The Mystery of Banking

Usapang pera naman. Ano ang pera? Saan nanggaling ito? Anu-ano ang mga katangian na mayroon ang pera? Sinagot ni Murray N. Rothbard ang mga katanungang ito sa chapter 1 ng kaniyang aklat na "The Mystery of Banking." Bago natin sagutin ang mga tanong, tingnan muna natin ang kahalagahan ng aklat na ito.

Ayon kay Douglas E. French na isang banker, ang aklat na "The Mystery of Banking" ay ang tanging aklat na buong linaw na ipinapaliwanag ang sistema ng "fractional reserve banking", kung paano ito nagsimula at ang mga mapangwasak na epekto nito sa buhay ng tao (p. xi). Dagdag pa niya, bibigyang linaw din ng aklat na ito na ang "fractional reserve banking" ang tunay na salarin sa krisis na naganap noong 2008 (p. xii). 

Ayon naman kay Joseph T. Salerno, ipinapakita sa aklat na ang Federal Reserve ay isang "cartelizing device" na nililimitahan nito ang entry at nireregulate and kumpetisyon "within the lucrative fractional- reserve banking industry and stands ready to bail it out, thus guaranteeing its profits and socializing its losses." Ipinakita ni Rothbard na maraming nakikinabang sa sistemang ito kasama na ang mga "bankers," "incumbent politicians and their favored constituencies and special interest groups." Ang kapangyarihan na mag-imprenta ng pera ay ginagamit para sa kapakanan ng mga "vote-seeking politicians." Ang mga beneficiaries ng ganitong sistema ay kasama ang mga "Wall Street financial institutions, manufacturing firms that produce capital goods, the military-industrial complex, the construction and auto industries, and labor unions." (p. xxi). 

Secretly Agreed, but Publicly Attacked

While reading Murray N. Rothbard's "Mystery of Banking," I stumbled with three curious paragraphs on pages 233-234 related to the creation of the Federal Reserve. It was stated that after a secret meeting at Jekyll Island, Georgia in December 1910 of most powerful banking personalities and came up with an agreement to pass a bill to create a central bank, two economists who helped in drafting the bill and the structure of the bank publicly opposed the bill they made. The question is why? Why after agreeing with the banking tycoons of that time in secret, these economists attacked the bill publicly?

Photo Credit: http://www.prophecyhour.com/2012/07/the-creature-from-jekyll-island-by-g.html

These are the three paragraphs:

"With intellectuals and politicians now sympathetic to a newly centralized statism, there was virtually no opposition to adopting the European system of central banking. The various shifts in plans and proposals reflected a jockeying for power among political and financial groups, eventually resolved in the Federal Reserve Act of 1913, which the Wilson administration pushed through Congress by a large majority."

"Amid all the maneuvering for power, perhaps the most interesting event was a secret summit meeting at Jekyll Island, Georgia in December 1910, at which top representatives of the procentral banking forces met to hammer out an agreement on the essential features of the new plan. The conferees consisted of Senator Nelson W. Aldrich (R., R.I.), a Rockefeller kinsman who had headed the pro-central banking studies of the Congressionally created National Monetary Commission; Frank A. Vanderlip of Rockefeller’s National City Bank; Paul M. Warburg, of the investment banking firm of Kuhn, Loeb & Co., who had emigrated from Germany to bring to the U.S. the blessings of central banking; Henry P. Davison, a partner of J.P. Morgan & Co.; and Charles Norton, of the Morgan-controlled First National Bank of New York. With such powerful interests as the Morgans, the Rockefellers, and Kuhn, Loeb in basic agreement on a new central bank, who could prevail against it?"

"One particularly ironic note is that two economists who played an especially important role in establishing the Federal Reserve System were highly conservative men who spent the rest of their lives attacking the Fed’s inflationary policies (though not, unfortunately, to the extent of repudiating their own roles in creating the Fed). These were University of Chicago professor J. Laurence Laughlin and his former student, then a professor at Washington & Lee University, H. Parker Willis. Laughlin and Willis played a large part, not only in the technical drafting of the bill and the Fed structure, but also as political propagandists for the new central bank."

Source:

Rothbard, M. N. (2008). The mystery of banking. Online. Available:

http://mises.org/Books/mysteryofbanking.pdf