START OF THE PROJECT GUTENBERG EBOOK THE FEDERAL RESERVE MONSTER*** E-text prepared by MFR, Graeme Mackreth, and the Online Distributed Proofreading Team (http://www.pgdp.net) from page images generously made available by Internet Archive (https://archive.org) Note: Images of the original pages are available through Internet Archive. See https://archive.org/details/federalreservemo00clarrich THE FEDERAL RESERVE MONSTER by _JIM JAM JEMS_ Bismarck, N.D. Price $2.00 in U.S.A. Carriage Prepaid Compiled, Edited and Published by Sam H. Clark and Wallace Campbell Of JIM JAM JEMS Bismarck, North Dakota Copyright August 1922 EDITOR'S FOREWORD. WITH "charity toward all and malice toward none" we indite this volume of criticism of the Federal Reserve "Bunking" System as it is "practiced" in America. We are not posing as a modern David, nor do we underrate the size of the giant we have tackled herein by several damsights. And by the same token we are not depending on a single stone to deliver a knockout; on the contrary we are delivering a veritable volley of rocks at the object of our criticism and we hope that every chapter written here will raise bruises and welts on the back and belly of the critter. We have no intention nor desire to kill. And we don't believe in reform. When a thing needs reforming it needs an axe. But what we are striving to do is to awaken public sentiment to the damnable ramifications of the Federal Reserve Octopus in the hope that the people will "come alive" and eventually force the Federal Reserve System to be born anew. It is the abuse of the Federal Reserve System to which we object. Every little while some smart Alec mounts the bema and roars about the great good that the Federal Reserve System has accomplished. It is called the Savior of Credit and Industry. But it is misbranded. There's a vast difference between the picture on the tomato can and the contents of the can. If you have ever lived in the West or North or in any part of the country where wild ducks or partridges or prairie chickens nest, you are familiar with the antics of the mother duck or prairie hen during the hatching season. You have come suddenly upon the mother of a brood along the roadside and as she hops along there is every indication that the bird is wounded and she leads you away from her nest to a point where she figures the young are safe and then up and away she goes. These touters for the Federal Reserve System remind us of the mother duck and the prairie hen. They flap along and distract your attention from the nest which they are so beautifully feathering; they prate about "saving" and "benefiting" and flap you along until you lose sight of the brood of evils that they are really mothering. Our object in attacking the evils of the Federal Reserve System has been to awaken sentiment--that is all. For the past two years we have kept up a continuous bombardment against the iniquities of the Federal Reserve System through the monthly issues of Jim Jam Jems. The demand for back numbers and extra copies has been so great that we deemed it advisable to collect all of these charges under one volume and thus place the whole Truth about the Federal Reserve System before the people. What we publish herein is fact, carefully compiled from the System's own reports and from public records. We commend this volume to all thinking, upstanding Americans who are ever ready to fight for a square deal. ZINC! VINEGAR! VITRIOL! JIM JAM JEMS Please don't confound JIM JAM JEMS with other magazines that are aping it in size and general appearance. It is not a joke book, nor a dream book, nor a slab of fiction. It is just what it is advertised to be--A Volley of Truth. You will find more hard, frozen-in facts and facts that you want to know about matters of public interest in each issue of JIM JAM JEMS than you will find in any other publication in America. You cannot afford to miss a single number. Fill in the coupon below and send it to us with your check for three dollars and you will get JIM JAM JEMS for a year delivered by mail to your office or home address. Don't wait! Join our army of regulars with the next number. * * * * * JIM JAM JEMS, Bismarck, N. Dak. Gentlemen: Here's my check for $3.00. Send me JIM JAM JEMS for a year at the following address: Name ....................................... Street ..................................... City ........................ State ........ CONTENTS Chapter Page I FEDERAL RESERVE "BUNKING." 