FDR Chickened Out from Making REAL Economic Reform → Washingtons Blog
FDR Chickened Out from Making REAL Economic Reform - Washingtons Blog

Sunday, July 26, 2009

FDR Chickened Out from Making REAL Economic Reform

Americans are taught that Franklin Delano Roosevelt instituted massive economic reforms and regulations which tamed the banking hooligans.

True, FDR helped pass a boatload of legislation, including Glass-Steagal and many other laws which helped rein in some of the worst abuses of the robber barons of the day.

But Ellen Brown points out that FDR chickened out from making the most important, most fundamental reform: taking the power to create credit and "print" new money away from the private banksters and give it back to the federal government, as the founding fathers intended.

By way of background, remember that Milton Friedman and Ben Bernanke have both said that the Federal Reserve caused the Great Depression.

In 1932, Congressman McFadden - chair of the Banking and Currency Committee for more than 10 years, and elected to Congress on both Republican and Democratic tickets - said the following in Congress:

The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board and through the corrupt practices of the moneyed vultures who control it ...

From the Atlantic to the Pacific our country has been ravaged and laid waste by the evil practices of the Federal Reserve Board and the Federal reserve banks and the interests which control them ... This is an era of economic misery and for the conditions that caused that misery, the Federal Reserve Board and the Federal reserve banks are fully liable.
In a Congressional address in 1933, McFadden quoted a newspaper article by the credit manager of the Atlanta Federal Reserve bank - Charles Hemphill:
We are rapidly approaching a situation where the government MUST issue additional currency. It will very soon be the only move remaining. It should have been the first step in the recovery program. Immediately upon a revival of the demand that the government increase the supply of currency, we shall again be subjected to a barrage of skillfully designed and cunningly circulated propaganda by means of which a small group of international bankers have been able, for two centuries to frighten the peoples of the civilized would against issuing their own good money in sufficient quantities to carry on their necessary commerce. By this simple, but amazingly successful device these `money changers' -- parasites in a busy world intent on creating and exchanging wealth -- have been able to preserve for their private and exclusive right the monopoly of manufacturing an inferior substitute for money which they have hypnotized civilized nations into using, because of their pressing need to exchange goods and services. We shall never recover on credit. Even if it were obtainable, it is uncertain, unreliable, does not expand in accordance with demand, and contracts unexpectedly and for causes unrelated to the needs of commerce and industry...In our present situation the issue of additional currency is the only way out.
And in 1933, Congressman Wright Patman asked Congress the following rhetorical question:
Why is it necessary to have Government ownership and operation of banks? Let us go back to the Constitution of the United States and follow it ... The Constitution of the United States says that Congress shall coin money and regulate its value. That does not mean ... that the Congress of the United States, composed of the duly elected representatives of the people, have a right to farm out the great privilege to the banking system, until today a few powerful bankers control the issuance and distribution of money - something that the Constitution of the United States says Congress shall do.
But FDR did not heed the insights of McFadden or Patman. He kept the status quo of the Federal Reserve acting as the "central bank", even though the Fed caused the Depression.

He also maintained the Fed's power of creating money and credit, and charging the government interest on that money, even though that was contrary to the intention of the Founding Fathers and the Constitution. See this, this and this.

Because FDR chickened out, the Fed has again wrecked the economy, while the Feds member banks have raked in trillions in interest payments in financing the government debt.

In other words, the Fed's member banks have pickpocketed trillions of dollars from the American people over the years because FDR failed to make the fundamental reform which was actually needed ... returning the money-creating power to the government.


  1. The way this article is written is deceiving. FDR didn't chicken out. He was a great help to the bankers who took over our money. He did it because he was related to them.

  2. Great post, G!
    As I previously commented, in economics, when the private sector cannot or will not provide an important economic function, we call that "market failure." High unemployment is market failure. Therefore, if we're serious about the achieving the goal of full employment, the government should be the employer of last resort. These cost-positive public service jobs would be paid for by government-created money. As the economy expands in value, inflation should not occur. The historical examples that Ben Franklin wrote of in Pennsylvania, Napoleonic France, and Hitler's Germany give good indications this would be successful (of course, moral use of this economic might is essential).

    Does anyone have a policy proposal other than government being the employer of last resort that produces a win for the goal of full employment? If not, then you should champion this proposal until such time you find a better proposal.

    A little history combined with your world in the present: when you think of the most romantic city of the world, what comes to mind? If Paris pops-up, that is Napoleon's doing. Those who had no work were employed to beautify Paris. Today, do we have roads that need repair? Schools? Wouldn't you pay someone $10/hour with health care to pick the weeds and plant flowers along freeways?

    Think about the benefits of full employment as a deterrant to crimes of poverty. BTW, ALL research has shown than taking homeless people off the streets and paying for their minimal housing, health care, and feeding them is far less expensive than the crimes and emergency room treatments of leaving them on the streets. See the Interagency Council on Homelessness for details.

  3. Carl - obama, the dems, and repug/neocons have done you one better. There is a better solution and full-employment undermines it and our economic growth. Tehy have alos decided there is no need to provide healthcare for the masses. It would just undermine the "great plan".

    For young and healthy young men and women, they can generate surplus value for the corpocracy by serving the military industrial complex as a human resource that exchanges blood for oil.

    For others, full-employment is a waste - the next great “breakthrough” will be a growing appreciation of the efficiencies that result from the burning of humans as fuel. This process allows the body's organic matter to directly contribute to the economic growth of society without the thousands of years that are needed to convert organic matter into oil reserves.

    The repugs/blue dogs are looking out for our well-being. To economically prosper, America needs to burn the bodies of "undesirables" to fuel our economy. Not only will there be benefits from harvesting the poor, infirmed, or elderly that result from the laws of thermo-science, the economic benefits and economies of scale that will result from consumption of humans for fuel makes providing universal healthcare economically inefficient.

    Until people become useless to the ruling class, they participate in our economic system adding to the creation of wealth through the surplus value of their wages (if employed) or to their contributions to either the military-industrial or the medical/health/insurance complex.

    When their economic usefulness no longer serves the needs of the ruling elite, we convert the surplus value of their being into an energy commodity. The powerful interests that will benefit from this economically efficient production cannot be stopped - just consider it another example of "the-invisible hand" that guides our economy slapping you in the face.

  4. Good work on the article.

    Infowars.com has a huge "typo" in their mirror of your article. They accidentally put ten paragraphs about the swine flu in the beginning of the article.

    I contacted them through their general form, but they still haven't changed it.

    You might want to contact them.

    Jock Doubleday

  5. FDR was a fascist in my opinion. I don't think he would have wanted to abolish the FED. His entire "New Deal" was State-monopoly-capitalism as libertarian scholar Murray N. Rothbard pointed out.

  6. Jct: Nobody ever mentions how Roosevelt banned the thousands of emergency community currency scrip lifeboats that had started up resulting in the lastest estimate of 7,000,000 needless deaths. If you think FDR sacrificing a couple of thousands of sailors at Pearl Harbor was his biggest crime, wait until they realize what his banning the emergency monies did.


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