Dr. Martin A. Larson, now 93 years of age, has spent many of those years studying the Federal Reserve System and his published views are studied internationally. He considers the Federal Reserve System as a critically destructive deception played on the American people by an intensely self-serving group. He gave the clearest explanation we've ever heard in a speech he made at the Arizona Breakfast Club. (4/79; updated 10/92 --ed.)

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Andrew Jackson, as President of the U.S., told the international banking monopoly: "You are a den of vipers and thieves! I intend to rout you out and, by the eternal God, I will rout you out!" He refused to renew the central bank's charter.
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Today I'm going to talk about the Federal Reserve System, its origin, its background, its operation, what it has done and is still doing, to the American people.

I would say, first of all, that, together with the Internal Revenue Service, it constitutes the twin instrument for reducing the American people to economic servitude. It is especially dedicated to the oppression and the destruction of the middle-class, which is the backbone of our nation, the great producing element therein, and the only source which can possibly maintain this county as a Constitutional Republic.

Together with the Internal Revenue Service, the FRS has established a vast system of extortion, bribery, and tyranny. This has been done in so subtle a manner that most Americans are not even aware of what is being done to them.

First of all, the Federal Reserve System is not a governmental financial system. It is privately owned and controlled by American financiers who are operating in conjunction with international financiers. It is operated for the profit of the member banks by taking away from the American citizens a major portion of their personal production. It is destructive and unconstitutional.

Congress had no authority to turn over to a private organization the monetary and financial system of the United States.

The one great power which is mandated to Congress -- the control of our monetary system -- they turned over to a private organization of investors. In essence, our American government was consciously subverted from its Constitutional basis.


Lets talk about our monetary history. During the Revolution we had a Continental Congress; it could not grant itself the power to collect taxes, but it was called upon to finance the Revolutionary War. So they printed  a currency note, called Continentals. 
The first Continentals circulated for a short time at par, but within a few months they went down to forty-for-one, then a thousand-to-one, when they hit five thousand-to-one approximately two years later, they were waste paper.

However, since the government had assumed the responsibility of issuing this money, the Founding Fathers felt it was their duty also to redeem this money. As methods of doing this were discussed, speculators went out and bought millions of dollars of the Continentals and they began pressing Congress to redeem them at full par. The Hamiltonians and the bankers wanted them redeemed at full par.
Jefferson said no, because it would reward the speculators as well as create a national debt of $400 million; which they had no income to meet.

He therefore suggested that Congress redeem the Continentals at their original value. The result was that Congress paid $72 million to redeem the Continentals.

Some of the speculators who had bought it up at five thousand-for-one made large fortunes as did some members of Congress.

As a result of this experience, the Founding Fathers said the country must establish a monetary system in which money will retain its value generation after generation. They wrote two provisions into the Constitution to guarantee that we would forever  have a solid monetary and financial system in the United States for which the Congress should be responsible.

These provisions were: Congress shall have the power to coin money and regulate the value thereof and of foreign coin. That meant that Congress and only Congress would have the power to declare the value of the unit of currency. And they did so by saying that a silver dollar would constitute the unit and that it would consist of 412-1/2 grains of standard silver, 376% grains of pure silver. They also made provision for the coining of a gold Eagle, that would be worth approximately ten silver dollars.

However, the bankers insisted upon having the power to control the currency and the monetary system.

Jefferson stood on one side, he wanted a Constitutional currency; but Alexander Hamilton, who opposed him, became the Secretary of the Treasury under Washington and was the leading intellectual of what was known as The Federalist Party, which dominated President Washington. They were able to put through the first United States Bank. Basically. It was owned by private interests under government legislation and authority.

The first United States Bank was able to control the currency. It made loans to whomever they wished. It was financed by the federal government; it issued the bank notes which were used throughout the country; and in the end, it gained power of government.

When the charter of the first United States Bank expired in 1811, James Madison was President. He was a close ally of Jefferson and he killed the Bank. There was no central bank between 1811 and 1816.

However, something occurred within that period which was of great consequence to the American people and to the fate of this nation. During the War of 1812-14 it again became necessary to raise large amounts of money to finance it. The bankers demanded enormous interest rates.

(I have estimated that the bankers made $75 million from the American Revolution, $125 million from the War of 1812-14, $3 billion out of the Civil War and $30 billion from the First World War. The amount of profit they made from the Second World War defies comprehension. It is in the trillions of dollars.)