1 II THE BIRTH OF THE FEDERAL RESERVE SYSTEM 4 III THE FRAMEWORK OF THE MONSTER 9 IV THE STUFFING OF THE LEVIATHAN 16 V CHECK COLLECTION BANDITRY 21 VI THE LOOT OF THE MONSTER 34 VII HOW THE LOOT IS GATHERED 40 VIII THE PARTIALITY OF THE PILLAGE 50 IX THE TRAGEDY OF DRASTIC DEFLATION 56 X THE PALACES OF THE MONSTER 68 XI THE MONSTER'S EXPENSES 75 XII WHAT THE MONSTER DOES WITH ITS LOOT 83 XIII THE CAMOUFLAGE OF THE MONSTER 86 XIV FINAL VOLLEY AT THE MONSTER 95 Federal Reserve "Bunking" CHAPTER I THE FEDERAL RESERVE SYSTEM--WHAT IT REALLY IS THE Federal Reserve System is the visible hand of the Invisible Empire picking the pockets of the producers of real wealth. It is the most leviathan parasite engrafted upon--and grafting on--production in the world's history. It is an industrial vampire sucking industry's life blood down its bottomless maw. Its greed is fathomless, its rule is ruthless and its lust for power is insatiate. It is openly and avowedly run and managed in the interest of a so-called "superior class." It has a cynical contempt for the public--whom it ruthlessly plunders. It believes--and practices the belief--that it was instituted for the promotion and protection of superior privileges; that wealth is produced for its exploitation; that production of values exists for its parasitical plunder; that Shylockery is a virtue and that the fruits of industry belong not to its producers but to its despoilers. Property-owners, property-earners and property-producers are but its puppets whom it plunders at will. By monopolizing and juggling money--the mere symbol of wealth--it destroys the value of real wealth. It has but one interest in the public whom it hypocritically professes to serve and that interest is expressed in the query "How much will the people stand?" There is nothing with which to compare it for it stands alone in the world's history as the most gigantic plunderbund ever conceived in predacity's womb. Czardom at its height and Kaiserdom at its zenith never held a tithe of the real power held by the Federal Reserve System. It is the perfected fruit and flower of financial high-bindery, industrial plunderbund and applied Shylockery. Under the cloak and mantle of the law it reaches forth its paws of predacity and pouches filcheries which are simply stupendous. That is briefly what the much touted and saccharinely adulated Federal Reserve System really is. Abraham Lincoln, the greatest human intellect which ever functioned on this planet, prophetically drew its portrait in these words: "It (the Civil War) has been indeed a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before even in the midst of the war. God grant that my suspicions may prove groundless." That is the true portrait, drawn by a master hand, of the Federal Reserve System. In subsequent chapters you will see the birth of the monster, its ruthless methods of plunder, its machinery of despoilment, its monopoly of money and credit, its pawnbrokery and Shylockery and its huge mounds of pillage. And in looking it over don't overlook the fact that you, you yourself--whatever may be your part in American industry--are laying tribute on the Federal Reserve altar of Mammon. You can't escape its net of pillage. Amid its mounds of gold, currency and securities--the hugest ever massed together on this planet--your contribution is there. Your brain or your brawn, or both, have added to its lootage. If you live and toil in the U.S.A.--in whatever capacity--your "mickle" adds to the "muckle"--of its stored pillage. CHAPTER II THE BIRTH OF THE FEDERAL RESERVE SYSTEM "SLICKER than an eel in a bucket of soap suds" is a fair description of the accomplished financial accoucheurs who ushered this monster into legal existence. You must understand that the real object was to establish what was in truth and fact a Central Bank which would dominate and control currency issues and bank credits in the United States. To weld those chains upon American industry without appearing to do it was the object in view. It could be done only by encasing dirty hands of real pillage in the white gloves of a "Reserve System." The Invisible Empire must remain invisible. Visibility would defeat its object. The Money Masters had read history and knew that the American people stood four square against a Central Bank. If their monster of pillage were called a Central Bank they knew it would die in the legislative womb. Two such attempts had been made and had resulted disastrously thusly. The first attempt was the First United States Bank. It was the child of Alexander Hamilton's astute brain. It began business on December 12, 1791. It met violent opposition from its birth. It was branded as a "Money Trust," struggled along with varying fortunes and finally died on March 3, 1811, when its charter expired--with its renewal vainly sought. American industry rebelled at the idea of a Central Bank domination. It savored too much of that aristocracy and oligarchy whose chains they had recently chiseled. The second attempt to engraft a Central Bank on American industry was the Second Bank of the United