Federal Reserve and European Banking Interests

The Federal Reserve, far from being the central banking entity of the United States, instead operates as a de facto private bank, owned and managed by private banking interests in Europe and the United States. Created by national mandate in 1913 to act as the lender of “last resort” for banking interests, the Federal Reserve quickly became the principle central banking unit of wholly privately owned banks, many of which have long histories of involvement in the European finance industry. Moreover, I argue that, instead of being a government-run and supervised creation, the Federal Reserve has been subverted from its original purpose to serve the needs and desires of particular European banking families, such as the Rothschild clan. Thus, while on paper the Fed appears to be a mixture of public and private ownership, the effective role of the entity is to provide for the needs of European banking interests and crises, not stabilize and support the domestic American economy. 

The Federal Reserve is only marginally supervised by government oversight, namely through the appointment of the Chairman, who is nominated by the President and approved by the Senate. Able to appoint seven members of the Board of Governors, the President and Congress' ability to effectively manage and control what happens in this powerful banking entity is highly suspect, as the Fed in practice functions like any other private company. Though the Chairman traditionally gives lectures and testifies to Congress regarding his actions and the policies the Fed takes, it is nonetheless the private operation of the Federal Reserve that raises so many questions. Moreover, as its “monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government”, the Fed can operate with impunity (Federal Reserve). Lacking any office or organization within the government to oversee the daily operations and policy decisions of the Fed, America's central bank has zero legal accountability nor any sort of check on its monopoly over currency manipulation. In addition, major local private commercial banks are members of the Federal Reserve and appoint their own representatives to the banking conglomeration, thereby lending even more private influence to allegedly public central bank (Henderson). These twelve Federal Reserve banks are the means by which control over the Reserve is exerted.

As a private entity, the Federal Reserve is responsible to those who own its stock, namely large commercial banks. Lacking any budgetary allowance or, as it calls, “appropriations” from Congress, the Federal Reserve effectively receives funding “without congressional approval, by engaging in open market operations” (Brown). Creating money through the purchase of monetary bonds, these bonds become part of the Fed's total allowance to be used as the fractional reserve, or the money by which all private banks base their own lending practices. Guaranteeing a six percent interest rate on its stock as a matter of policy, the Federal Reserve and its private shareholders benefit financially from the government assurance of a six percent increase in stock value of the federally mandated Reserve. Thus, though the Federal Reserve itself refunds all its yearly earnings to the Federal government, the stock that large private commercial banks are forced by law to own in it is guaranteed to increase in value. The outbreak of the financial crisis in 2009 showed “the salutary effect of making the relationship between money creation and the politically preferred groups in society who pro?t from it obvious” (Westley). As it controls the money supply of the United States, the Federal Reserve thus plays a major role in determining the effect the American dollar has in an overseas market, such as Europe. 

European banking interests, then, are able to exert significant influence over the direction of the Federal Reserve through the manipulation and ownership of the smaller, private commercial banks that are represented in the governance of the Reserve. As local shareholders elect a majority of the board of directors of their own choosing to govern their particular branch of the Federal Reserve, we then see that private interests have a very real influence in controlling the appointment of the Fed's governing body. Thus, as seen in the New York Federal Reserve, the “top eight stockholders were “Citibank, Chase Manhattan, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York”. These banks, which own a majority of the New York Fed's shares, are in fact “owned by about a dozen European banking organizations, mostly British, and most notably the Rothschild banking dynasty”. Thus, these companies, owned outright or in large part by European banking interests, are able to influence the individuals who get appointed to staff their respective board of directors and are thus able to “direct U.S. Monetary policy” (Mullins).

On paper, the Federal Reserve is a mixture of public and private interests that have effectively governed U.S. monetary policy since its inception. However, a deeper look shows the simple ways in which European banking interests have a controlling interest in many of the major branches of the Federal Reserve and, in particular, the New York Fed, which operates as the single most important bank of the conglomeration. When researching the ownership of the Federal Reserve, it became clear that, while private banking interests are indeed represented in the institutional framework of the Fed, European entities control a deeply unsettling portion of the power of American currency. Instead of an open system in which ownership is public and therefore transparent, I am shocked and saddened to find an institution that can be easily manipulated by foreign banking interests, simply through the ownership of large local banking organizations who then appoint the respective Federal Reserve branch's board of directors. I feel that the Federal Reserve, despite the role it plays as a vital currency manipulator and stabilizing agent in the world economy, should be held to a higher standard and that public, domestic forces should direct the power and influence of American monetary policy, not European banking interests. Sadly, it seems that, barring a major organizational shift in the ownership and structure of the Fed, European banking interests will retain significant ownership via their puppet commercial institutions of the Federal Reserve. 

Works Cited

Baker, Colleen. "The Federal Reserve As Last Resort."University Of Michigan Journal Of Law Reform 46.1 (2012): 69-133. Academic Search Complete. Web. 1 May 2013. 

Brown, Ellen. "Global Research." Who Owns The Federal Reserve? N.p., n.d. Web. 01 May 2013. <http://www.globalresearch.ca/who-owns-the-federal-reserve/10489>. 

"Current FAQsInforming the Public about the Federal Reserve." FRB: Who Owns the Federal Reserve? N.p., n.d. Web. 01 May 2013. <http://www.federalreserve.gov/faqs/about_14986.htm>. 

Flaherty, Edward. "Who Owns and Controls the Federal Reserve." Who Owns and Controls the Federal Reserve. N.p., n.d. Web. 01 May 2013. <http://www.usagold.com/federalreserve.html>. 

Henderson, Dean. "Global Research." The Federal Reserve Cartel: The Eight Families. N.p., n.d. Web. 01 May 2013. 

<http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080>. 

Mullins, Eustace. 1983. “Secrets of the Federal Reserve”. Staunton, Va.: Bankers Research Institute. 

Westley, Christopher. "The Home of American Intellectual Conservatism — First Principles." First Principles. N.p., n.d. Web. 01 May 2013. <http://www.firstprinciplesjournal.com/print.aspx?article=1448>.