As a result of the financing of the War of 1812, the pressure from bankers and speculators was so great that Madison was forced to accept the Second United States Bank, chartered in 1816, for a twenty-year period. As a result of its establishment, the people in the country were split into two parties -- those who operated the financial system of the country, and those who produced the wealth.

In 1828 a man of the people was elected as President of the United States. When the bankers attempted to renew the charter of the Second United States Bank in 1832, Andrew Jackson vetoed the legislation. He withdrew the federal money from the United States banking system. The result was that this bank dried up; its resources were gone; and there was no United States Bank after 1836.

There were two years, 1835 and 1836, in which there was no national debt whatsoever, the only two years in American history when this has been the fact. And the federal government had so much money on hand that they really didn't know what to do with it. They began distributing large amounts to the states, which used it in order to build universities, to construct canals, to build roads, and a great many other important projects throughout the nation.

In 1836, there was no central bank in the United States. However, a situation arose which was not desirable or conducive to the best interests of the country. There were only state-chartered banks. There were 12,000 different kinds of currency circulating in the United States. Every bank issued its own currency, all of them theoretically based upon specie so that any person who held one of their notes could obtain silver or gold in return for them. However, there were about 5,000 different kinds of currency that were either counterfeit or totally fraudulent. It was a chaotic system, but the people were so utterly resistant to any central banking authority that they would not permit the passage of any banking system under a federal aegis which would permit a central authority to again control the monetary system of the country. And it wasn't until a great crisis arose -- the Civil War -- that the banks were again able to accomplish their purpose. It is only when great wars occur or when crises happen that the bankers are able to obtain the kind of leverage they want in order to exploit the people and take away from them most of the gains of their production.

The Civil War presented a situation which certainly was an extreme crisis. Millions of dollars were necessary to pay the soldiers, to buy the supplies, to create the armies necessary to fight that war, which lasted for four years. Lincoln, in desperation, went to the Seaboard bankers and wanted to borrow money. They told him he could have it at an interest rate of 28%! But Lincoln said, "That is an outrageous rate of interest, and we'll do something else. We'll issue a national currency."

So, for the first time, the United States Government issued a national currency which was known as "Greenbacks." There were three issues of these of $150 million each, for a total of $450 million. But, the banks were able to persuade Congress to add certain restrictions to this currency: It could not be used to pay the interest on the national debt, or to pay taxes, excises, or import duties. It could only be used to pay the soldiers, and as a means of exchange between ordinary citizens. So the Greenbacks circulated side by side with gold and silver, but it didn't take very long before the Greenbacks dropped to about 30 on the dollar. So these soldiers, who received their money in Greenbacks, were only able to obtain 30 worth of merchandise in return for each dollar of Greenbacks.

Under the pressure of the banks, the National Banking Act of 1863 was passed. This Act permitted private banks to purchase government bonds with Greenbacks at par; in other words, they could buy a million dollars' worth of government bonds for a million dollars of Greenbacks, which they had purchased at 30 on the dollar. So, for $300,000 in actual investment, they could obtain a million dollars' worth of government bonds which paid 7% interest in gold. Then the banks could use the bonds which they obtained at these prices to issue their own currency up to 90% of the amount of bonds which they held, and loan out this currency at 10%. Do you comprehend the enormity of this swindle?

This is the way the Civil War was financed. The bankers offered to loan money at 28% at the beginning, and now they obtained a good deal more -- just exactly how much more is difficult to determine, but it probably amounted to between 30% and 40% annually on their actual investment.

The National Banking Act of 1863 remained on the books into the beginning of the 20th century. However, the amount of currency which could be issued by the banks was determined by the amount of bonds they had in their vaults. Between 1866 and 1912 the national debt was reduced from $3 billion to approximately $l billion and there was, therefore, a much reduced reserve on which to create the currency and the credit which the banks needed in order to operate. As the population increased and the economy expanded, the need for currency and credit became greater and greater. Occasionally, there were terrible panics. The greatest occurred in 1873, 1893 and in 1907; but there were smaller ones interspersed among them. When these panics struck, it was like a revolution -- hundreds of thousands of people lost their property, thousands of workers walked the streets. There was no money. People had deposited their money in the banks, but the banks were closed.

Then the bankers began working to obtain a kind of currency and a financial system that would enable them to issue credit in larger amounts. Year after year, they told the people that if the country only had a central bank, then there would never have to be a shortage of currency and there would never be any more panics, or depressions, or inflation or deflation. We would all have a perfect system on which to depend in the future.