States. It was chartered on April 10, 1816, and was a stormy petrel of finance. About it waged a running battle. It was from birth to death the center of a conflict. Against its domination American industry rebelled. Real producers of real wealth constantly fought this parasite of finance. Andrew Jackson was its bitter foe and it went out of existence during his administration "unwept, unhonored and unsung" except in the doleful dirges of the then Money Masters who mourned its demise. The Money Masters of those two eras read the handwriting on the wall. American industry would not endure a Central Bank and the Money Masters of 1914 read the same symbols. History was against them and the genius of American institutions was against them. Their idea of a Central Bank had never changed. It was the very core and center of their scheme to dominate American industry. But to "get it across" or to "put it over" they must re-christen the monster. Twice the people had violently repudiated the Central Bank banditry. Hence in the fertile brainery of predacity was born the idea of the Federal Reserve System--a camouflage, a deception and a mere cloak of Pecksniffian hypocrisy. A clever nation-wide propaganda was at once instituted with every "prop" put under it that wily astuteness could suggest. A subsidized press ballyhooed, touted and paeanized the proposed Federal Reserve System. It was hailed as the Moses which was going to lead America into the Promised Land of industrial freedom. It was paeanized as an absolutely new discovery in finance--when in truth and in fact it was one of predacity's oldest cards soiled in many a game. But it was varnished o'er and played again. There wasn't to be any "Central Bank" you understand. The sponsors of this monster abhorred the idea of a "Central Bank." It was the furthest possible from their pure thoughts of altruistic finance! They were going to have twelve banks, each one established in a center of industry and catering to and upbuilding the industries in its regional zone. Each one was going to be a separate and distinct corporation absolutely disconnected from its eleven brethren. This idea was advertised, adulated, and saccharinely paeanized until America was lulled to sleep. For month after month this cone of chloroform was held over American citizens until the anesthetic took effect. Then came forth what was known as the Glass-Owen bill. The smoothness of its head sponsors' name was symbolic. The ground had been prepared for its reception. Propaganda seed had been diligently sown. Years of the most astute scheming and plotting of the brainiest schemers who ever schemed bore its fruit in the Glass-Owen bill. On rails greased by years of propaganda it slid into the legislative hopper, came through in an oil bath and went to President Wilson. Whether he was the deceived or the deceiver none but himself knows. But he painted the Federal Reserve System with his most magnificent verbal rainbow colors, prated of it as "the emancipator of credit," signed it in the midst of a coterie of sycophantic Pecksniffs and the pen whose strokes made it a law was religiously preserved! Its real authors--who had spent years in weaving its phrases and scores of thousands of dollars in propagandizing for its passage--winked, smiled in their sleeves and prepared for pillage. The Federal Reserve System was born with a caul--concealing its grin of greed--and was brought into being by the most astute coterie of legislative accoucheurs who ever delivered a babe of legislation. Here and now read just two of the sample promises made by the Money Masters at the birth of their monster. They told you that the Federal Reserve System would "prevent unfair and undue constriction of credits with its consequent paralyzing effect on business and on the productive energies of the nation." They told you that "men will not be thrown out of employment wholesale throughout the country by the fright of financial and commercial panic, but finance and commerce will be steady. Hundreds and thousands of men will not suddenly be thrown out of employment during these national waves of depression nor undue feverish buoyancy." Peg these specious promises in your brainery and compare them later on with the actual performances of this monster of depression with the Federal Reserve Board at Washington really functioning as a Central Bank. 