"As a direct result of logical and relentless agitation by members of Congress, led by Congressman Wright Patman as well as by other competent monetary experts, the Federal Reserve began to pay to the U.S. Treasury a considerable part of its earnings from interest on government securities. This was done without public notice and few people, even today, know that it is being done. It was done, quite obviously, as acknowledgment that the Federal Reserve Banks were acting on the one hand as a national bank of issue, creating the nation's money, but on the other hand charging the nation interest on its own credit -- which no true national bank of issue could conceivably, or with any show of justice, dare to do."
The potential for the Fed to act as a truly "federal" central bank that issues loans to the public and return the profits to the government has been there since the 1960s; but until now, the Fed and the Administration have not made much use of it. The Fed has used its dollar-issuing power only to the extent necessary to provide the reserves to backstop bank runs. The vast majority of the money supply has continued to be created privately by banks in the form of loans; and as Congressman Voorhis observed, "where the commercial banks are concerned, there is no such repayment of the people's money" as there is with the Federal Reserve. Commercial banks do not rebate the interest they receive, although they also "'buy the bonds with newly created demand deposit entries on their books -- nothing more." This, Voorhis maintained, was a violation of the Constitutional provision that "Congress shall have the power to coin money [and] regulate the value thereof."
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
1
1