These bankers had been at it a long time, and they could wait. They knew exactly what they were doing. And their methods were so subtle, so elaborate, and so secret that the people would never know how they were robbed.

In November, 1910, a group of the most powerful men in the world and the leaders of the financial system in the United States met on Jekyll Island, off the coast of Georgia. The two most important individuals who took part in this were Senator Nelson Aldrich, the grandfather of Nelson Rockefeller, and Paul Moritz Warburg from Germany who had moved to America in 1902, and with Rothschild money, had purchased a partnership in Kuhn, Loeb & Co. in New York. He then received an indefinite leave-of-absence with a salary of $500,000 a year to go up and down the United States to organize opinion in favor of a banking system based upon that of The Bank of Deutschland. What these bankers wanted was a system that would be established by the federal government in which, the federal government would take complete responsibility for all the obligations issued by the bank. But the notes issued by the bank would be private paper and controlled entirely by the banking system. The banks would then be able to: control the money supply, determine the interest rates, and what credit would be extended; it would be a system by which they would achieve total financial control of the country and the people therein.

The conspirators spent about two weeks on Jekyll Island. It was a most secret conclave. They went to Georgia from New York in a sealed train; they used code names; they had a new group of servants who didn't know who they were; and they battled for about two weeks and gradually agreed upon certain general principles to serve as the basis for an American banking system.

When they came back, Senator Nelson Aldrich, who was a stately old solon from New England, introduced what he called "the Aldrich Banking Bill"; but, since it stank to high heaven of Wall Street, it was rejected out of hand and never got to the floor of Congress. But the wily gentleman from Germany, Paul M. Warburg, knew exactly what they would have to do in order to accomplish their goal.

"We must take away from this the stigma of private enterprise," he said. "We must convince the people that it is a government agency. We must call it the Federal Reserve System. Then everybody will think that it is a government organization and that it is constitutional. But actually it will be in the control of the bankers  for their own private benefits."

Up for grabs was the control of the production of millions of Americans.

In 1911-12 one of the greatest political battles in the history of this nation took place. The battle was between the people, who wanted to preserve a Constitutional monetary system, and those who wanted a system controlled privately, by the financiers. The sentiment ran so strongly against the Wall Street-dominated system that any politicians who came out in favor of it committed political suicide. And thats what William Howard Taft did in 1911 when he came out in favor of the bankers.

But the financiers found just the man they needed in Princeton, New Jersey. His name was Woodrow Wilson: he was perhaps the most successful and pious hypocrite in all American history. He was chosen to institute the Federal Reserve System. He had made a great many statements in opposition to Wall Street before and he was thought by the people to oppose anything from that source. When he was nominated by the Democratic convention, the convention went on record as absolutely opposed to any banking system that would be controlled by the financiers or have the blessing of Wall Street.

However, at that time, the Democratic Party was a minority in the United States and, in spite of the fact that its candidate went up and down the country, condemning the bankers, the financiers knew that the Republicans would probably win the election unless they did something unusual to prevent it. So they picked up Theodore Roosevelt, who was known as "the great trust-buster," and a great friend of the people. So he was nominated under "the Bull Moose Party."

I was a boy of about 13 at that time, and remember the pictures that I saw of Teddy Roosevelt, going up and down the country, blasting the bankers and telling them that we have to keep the credit of this nation in the hands of Congress, and so on.

Understand, now, that both Woodrow Wilson and Theodore Roosevelt were financed by the bankers whom they condemned. And poor, old William Howard Taft, who said that the proposed banking system was a good one, came in a poor third.

That's how it was put over. It was done by lying to the people. I would say that most of the things that emanate from Washington are lies, but the worst lies that have ever been told to the American people were the lies that were told in the campaign of 1912 with both Theodore Roosevelt and Woodrow Wilson promising that there would be a monetary system in which there would be no more panics, no more depressions, no more inflation, no more deflation; that we would have a currency that could be depended upon under a federal system that would guarantee the integrity of Constitutional money.

Woodrow Wilson was elected on two platforms: First, that he would oppose Wall Street bankers and, secondly, that he would keep us out of war and he did for three or four years, but then, in a reversal, he became an overt apostle of war. I remember so well his wonderful speeches telling us how it would be absolutely necessary for us to enter this war "in order to make the world safe for democracy." What he was really trying to do was to enable the bankers to collect the loans they had made to France and England.

