CHAPTER III

THE FRAMEWORK OF THE MONSTER

HERE'S the idea. Were you one of a coterie of multi-millionaires lusting for the control of American industry and finance--exclusively for pillage--you would, if necessary, join in providing any amount of capital necessary to obtain the result. You could afford to provide it for it would make you one of a coterie enabled to loot the richest prizes on this planet. Any system which could at will open or shut the valves of American credit, stage an orgy of "inflation" or stage a debacle of "deflation," increase or decrease the money supply, make the tide of employment flow to prosperity's height or ebb to despair's depths, create a "bull" or a "bear" market at will--would justify the investment of hundreds of millions or even billions of capital! Its power would be practically boundless, its profits be fabulous and from its coign of vantage it could coin the sweat of scores of millions of toilers into its coffers of greed.

But if you could do this very same thing and obtain precisely the same results and reap exactly the same harvest in power and pelf without investing one thin dime or one plugged nickel you wouldn't put up the money, would you? That is just exactly what these Federal Reserve highbinders did and this is just exactly how they did it. There lay fair to their hands the most successful banking system in the world's annals--the National Banks.

Here was the core and center of their pillage. Here was the capital ready to their hands. They proceeded to levy upon, to appropriate and to commandeer their capital from the National Banks of the United States. They divided the U.S.A. into twelve financial satrapies or dependencies or loot areas with centers of pillage thusly: New York, Chicago, Atlanta, San Francisco, Boston, Minneapolis, Kansas City, St. Louis, Cleveland, Philadelphia, Richmond, and Dallas. Upon every National Bank in the U.S.A. there was levied a capital tribute of six per cent of their capital and surplus account for subscribed capital to the Federal Reserve Bank set over them. Of this amount one-half or three per cent was required to be immediately paid in and the other half was held subject to call if required.

Take a look at this first step on the stairway of pillage. Without the investment of one copper cent, of one plugged nickel or of one thin dime and by one stroke of the pen when this infamous law was passed practically one hundred millions of capital was commandeered into the coffers of Federal Reserve banditry. Without the risk of one penny of their own money the Federal Reserve plunderbund seized in its talons of greed the hugest banking capital in the U.S.A.--practically two hundred millions of dollars with one-half of it immediately payable and the other half subject to call! It was the most daring financial high-bindery ever enacted on earth.

Right here don't hock your brains--do your own thinking. Without any option, without any vote of stockholders, without any action by its officers every National Bank in the U.S.A. was compelled to buy stock in the Federal Reserve Bank in its fiscal dependency or loot area in which it was located. Protest was useless--just as useless as if they stood under the guns of a Jesse James' or Younger Brothers' gang. It was just "stand and deliver" and they delivered!

At this time, in 1914, the banking business in the U.S.A., and particularly National Banks, was functioning soundly and safely. It was serving--not dominating--industry. It was making reasonable--not Shylock--profits.

Suppose the lustful eyes of the Federal Reserve lootage had turned to the drygoods instead of to the banking business. They would have compelled every drygoods merchant in the U.S.A. to contribute six per cent of his capital and surplus--with one-half immediately payable--to set up a drygoods jobbing house in the center of a designated loot area. They would have compelled every drygoods merchant to purchase his merchandise from that jobbing house at their price. Isn't one proposition as sane as the other? Of course it is. But there is this difference. By commandeering capital for the drygoods business licensed looters _could control only the drygoods business_. But by commandeering capital for the banking business licensed looters _could control all business_! That's the difference and that's all the difference. They commandeered capital where it could _control not one industry but all industries_. They didn't commandeer a leg or an arm of industry but they did commandeer _the life blood of all industry_ and at one leap vaulted into a seat of power where their scepter's sway really governed all American industry. That's what they really did.

What price did Federal Reserve lootage pay for this commandeered capital? It limited the dividends to be paid to these sandbagged stockholders to six per cent per annum. No matter how fabulous might be--and really have been--the profits of Federal Reserve pillage the people who provided its life blood of capital must be content with a paltry six per cent dividend! Over a long term of years the net profits of the National Banks of the U.S.A. have averaged slightly over 12 per cent per annum. But Federal Reserve lootage says: "We will pay you but one half what your capital has been earning." Some gall? It was the absolute acme of refrigerated nerve! No matter what Federal Reserve Shylockery might make on this commandeered capital the people who provided it--whose money it really was--could get but a paltry six per cent.

But one fact or series of facts is worth more than pages of language. So right here and now look at the actual results for the year 1920. Here is a list of Federal Reserve profits and pillage for that year:

Per cent Net Sandbaggery Location[1] Capital on Capital Per Cent New York $24,618,000 217 211 Chicago 13,213,000 195 189 Atlanta 3,759,000 162 156 San Francisco 6,412,000 159 153 Boston 7,454,000 137 131 Minneapolis 3,265,000 131 125 Kansas City 4,295,000 129 123 St. Louis 4,229,000 124 118 Cleveland 10,070,000 119 113 Philadelphia 8,278,000 116 110 Richmond 4,884,000 110 104 Dallas 3,757,000 89 83

Take all of your reading, take all of the history of banking or of finance since banks were first founded and see if you can approximate any such leviathan Shylockery. The stockholders in National Banks who provided the capital for this orgy of profiteering were gyped out of all the way from 211 per cent in the New York satrapy to 83 per cent in the Dallas satrapy. For the year 1920 all over the U.S.A. on the average Federal Reserve lootage took away from the real providers of its capital--the stockholders in National Banks--better than 154 per cent on the money they provided!

These records are taken from the accounts of its own pillage rendered by the Federal Reserve System itself.

You could be quite some banker yourself, you could orate and strut and preen and propagandize, you could swell out your pouter pigeon breast at stage-managed banquets and be a prince of high finance with a limitless expense account and with an altitudinous salary--if you could commandeer your neighbor's money at 6 per cent and then sandbag out from 211 to 83 per cent profit on it, couldn't you?

Legal? Of course it's quasi-legal and that's the infamy of it. A coterie of the most astute lobbyists who ever enchained a people's industry log-rolled through a piece of legislation whereby they commandeered for their capital the people's money at a petty 6 per cent and in the year 1920 alone pouched on it a profit varying from 211 to 83 per cent! That's the record and those are the facts--hidden and concealed from you and draped in a mantle of silence. Federal Reserve lootage, Federal Reserve propaganda, Federal Reserve publicity--all paid for from your money--is too astute to "toot" anent this legalized sandbaggery. Do you, the stockholders in the eight thousand and odd National Banks in the U.S.A., know of any reason why you should provide at 6 per cent the capital for Federal Reserve lootage on which it made in one year alone from 217 to 89 per cent? That is, do you know of any reason except your legal helplessness and the bottomless greed of Federal Reserve sandbaggery? If the law--cleverly lobbied through your Congress--didn't compel you to do it, would you do it? Would you of your own free will provide capital at 6 per cent and be gypped out of 154 per cent? You know you wouldn't! Here is the core and center and solar plexus of the whole Federal Reserve System--commandeer capital at a petty six per cent and realize out of it profits that make Shylock look like a philanthropist. Peg this in your brainery and look further.

FOOTNOTES:

[Footnote 1: The average paid in capital for 1920 was $94,234,000 and total net earnings were $151,408,031. This is 160.7% profit and so stated on pages 153 and 154 of Federal Reserve Bulletin of February, 1921. When the net average of the individual banks are footed and averaged the average is 140.9%. This discrepancy is for Federal Reservists--not us--to explain.]