rockefeller Jr.;





Abraham Piatt Andrew, Assistant Secretary of the United States Treasury;

Frank A. Vanderlip, President of the National City Bank of New York, the most powerful bank at that time, representing William Rockefeller and the international investment banking house of Kuhn, Loeb and Company;

Henry P. Davidson, senior partner of the J.P. Morgan Company;

Charles D. Norton., President of J.P. Morgan’s First National Bank of New York;

Benjamin Strong, head of J.P. Morgan’s Bankers Trust Co.; and

Paul M. Warburg, a partner in Kuhn Loeb and Company, the representative of the Rothschild banking dynasty in England and France and brother of Max Warburg, who was head of the Warburg banking Consortium in Germany and the Netherlands.

The final destination of the party was Jekyll Island, Georgia. One of the participants, Frank Vanderlip, in an interview with the Saturday Evening Post on February 9, 1935:

“Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion near the close of 1910, when I was as secretive—indeed, as furtive—as any conspirator…I do not feel it as any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve system…”

As mentioned earlier, the greatest threat to the banking system had always been runs by the public-at-large. Under fractional reserve banking, when banks accept a customer’s deposit, the customer is given a “balance” on his account in return. This is the equivalent of a promise to pay back the deposit any time the customer wants.

Likewise, when another customer borrows money from the bank, he is also given a balance which is usually withdrawn immediately to satisfy the purpose of the loan. This creates a ticking time bomb because at that point the bank has issued more promises to pay on demand than it has money in the vault. Even though the depositing customer thinks he can have his money any time he wants, in reality it has been given to the borrowing customer and is no longer available at the bank.

The problem is compounded further by the fact that under fractional reserves, banks are allowed to loan more money than they receive in deposits. The question was how to insulate banks from the catastrophic consequences of this in the event of runs on the various banks. 

The meeting at Jekyll Island created a system that would roll the bank failures over onto the backs of the taxpayers. Thus Congress would have to be convinced their scheme was a measure to protect the public. Otherwise it would never be passed. But it did pass and the Federal Reserve System which we have today was born.

Since its creation, the Federal Reserve has presided over the crashes of 1921 and 1929; the Great Depression of 1929-1939; recessions in 1953, 1957, 1969, 1975 and 1981; the stock market crashes of 1987, 2000, and 2008; plus 1,000% inflation, which has destroyed 90% of the dollar’s purchasing power. 

It would seem the Federal Reserve is incapable of achieving its stated objectives—the ones with which it sold itself to Congress. 

Why? 

Those were never its true objectives.

Recognizing the circumstances under which the “Fed” was created, the type of people who authored it, as well as its actual performance over the years, it becomes obvious that the system is merely a cartel with a government facade.

In terms of its true objectives, the Federal Reserve has been a terrific success. 

The entire drop in the dollar’s value between 1910 and today is attributable to the Federal Reserve System/federal government cartel, which has transferred that much wealth from the citizens of the country to itself. 

This is the center of the present global currency crisis.

K-House eNews for April 16, 2013