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.] CHAPTER IV THE STUFFING OF THE LEVIATHAN YOU have seen the framework and skeleton of the monster--the commandeering of the capital for the operation of the twelve Federal Reserve Banks in each one of the satrapies. You have seen that the Federal Reserve oligarchs not only never put up one thin dime of their own for the capital for their System but obtained that capital--practically in perpetuity--at a paltry 6 per cent interest or dividend charge. This capital would naturally fluctuate somewhat--but ever upward--as new National Banks were commandeered into the jack-pot. By January 1, 1922, the paid-in capital legally sandbagged into the twelve regional Shylockeries was as follows: Boston $7,935,500 New York 27,114,000 Philadelphia 8,736,500 Cleveland 11,134,000 Richmond 5,428,500 Atlanta 4,189,500 Chicago 14,307,000 St. Louis 4,603,000 Minneapolis 3,569,000 Kansas City 4,570,000 Dallas 4,203,000 San Francisco 7,374,500 ------------ Total $103,165,000 This is the assembled capital commandeered from National Banks in each one of the Federal Reserve satrapies. This is the framework or skeleton of the leviathan. Observe now how adroitly by another provision of the Federal Reserve legal grabbery and graftery this skeleton is stuffed and over-stuffed. A bank without depositors would be like a railroad without shippers, a store without customers, a hotel without guests or a doctor without patients--a mere expense account. But the same astuteness which could commandeer into its maw over a hundred millions of capital wouldn't falter for lack of deposits--you know that. If the Federal Reserve System could--as it could--commandeer capital, couldn't it commandeer and conscript deposits? Certainly it could and certainly it did. Every National Bank in the United States is compelled to carry in the Federal Reserve Bank in its satrapy or dependency a reserve account, i.e., the amount of money which the law compels it to carry in its reserve against its deposit liabilities. That sum of money is of course enormous and at this writing at the close of business on May 10, 1922, amounts to the stupendous sum of $1,806,464,000! This is the mightiest mound of massed deposits on this planet. And every dollar of that gigantic sum has been conscripted and commandeered into the hands of Federal Reserve oligarchs--without the capital investment on their part of one penny for its security! By a few strokes of a pen or taps of a typewriter Midas was made a piker, Aladdin's lamp was made but a tallow dip and Croesus was made a small change artist. What generations of toil and astute commercialism couldn't accomplish in centuries in the banking business adept Federal Reserve oligarchical lobbyists could accomplish--and did accomplish--by a few pen strokes! You don't know which to admire most--their supernal gall or their astute lobbying ability! But hang your cap of admiration on either horn of the dilemma which you choose you find the mightiest single mass of money on this planet swept into Federal Reserve coffers without toil, without effort, without one penny of capital contributed by them and without one scintilla of ability proven by them--except the ability of accomplished and astute lobbyists! But did they stop there--after commandeering over $100,000,000 of capital and after conscripting over $1,800,000,000 of deposits? Little you know those birds if you think it. After they had got their beaks into that capital and their claws firmly fixed on those deposits they spread their wings and took a financial flight hitherto absolutely untried--even by the boldest buzzardry of finance. Here it is, scan it, take a look at it. For generations of banking the reserve deposits of banks have always drawn a minimum rate of at least 2 per cent per annum. Why? Because of their size and because of their stability. Experience of generations had demonstrated the fairness and the wisdom of that usage. Reserve deposits rarely fluctuate--except upwards. But at a few strokes of a pen Federal Reserve oligarchs reversed the custom of generations and _conscripted this mass of deposits--the largest on earth--into their coffers without interest_! Tie a towel about your throbbing brow so that you won't get dizzy, seize your trusty pencil and "figger" a moment. You will find that on this one item alone at 2 per cent interest on $1,800,000,000 Federal Reserve satrapists and oligarchs and legalized tyrants sweep just $36,000,000 a year into their profit pouch. It's $36,000,000 a year that National Banks and their stockholders and their depositors used to get that they don't get and that Federal Reserve predacity does get! If you and a few hundred of your friends could, by astute lobbying ability, get the titanic sum of $1,800,000,000 placed in your hands, practically in perpetuity, without interest, you could do quite a bit with it, couldn't you? You could, as do those Federal Reserve oligarchs, wield the mightiest scepter of power which ever ruled man. And you could do it with "other people's money"--every penny of it--just as they do and you could do it without the investment of a penny of your own--just as they do it! Here