The war was financed by the Federal Reserve System. It would have been impossible to pay the expenses of that war without it because the Federal Reserve Banks and their member banks became brokers for the sales of bonds. These bond issues were peddled all over the United States during the war and at the end of the war, a great Victory Bond issue was vigorously promoted which collected more money. WWI cost close to $40 billion. They raised about $14 billion through taxes during the war; the other $26 billion was raised by the sale of bonds and the government went into debt by that amount during the war.

As soon as the war was over, there was a period of inflation as the Federal Reserve sold still more bonds.

While debates still continued regarding the Federal Reserve System, there was one man in the Congress who really understood what was going on. Charles Augustus Lindbergh, the father of that Lindbergh known as the Lone Eagle. He said that if you establish a privately controlled system, you will create the means by which depressions and inflations will be created. A group of bankers will determine whether we shall have inflation or deflation. They'll be more powerful than Congress; and they will make the entire American people their servants.

Well, that's exactly what has happened. At the end of the war, the Federal Reserve System, in response to inflation, decided to create deflation. They did it by raising the interest rates and by other mechanisms which are at the disposal of the Federal Reserve System, and about a million farmers lost everything they had. Hundreds of thousands, even millions, of men walked without jobs on the streets of America. The Ford Motor Company came within a hair's breadth of going bankrupt.

The depression had struck so suddenly, so fiercely, that suddenly there was no money available anywhere. For about a year and a half, this depression continued and millions of people lost everything they had. The bank investors, however, rolled in wealth.

For about six or seven years, the Federal Reserve Board decided to permit prosperity again in the United States. Beginning in 1922 and running until about 1929, we had an expanding economy. People were borrowing money, building, constructing, expanding, and going into debt. And it seemed as though we had a rosy future. We were told that pretty soon there were going to be two cars in every garage and a chicken in every pot. Everybody was working.

I was in Detroit at that time and something like 6,000 apartment buildings were constructed during those years. Hundreds of thousands of homes were built. People were making money. They were becoming prosperous. But bankers do not want a prosperous and educated middle-class because it might insist upon a Constitutional government, which would spell the end of their monopoly.

So, in 1926, they decided to expand the stock market. Member banks of the Federal Reserve System loaned out more than $9 billion for speculative investments. The result was that the stock market rose rapidly from about 110 to the 470s. Fortunes were created in a short time. Then the Federal Reserve Member Banks were told to call in their loans on speculative stock investments and the stock market tumbled in October 1929 in a crash the like of which had never been known before in America or the Western world.

Men who had been millionaires were paupers a week later. There was a bridge in Akron, Ohio, called "Suicide Bridge," from which 14 or 15 of the wealthiest men in that city had leaped to their deaths. I would say that 90% of all the real estate in Detroit was foreclosed for lack of payments on mortgages or contracts.

Remember, this was done by the Federal Reserve System. It has unlimited power to create inflation or deflation, panics or depressions, anytime it pleases, by making decisions which are beyond the reach of Congress and beyond the understanding and influence of the people.


Another Roosevelt arose on the horizon. His career was probably the most immensely destructive of any person who has ever appeared on the American scene in this century. To recount the evil acts that he performed at the bidding of his masters, the bankers of Wall Street, would fill a book. One of the first things FDR did was to get the Gold Reserve Act of 1934 passed. Under that Act, all the gold that belonged to the United States Treasury was given to the Federal Reserve System. It became a crime for any American citizen to keep his own gold. This Act raised the price of gold from $22.67 to $35 an ounce. This money was paid to the miners of gold or to any foreign investor who sent it over here. But the Americans, who were forced to turn over their gold, received only $20 in Federal Reserve notes for a $20 gold piece.

The circulation of gold coins ceased in the United States. And there was no more redemption of currency in gold. Gold could be mined at that time for about $12 an ounce.

Between 1934 and 1941, 18,000 tons of gold were purchased by the Federal Reserve System and placed in the vaults in Fort Knox. It was owned by the Federal Reserve and the government was simply the custodian thereof, and American taxpayers paid the storage fees.

The depression worsened. Money became more and more scarce. Money almost disappeared from the American scene. I would say that about 80% of the people who had private jobs were out of work; governments were using script to pay their employees. I counted 400 vacant stores on one street in Detroit in 1934.

And this depression went on, year after year, and there were very few who had the slightest understanding as to the role of the Federal Reserve System. Remember, that the group of seven men who operate the Federal Reserve System could have ended the whole thing in two weeks if they had wanted to. But they had certain long-range objectives.

