Rothschild Money Trust

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deflation process was begun and thereby escaped the odium of it.
When the Federal Reserve Act was adopted the Democrats
thought they had won a great victory, but nevertheless many
well informed Republicans claimed credit for the Act and that
the bill was in fact the Aldrich Bill under a different name and
in a different dress. The Democrats thought that the Federal
Reserve Board was only a medium of contact between the twelve
reserve banks and that the banks would be governed by their respective
boards of directors and would function independently
of it. It was originally provided that a member bank could at
will convert its eligible notes into currency by simply endorsing
them and sending them into the reserve bank of its district for
discount; and the notes of the farmer and those given in the
course of commerce were in the preferred class.
This method of issuing currency was intended to supply the
adequate volume of currency and credit that the people of the
country desired and were promised by the Democratic Party.
It has all been changed since. The original purpose of the act
has been entirely lost sight of and has been grossly perverted.
Paul Warburg was right when he testified before the Senate
Committee that the system could be transformed into a good
system (for the Elders) by administration. It has in fact been
transformed adroitly by administration but more radically by
legislation.
Just prior to the panic of 1920 Congress adopted an amendment
empowering the Federal Reserve Banks to limit the discount
privileges of member banks and to refuse to discount
eligible notes. This amendment changed the whole character of
the system. It could no longer operate automatically in response
to the demands of the people. Thereafter currency could only
be issued at the discretion of the Federal Reserve Banks,—which
was subsequently changed to the Federal Reserve Board.
The Federal Reserve Banks promptly exercised this power
and promptly brought on the panic of 1920 in pursuance of the
resolution adopted at the conference between their representatives
and the members of the Federal Reserve Board on May 15,
1920. The depressions of 1920 and of 1930, and the present depression
would not have been possible except for this change in
the act.
Every step in the administration of the system and every
act of Congress amending the law since its enactment, have been