they are: the Federal Reserve Board at Washington, really a Central Bank, dominating and domineering over the whole Federal Reserve System; the twelve Federal Reserve Banks, each one dominating and domineering over its own zone or regional satrapy; the commandeered and conscripted National Banks in each satrapy and finally their stockholders and depositors--working and toiling--at the base of the pyramid! You have seen the birth of the Federal Reserve monster, you have seen the skeleton or framework of the monster and you have seen the stuffing of the monster. The Invisible Empire were the accomplished accoucheurs at its Congressional birth; they conscripted the capital, the framework of the monster; they commandeered the stuffing, the leviathan deposits, for the monster; it is in their keeping and now what do they do with it, whom do they "do" and how do they do it? Keep right on reading and you will find out. CHAPTER V CHECK COLLECTION BANDITRY YOU have seen the birth of the monster; you have seen how it conscripted its capital at a petty six per cent interest rate; you have seen how it commandeered--at no interest rate--the mightiest mass of deposits ever gathered together on earth and you have seen how it did these things by its absolute control over the money and over the destinies of the National Banks in the United States. It could and it did and it does practically control their affairs. But it could not--except by intimidation, by oppression or by practical banditry--control the State Banks of the United States. It could not legislate them into its sheep pen for shearing, but it could attempt to intimidate, bulldoze and banditize them. This it attempted to do in this wise: One of the chief specialties of this Federal Reserve System of applied banditry is to attempt to force every bank in the United States--whether a member of its Shylockery or not--to collect checks for its benefit and advantage for nothing. In other words, where it couldn't conscript nor commandeer--purely for its own sordid profit--it proceeded to bulldoze. There are just two ways to collect money on checks, one by presenting them at the counter of the bank on which they are drawn and getting the cash and the other by sending them through the mail for remittance by draft drawn on some large city depository. The latter method obtains in 99 per cent of the hundreds of millions of checks drawn. The bank upon which the check is drawn makes a small charge of one tenth of one per cent to compensate for clerk hire, postage, stationery and the like. It is a perfectly legitimate charge in vogue and practiced for generations in banking circles. But the Federal Reserve System, with its customary greed, insists upon sandbagging this service for nothing. This arrogant rule--purely for its own sordid profit--it could and did and does enforce against its conscripted and commandeered National Banks. But State Banks--not wearing the Federal Reserve yoke of bondage--were at liberty to make the usual collection charge of one tenth of one per cent. Thereupon the Federal Reserve System had a series of fits and fell into them. From an enormous number of its banditries three typical ones are selected for your observation--merely straws showing whence blow the most arrogant winds of oppression. First take a look at the Cones State Bank of Pierce, Nebraska. "I don't want a smug lot of experts to sit down behind closed doors in Washington and play Providence to me." That is what President Wilson said--on page 60 of his book, "The New Freedom"--before he, himself, was sitting tight "behind closed doors in Washington." That is just exactly how Wood Cones, president of the Cones State Bank of Pierce, Nebraska, feels about a smug coterie of banking oligarchs known as the Federal Reserve Board at Washington and the Federal Reserve Bank at Omaha, Nebraska. First, read the subjoined affidavit about "hard boiled and armed" Federal Reserve Bank agents and then our comments on the whole proposition. "In the Superior Court of Fulton County, Georgia. AMERICAN BANK & TRUST CO., et al. vs. FEDERAL RESERVE BANK, et al. THE STATE OF NEBRASKA } SS. PIERCE COUNTY } "Personally appeared before the undersigned attesting officer, Wood Cones, who makes this affidavit to be used as evidence in the above stated case and who being first duly sworn deposes and says: "That I am, and for many years have been, the president of the Cones State Bank of Pierce, Nebraska, and as such officer of said bank, I was interviewed some time last September by a Mr. Jones, claiming to represent the Omaha branch of the Federal Reserve Bank of Kansas City, Missouri. I was urged by him to join the system. I refused and was then asked to sign a card agreeing that my bank would remit all items at par sent us by mail