They wanted to liquidate the middle-class. As Andrew Mellon said, who was then not only Secretary of the Treasury, but also the President of the Federal Reserve Board: "We shall liquidate the farmers, we shall liquidate the small businessmen, we shall liquidate labor, we shall liquidate investments, we shall liquidate the stock market and then the worthy people will pick up what is left." The Wall Street bankers bought America. They bought it at 10 on the dollar. And the American people were again completely denuded of their savings and labors.

The Federal Reserve System operates over and over again for the purpose of liquidating the middle-class whenever they become successful enough to approach independence, to save some money, to build estates or to consolidate power.


We would have gladly borne the tax on tea if we [American people] could have been granted the power to create our own money. --Benjamin Franklin

How is the Federal Reserve System structured? There are 12 branch banks in the Federal Reserve System. There are seven members of the Board of Governors. The members are appointed by the President for 14 years', staggered terms and they must be approved by the Senate. No President, therefore, can out-serve any member he appoints to the Federal Reserve board. Once these men are in office, they are absolutely beyond the control of Congress. The Congress has no control over its operation. Congress can pass any law, but these seven men can get together and negate the effect of that law. In fact, during the 30s, Congress attempted several times to do something about the depression, but the Federal Reserve board negated the effects of the law through its control of the monetary system.

Congress has the power to abolish the Federal Reserve System and replace it with something else. But it has no power to regulate its operation. Each of the 12 banks of the F.R.S. has nine members on its board of directors. There are three classes of directors: One class, consisting of three, is elected by the stockholders of the member banks; three are also elected by the member banks but are persons who are active in agriculture, trade, or commerce in the area; three are appointed by the Federal Reserve board itself. That leaves six of the nine representing member banks and therefore they have control over the operation of these banks. So, even though it seems to be a federal or government system because it is sponsored by the government and because it is set up by a law that is passed by the government, it is actually a system of private bankers who operate entirely for their own benefit.

There is an entity known as the Open Market Committee, which operates through the New York branch of the Federal Reserve System. Did you know that the F.R.S. itself has at the present time (1979) approximately $100 billion worth of government bonds in its vaults. How does this New York branch of the F.R.S. obtain $100 billion worth of government bonds which they buy on the open market? They have an unlimited checkbook on the U.S. Treasury. Secondly, they have unlimited power to print any number of Federal Reserve Notes that they want. And so they purchase this $100 billion worth of bonds, either by printing Federal Reserve Notes or by writing checks upon the U.S. Treasury. Did you ever hear of such a thing? False paper based on false promises. That's the way it operates!

Why are they so anxious to keep these bonds? Because these bonds serve as the basis for the creation of credit. The Federal Reserve determines what reserves the member banks must have in order to create credit. They can set that reserve requirement anywhere from 10 to 26. If the reserve requirement is 10, then for every million dollars' worth of bonds they have in their vaults they can loan out $10 million of credit. If they set it at 26, they can only loan out about $4 million. So, if they want to create inflation, they reduce the reserve requirements and, if they want to create a depression, they raise the reserve requirements and/or, at the same time, they generally increase interest rates.

How do the member banks get these bonds? Oh, that's the most beautiful thing you ever heard of in your life! The member bank will make an application to the agent of the nearest branch bank of the Federal Reserve System and say, "We would like to purchase $20 million worth of government bonds." Then the Treasury prints these bonds and delivers them to the branch bank. The branch bank pays for them with a check created by the credit based on those same bonds. It doesn't cost them a dime!
This will continue until the American people understand how they are being robbed. A new monetary system has to be established to protect the freedom our founding fathers meant us to have.

I would say that we must re-establish the kind of Constitutional system in this country that Jefferson wanted. He said that the Treasury only, should issue money. He said that all money should be redeemable either in gold or in silver. And that's the reason our Founding Fathers put into the Constitution a provision which says that no state shall make anything but gold and silver tender in the payment of debts. (Our former Silver Certificate was fully redeemable for silver on deposit in the US Treasury. That was sound currency. So was the gold note. both were honored on demand. But our present Federal Reserve Notes are not redeemable for the issuers will give nothing of value for them). If we go back to that kind of system and do away with fractional reserve banking, we may be able to re-establish a Constitutional government in the United States.


Dr. Larson has written columns frequently in The Spotlight. The Truth Seeker would like to thank him for taking valuable time to share his latest thoughts regarding the Federal Reserve System.