The Right To Issue Credit Money
1941
USA
On September 30 Marriner Eccles the Governor of the Federal Reserve System gave testimony before the House Committee on Banking and Currency. The purpose of the hearing was to obtain information regarding the role of the Federal Reserve in creating conditions that led to the depression of the 1930s. Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933.
"Eccles: We created it.
Patman: Out of what?
Eccles: Out of the right to issue credit money.
Patman: And there is nothing behind it, is there, except our government's credit?
Eccles: That is what our money system is. If there were no debts in our money system, there wouldn't be any money."
In the spring of 1941 President Roosevelt ordered the navy to patrol the shipping lanes to Europe. In November 1941 the Neutrality Act was partially repealed. By the end of hostilities in 1945 400,000 US troops were dead and 60 million people worldwide. The war ended in 1945.
1942
England
In his William Temple's initiative the Archbishop of Canterbury, using typical English understatement, wrote:
"In the case of money, we are dealing with something which is handled in our generation by methods that are extremely different from those in vogue a century or half century ago….we have now reached a stage where something universally needed - namely money, or credit which does duty for money - has become in effect a monopoly…
"The private issue of new credit should be regarded in the modern world in just the same way in which the private minting of money was regarded in earlier times. The banks should be limited in their lending power to the amount deposited by their clients, while the issue of newer credit should be the function of public authority.
"This is not in any way to censure the banks or bankers. They have administered the system entrusted to them with singular uprightness and ability and public spirit. But the system has become anomalous, and, as so often happens when anomaly has persisted through a long period of time, the result is to make into the master what ought to be the servant." [1]
1944
USA
IMF and World Bank Articles of Agreement are formulated at the International Monetary and Financial Conference in Bretton Woods, New Hampshire. Forty-four countries participated.
[1] As quoted in Ch. 20, The Lost Science of Money
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