by the Federal Reserve Bank. I refused to sign and was told that I would be compelled to at an early date, as there was no limit to the power of the Federal Reserve Bank. "Early in October of the same year, the local express agent presented quite a number of checks on our bank from the Federal Reserve Bank and we gave him a draft for the full amount payable to the Federal Reserve Bank. A short time after, another bunch of checks of the same kind came in the same way but the express agent was instructed to collect in cash. I offered him silver dollars for the checks and he said he did not have time to count it and accepted an Omaha draft for the face of the checks. "Following this, W.S. Lower, claiming to represent the Omaha branch, came with some checks and demanded legal tender in payment. We offered him a draft payable to the Federal Reserve Bank but refused to pay him the currency without better identification than was produced by him. After considerable loud talk and threat to protest the checks he accepted a draft. Shortly after this Mr. Lower came again, properly identified, and demanded cash on checks he had and we refused payment on account of improper and insufficient endorsement. He stormed around for a day and finally accepted a draft payable to the Federal Reserve Bank. "November 14, 1919, a high powered auto containing four people, drove into Pierce and stopped in front of the Bank, but the engine kept running. Two men, W. S. Lower and M.L. Bishop, got out of the car, armed with revolvers and entered our bank. As agents of the Federal Reserve Bank, they demanded the currency on checks drawn against the Cones State Bank of Pierce, Nebraska, of the aggregate face value of $31,900, some of which had been held for over three weeks. While one of our Bank force was counting out the money (about $13,000 more than we are legally required to carry in our vault) to Mr. Bishop, Mr. Lower told us that Bishop was a United States marshal, hard boiled and armed, and that he had cleaned up the State of Kansas and would get us anyway, so we had better sign up the agreement and keep our money. "Bishop said that a banker in Kansas who had the only bank in the town, held out against parring, and that he told him they would start a National Bank and drive him out of business, and that he personally was instrumental in starting the National Bank and said he would stick to it until he drove the Kansas bank out entirely. "Mr. Jones and a Mr. Davis came along later and claimed they were peacemakers direct from the Federal Reserve Bank of Kansas City. Said that Lower and Bishop were ---- fools and had done entirely wrong at Pierce and advised us to forget what Lower and Bishop had done and sign up as the day was near when we would be forced. They took a draft for the checks they had and departed saying that they had enough of this ---- business. "Subsequently checks were sent through the Express Company and returned by the express agent for the reason as I said that he didn't have time to count the money. "Along about the 27th day of December, 1919, a Mr. Farley came to Pierce from Kansas City and asked us to sign the paper relative to parring checks or join the Federal Reserve System. We refused. He then stated that he was instructed to stay in Pierce until he had accomplished something. From that date until the day of making this affidavit Mr. Farley has been here continuously and collects cash every day on checks sent him by the Federal Reserve Bank. "On January 5, 1920, a Mr. J.G. Bryan came in from Kansas City and he and Mr. Farley have been instrumental in trying to start a National Bank at Pierce, devoting practically their entire time collecting cash on checks sent by the Federal Reserve Bank upon banks in Pierce and promoting a National Bank that they will compel the banks of Pierce to join the system. Our customers report to us that these men have told them that we are robbing them out of ten cents on every hundred dollars of their money. "On or before the 14th day of January, 1920, Mr. Jones joined Mr. Farley and Mr. Bryan and has acted as Notary Public, protesting checks presented by the aforesaid agents of the Federal Reserve Bank of Kansas City, notwithstanding such checks were endorsed on the face 'not payable through the Federal Reserve Bank, their branches or agents, nor Express Company nor Postoffice' and are continuing to protest such checks when we refuse payment of them in their hands and in one case have presented a check a second time and protested it each time. "Every agent of the Federal Reserve Bank that has been here has advised us in substance that they were spending the Government's money like drunken sailors and will not stop at any expense to force us to join the system. "One of my competitors told me that