Creature From Jekyll Island by G. Edward полностью

Congressman Charles Lindbergh, Sr., father of the man whomade the world's first solo transatlantic flight, explained it thisway: "Under the Federal Reserve Act, panics are scientificallycreated; the present panic is the first scientifically created one,worked out as we figure a mathematical problem."

The details of how this panic was created were explained in1939 by Senator Robert Owen, Chairman of the Senate Banking andCurrency Committee. Owen, a banker himself, had been a co-author of the Federal Reserve Act, a role he later regretted. Owensaid:

In May 1920 ... the farmers were exceedingly prosperous.... They were paying off their mortgages. They had bought a lot of new land, at the instance of the government—had borrowed money to do it—and then they were bankrupted by a sudden contraction of credit and currency, which took place in 1920....

The Federal Reserve Board met in a meeting which was not

disclosed to the public—they met on the 18th of May 1920; it was a secret meeting—and they spent all day; the minutes made 60 printed pages, and it appears in Senate Document 310 of February 10,1923. ..

Under action taken by the Reserve Board on May 18, 1920, there resulted a violent contraction of credit.... This contraction of credit and currency had the effect, the next year, of diminishing the national 1. Charles A. Lindbergh, Sr. The Economic Pinch (1923 rpt. Hawthorne, C a l i f o r n i a : Omni Publications, 1968), p. 95.

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production $15,000,000,000; it had the effect of throwing millions of people out of employment; it had the effect of reducing the value of lands and ranches $20,000,000,000.1

The contraction of credit had a disastrous effect on the nation asa whole, not just farmers. But the farmers were more deeplyinvolved, because the recently created Federal Farm Loan Boardhad lured them with easy credit—like ducks at the pond—intoextreme debt ratios. Furthermore, the large-city banks which weremembers of the System were given support by the Fed during thesummer of 1920 to enable them to extend credit to manufacturersand merchants. That allowed many of them to ride out the slump.

There was no such support for the farmers or the country bankswhich, by 1921, were falling like dominoes. History books refer tothis event as the Agricultural Depression of 1920-21. A better namewould have been Country-Duck Dinner in New York.

BUILDING THE MANDRAKE MECHANISM

In Chapter Ten, we examined the three methods by which theFederal Reserve is able to create or extinguish money. Of the three,the purchase and sale of debt-related securities in the open marketis the one that provides the greatest effect on the money supply.

The purchase of securities by the Fed (with checks that have nomoney to back them) creates money; the sale of those securitiesextinguishes money. Although the Fed is authorized to buy and sellalmost any kind of security that exists in the world, it is obligated toshow preference for bonds and notes of the federal government.