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In 1941 a rather interesting exchange took place between the Governor of the Federal Reserve and a member of the House Committee on Banking and Currency, Mr. Wright Patman.

Mr. Patman: Do you believe that people should pay their debts generally when they can?

Mr. Eccles: I think that depends a good deal on the individual; but of course, if there was no debt in our money system - there would not be any money. [emphasis added]

Mr. Patman: Suppose everyone paid their debts, would we have any money to do business on?

Mr. Eccles:  That is correct. [i.e., No, there would not be any money on which to do business.]

Mr. Patman: In other words our system is based entirely on debt.

 

A little later another astonishing admission emerged. The Federal Reserve, at the time, held over 2 billion dollars in government securities - government IOU's. How did they get the money to buy all these securities when their stock was a tiny fraction of that amount? According to the Governor of the Federal Reserve, they simply created it out of a congressionally granted right.

Mr. Eccles: "We created it."

Mr. Patman: "Out of what?"

Mr. Eccles: "Out of the right to issue credit money."

Wouldn't it be nice if Congress would allow your corporation to obtain interest bearing negotiable securities out of thin air simply with the stroke of a pen? You would never have to work another day in your life - except to keep everyone else from ever discovering your secret.

Read the bill that made all this possible. 
The Federal Reserve Act of 1913 (2.02M).

 

Other Congressional Acts on money

The Coinage Act of 1792 (DownloadPDF-537K)

The Coinage Act of 1834 (DownloadPDF-163K)

The Coinage Act of 1837 (DownloadPDF-695K) 

The Coinage Act of 1849 (DownloadPDF-180K) 


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© 2005 Peter Allison