Mr. Davis told him in substance that the Federal Reserve Board had a steam roller on the way from Washington to crush me personally and ruin my bank if I persisted in refusal to comply with their demands. I subsequently called Mr. Davis' attention to this report and he personally acknowledged to me that he had made such a statement in substance. (Signed) "Wood Cones. "Sworn to and subscribed before me this 10th day of February, 1920. (Signed) "Douglas Cones. "Notary Public in and for Pierce County, Nebraska. "My commission expires September 25, 1925." The Cones State Bank couldn't be bulldozed, banditized by gun play nor coerced into the Federal Reserve slaughter pen. When the Federal Reserve System grabbed Wood Cones it grabbed a hot wire which it finally dropped, nursing its badly burnt paws! Now take a look at the Brookings State Bank of Brookings, Oregon. It wouldn't wear the Federal Reserve yoke of bondage and made the customary collection charge of one tenth of one per cent for remitting check collections. It couldn't be bluffed, bulldozed, sandbagged nor coerced and the Federal Reserve System had its usual fit. On October 8, 1920, it stationed an emissary from the Portland branch of its San Francisco Shylockery at Brookings, Oregon, for the sole purpose of collecting in cash over the counter all checks coming from all over the U.S.A., drawn on the Brookings State Bank--with the avowed object of whipping it into abject surrender. Nothing doing! Daily the Federal Reserve sub-bandit presented himself at the counter with his wad of checks and daily the Brookings State Bank smilingly handed over the cash! The Federal Reserve emissary--pursuant to orders--stuck at Brookings, Oregon, from October 8, 1920, until October 1, 1921, vainly endeavoring to wear down the Brookings State Bank. Positively nothing doing. The Federal Reserve octopus had struck at one bank where its slimy tentacle slipped. Then this Federal Reserve sandbaggery resorted to the scheme of sending out what it called "notices of dishonor" against the Brookings State Bank, whereupon the Brookings State Bank went into the United States Court and obtained from Judge Wolverton an injunction against such "dishonor notices!" Drawing cash over its counter for over a year couldn't bluff the Brookings State Bank and the United States Court forbade its fictitious "dishonor notice" game! So the octopus tried another method--equally damphoolish but characteristic of its banditry methods. There lies before us as we write a photographic copy of a "transit slip" made out by the Federal Reserve Bank of San Francisco at its Los Angeles Branch on November 19, 1921. On this "transit slip" is listed a $50 check drawn on the Brookings State Bank of Brookings, Oregon, and over against the item is marked "Bank Closed!" It is as foul a libel as even the Federal Reserve octopus ever spewed from its sac of venom! The Brookings State Bank was never "closed" for the fractional part of a second! In fact it was and is a damsite too "open" to suit the Federal Reserve thuggery! Now look at the venom spat out by this Federal Reserve octopus at the Brookings State Bank because it wouldn't do its bidding. During the year it kept its emissary there it collected $102,000 in checks. Counting his salary, expenses, expressage of currency and the like, it must have cost it at least $4,000. It could have had precisely the same service for one tenth of one per cent or just $102. Then when that didn't work it sent out its fictitious "dishonor notices" and bumped into a United States Court injunction! Then when that didn't work it sent out its lying "Bank Closed" notice on its "transit slip!" And it cowers behind the skirts of a girl clerk in trying to skulk out of this picture of malice. In the meantime the Brookings State Bank held the fort--unshackled by Federal Reserve oligarchy. Now jump down into the Atlanta Federal Reserve loot area and take a look at its banditry there and read what the United States Supreme Court has to say on this whole thuggery proposition. The method of Federal Reserve thuggery at this point was to hold out and hoard up a mass of checks and present them at one time over the counter of the Atlanta Bank and Trust Company--with the avowed object of crippling it. Here are quotations from the opinion of the United States Supreme Court handing out a solar plexus blow to this Federal Reserve thuggery. "The plaintiffs are not members of the Federal Reserve System and many of them have too small a capital to permit their joining it--a capital that could not be increased to the required amount in the thinly populated sections of the country where they operate. An important part of the income of these small institutions is a charge for the service rendered by them in paying checks