Pick 53 - The FED

For nearly eighty years after the charter for the Second Bank of the United States was allowed to expire, America was without a Central Bank controlled by the Federal Government. After various financial panics, particularly a severe one in 1907, many Americans, especially Farmers and owners of small businesses, lobbied Congress for banking and currency reform.  They wanted a ready reserve of liquid assets that could be used to expand and contract currency and credit seasonally within the U.S. economy.

In response to this lobby, the Aldrich–Vreeland Act was passed in 1908. The direct result of this act was the establishment of the National Monetary Commission in 1909. Over the next four years, the Commission prepared and proposed major changes in U.S. banking and currency laws. The final report was submitted to Congress on January 9, 1912.  Its recommendations  ran 59 sections--most of them very controversial in those times. The proposed legislation was known as the Aldrich Plan, named after the chairman of the Commission, Republican Senator Nelson W. Aldrich of Rhode Island.

The Plan called for the establishment of a National Reserve Association with 15 regional district branches and 46 geographically dispersed directors primarily from the banking profession. The Reserve Association would make emergency loans to member banks, print money, and act as the fiscal agent for the U.S. government. State and nationally chartered banks would have the option of subscribing to specified stock in their local association branch.

Since the Aldrich Plan essentially gave full control of this system to private bankers, there was strong opposition to it from rural and western states because of fears that it would become a tool of certain rich and powerful financiers in New York City, referred to as the "Money Trust".

From May 1912 through January 1913 the Pujo Committee, a subcommittee of the House Committee on Banking and Currency, held investigative hearings on the alleged Money Trust and its interlocking directorates. These hearings were chaired by Rep. Arsene Pujo, a Democratic representative from Louisiana^.

In the election of 1912, the Democratic Party won control of the White House and both chambers of Congress. The party's platform stated strong opposition "to the so called Aldrich bill for the establishment of a central bank." However, the platform also called for a systematic revision of banking laws in ways that would provide relief from financial panics, unemployment and business depression, and would protect the public from the "domination by what is known as the Money Trust."

Now, a full 100 years later, we are still searching for the same relief from the same financial woes. Both political parties appear to have retained their policy positions regarding how to solve these woes, but no one seems to be asking the key question: Is there some hidden value in the function of the Federal Reserve that we have overlooked. The FED has served our financial interests well for most of the hundred years it has been in operation. Why is it failing us now? 

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