Tag Archives: federal reserve

Historical Perspective on the Federal Reserve

We now have more need than ever for wise advice, so I have been delving around in our archives to see how our forefathers handled financial crises in the past. With this in mind I have included in this posting a few paragraphs from a debate between Professor Edwin Seligman, head of the Department of Economics at Columbia University, and Professor Scott Nearing from the Rand School of Social Science.

The stated premise of the debate is that “Capitalism has more  to offer to the workers of the United States than has Socialism.” Professor Seligman speaks in support of the motion, and Professor Nearing opposes the proposition. The debate occurred on 23rd of January 1921 at the Lexington Theatre, New York City.

The debate was prefaced by  a 1911 editorial from the New York Nation magazine by Hammond Lamont who said..

“Convinced though we are that the reasoning of the socialists is fallacious, we incline to the belief that a socialist agitation may in the long run prove beneficial to this country. We were opposed to the free coinage of silver, and yet we are convinced that the two great political campaigns in which that subject was treated so fully in the press and on the platform were extremely valuable in their educational effect. Thousands, nay, millions, of men and women who had grown up without the slightest notion of economics in general and finance in particular, became fairly well versed in the topic; they were made more intelligent and better citizens; and in the end they sustained the principle of sound money. In like manner Socialism may be the means of widening intellectual horizons; it may lay before Americans a new view of some of the larger questions of life—far larger than the petty tenets of trades-unionism. It may set us to thinking; and the salvation of a republic depends upon the efforts of its citizens to think seriously about its affairs.

For one thing, Socialism is eminently a peace movement; it is steadily opposed to militarism; and it will thus help us to see more clearly the silliness of the huge naval and military expenditures in which we seem bound to rival the groaning nations of Europe. And as for other questions—we cannot believe that error will permanently prevail over truth. We are confident that individualism, in its main features, is the policy which has formed and which must preserve our institutions. But if we conservatives are mistaken, we cannot but welcome a discussion which shall open our eyes and set us right. Our attitude toward this topic, as towards any other which touches the vitals of our nation, must be that of readiness to defend our faith in open forum, to meet and conquer with reason.”

Extract from Professor Nearing…

The United States I said was owned by capitalists— worse than that owned by capitalist corporations, owned impersonally, not by individuals who have made their pile and bought their machinery -owned by Trusts, owned by great organizations with their stocks and their bonds and their big business mechanisms. I wish I had time to read you this last report of the National City Bank to show you how that ownership works out. Here is a list of the Board of Directors. This is the biggest bank in North America. Here is a list of Board of Directors: Percy A. Rockefeller, William Rockefeller, J. Ogden Armour, Nicholas F. Brady of the New York Edison Company, Cleveland H. Dodge, Philip A. S. Franklin, etc. What is the National City Bank? Why, it is the center of a great web of economic power. Here is the report issued by the Pujo Committee. At the center of the spider’s web, they put a great banking concern, J. P. Morgan & Company and around that banking concern, they group railroads, public utilities, industries, mines and other forms of industrial enterprise. At the center of the power lies the strength and the weakness of the system, lies the banker. I have not time to dwell on that further than to call your attention to this fact that the Federal Reserve System with its 30,000 banks and its Board of Directors, sitting in one place around the table, has more power than any single Institution on the face of the civilized earth, and that Federal Reserve System is in private hands. It is privately owned practically. It is under government supervision, yes, but the Federal Reserve System is the nerve center, the center of authority, the center of power and what are they going to do with this control that they exercise through their banking machine? I want to read you a paragraph from a weekly letter sent by one business house to its clients. “The War taught employing classes in America the secret and power of wide-spread propaganda. Now, when we have anything to sell to the American people, we know how to sell it. We have learned. We have the schools, we have the pulpit.”

The employing class owns the Press, the economic power centering in the banks, schools, pulpit, press, movie screen, all the power of wide-spread propaganda now. “When we have something to sell to the American people, we know how to sell it. Slavery—going to the boss and asking for the privilege of a job;—slavery—sending your child to school and having him pumped full of virulent propaganda in favor of the present system. Slavery in every phase of life all tied up under this one banker’s control. Is it true that no man is good enough to rule another man without that man’s consent? Is that still true in America or in the world? If that be true, every worker in the shop shall have the right to say who shall exercise authority over him in the shop. Every worker in an industry has the right to pick these or help these members as Board of Directors. Do you suppose the workers in the National City Bank elected William Rockefeller and Percy Rockefeller and J. Ogden Armour?. In the United States, a worker goes to work on a machine owned by the boss. He works on materials owned by the boss. He turns out a product owned by the boss. He lives in a country where the organized power of the boss concentrated in the banking system is supreme over every phase of life. He is a slave—industrial slave—because he cannot call one economic right his own and we Socialists want to have industry not only owned by those who participate in it but we want to have those who participate in industry direct the industry in which they participate. Industrial self-control, self-government in industry as Mr. Cole has put it—that is all—simple ideas— ownership by the worker of his own job, the control by a man of his own economic life.


After carefully reading the the rest of the debate I decided against including the arguments of Professor Seligman. Professor Nearings argument seems to strike more of a chord with me – especially considering the seemingly forced adoption of Socialism that we now appear to be entering.

You can of course read the full debate in our archives at the Ultrapedia library…