drawn upon them at a distance and forwarded, generally by other banks, through the mail. The charge covers the expense incurred by the paying bank and a small profit. The banks in the Federal Reserve System are forbidden to make such charges to other banks in the System. It is alleged that in pursuance of a policy accepted by the Federal Reserve Board the defendant bank has determined to use its power to compel the plaintiffs and others in like situation to become members of the defendant, or at least to open a non-member clearing account with defendant, and thereby under the defendant's requirements, to make it necessary for the plaintiffs to maintain a much larger reserve than in their present condition they need. This diminution of their lending power coupled with the lose of the profit caused by the above mentioned clearing of bank checks and drafts at par will drive some of the plaintiffs out of business and diminish the income of all. To accomplish the defendants' wish they intend to accumulate checks upon the country banks until they reach a large amount and then to cause them to be presented for payment over the counter or by other devices detailed to require payment in cash in such wise as to compel the plaintiffs to maintain so much cash in their vaults as to drive them out of business or force them, if able, to submit to defendant's scheme. It is alleged that the proposed conduct will deprive the plaintiffs of their property without due process of law contrary to the Fifth Amendment of the Constitution and that it is ultra vires. The bill seeks an injunction against the defendants collecting checks except in the usual way. "The defendants say that the holder of a check has a right to present it to the bank upon which it was drawn for payment over the counter, and that however many checks he may hold he has the same right as to all of them and may present them all at once, whatever his motive or intent. They ask whether a mortgagee would be prevented from foreclosure because he acted from disinterested malevolence and not from a desire to get his money. But the word (right) is one of the most deceptive of pitfalls; it is so easy to slip from a qualified meaning in the premise to an unqualified one in the conclusion. Most rights are qualified. A man has at least as absolute a right to give his own money as he has to demand money from a party that has made no promise to him; yet if he gives it to induce another to steal or murder the purpose of the act makes it a crime. "A bank that receives deposits to be drawn upon by check of course authorizes its depositors to draw checks against their accounts and holders of such checks to present them for payment. When we think of the ordinary case the right of the holder is so unimpeded that it seems to us absolute. But looked at from either side it cannot be so. The interests of business also are recognized as rights, protected against injury to a greater or less extent and in case of conflict between the claims of business on the one side and of third persons on the other lines have to be drawn that limit both. A man has a right to give advice but advice given for the sole purpose of injuring another's business and effective on a large scale, might create a cause of action. Banks as we know them could not exist if they could not rely upon averages and lend a large part of the money that they receive from their depositors on the assumption that not more than a certain fraction of it will be demanded on any one day. If without a word of falsehood but acting from what we have called disinterested malevolence a man by persuasion should organize and carry into effect a run upon a bank and ruin it, we cannot doubt that an action would lie. A similar result even if less complete in its effect is to be expected from the course that the defendants are alleged to intend, and to determine whether they are authorized to follow that course it is not enough to refer to the general right of a holder of checks to present them but it is necessary to consider whether the collection of checks and presenting them in a body for the purpose of breaking down the petitioner's business as now conducted is justified by the ulterior purpose in view. "If this were a case of competition in private business it would be hard to admit the justification of self interest considering the now current opinion as to public policy expressed in statutes and decisions. But this is not a private business. The policy of the Federal Reserve Banks is governed by the policy of the United States with regard to them and to these relatively feeble competitors. We do not need aid from the debates upon the
{'title': 'The Federal Reserve Monster by Wallace Campbell and Sam H. Clark', 'source': 'Project Gutenberg', 'lang': 'en'}