Creature From Jekyll Island by G. Edward

principle of government by the people, and which assumes a high level of understanding among the electorate, the people themselves have blocked out one of the most important factors affecting, not only their government, but their personal lives as well.

This attitude is not accidental, nor was it always so. There was a time in the fairly recent past when the humble voter—even without formal education—was well informed on money matters and

vitally concerned about their political implementation. In fact, as we shall see in a later chapter, major elections were won or lost depending on how candidates stood on the issue of a central bank.

It has been in the interest of the money mandarins, however, to convince the public that, now, these issues are too complicated for novices. Through the use of technical jargon and by hiding simple reality inside a maze of bewildering procedures, they have caused an understanding of the nature of money to fade from the public consciousness.

WHAT IS MONEY?

The first step in this maneuver was to scramble the definition of money itself. For example, the July 20, 1975 issue of the Nezv York 136

THE CREATURE FROM JEKYLL ISLAND

Times, in an article entitled 'Money Supply: A Growing Muddle,'

begins with the question: 'What is money nowadays?' The Wall Street Journal of August 29, 1975, comments: 'The men and women involved in this arcane exercise [of watching the money supply]

aren't exactly sure what the money supply consists of.' And, in its September 24, 1971 issue, the same paper said: 'A pro-International Monetary Fund Seminar of eminent economists couldn't agree on what money is or how banks create it.'

Even the government cannot define money. Some years ago, a Mr. A.F. Davis mailed a ten-dollar Federal Reserve Note to the Treasury Department. In his letter of transmittal, he called attention to the inscription on the bill which said that it was redeemable in

'lawful money,' and then requested that such money be sent to him. In reply, the Treasury merely sent two five-dollar bills from a different printing series bearing a similar promise to pay. Mr. Davis responded:

Dear Sir:

Receipt is hereby acknowledged of two $5.00 United States notes, which we interpret from your letter are to be considered as lawful money. Are we to infer from this that the Federal Reserve notes are not lawful money?

I am enclosing one of the $5.00 notes which you sent to me. I note that it states on the face, 'The United States of America will pay to (he bearer on demand five dollars.' I am hereby demanding five dollars.

One week later, Mr. Davis received the following reply from Acting Treasurer, M.E. Slindee:

Dear Mr. Davis:

Receipt is acknowledged of your letter of December 23rd, transmitting one $5. United States Note with a demand for payment of five dollars. You are advised that the term 'lawful money' has not been defined in federal legislation.... The term 'lawful currency' no longer has such special significance. The $5. United States Note received with your letter of December 23rd is returned herewith.

The phrases '...will pay to the bearer on demand' and '... is redeemable in lawful money' were deleted from our currency altogether in 1964.

1. As quoted by C.V. Myers, Money and Energy: Weathering the Storm (Darien, Connecticut: Soundview Books, 1980), pp. 161,163. Also by Lawrence S. Ritter, ed-, Money and Economic Activity (Boston: Houghton Mifflin, 1967), p. 33.

THE BARBARIC METAL

137

Is money really so mysterious that it cannot be defined? Is it the coin and currency we have in our pockets? Is it numbers in a checking account or electronic impulses in a computer? Does it include the balance in a savings account or the available credit on a charge card? Does it include the value of stocks and bonds, houses, land, or personal possessions? Or is money nothing more than purchasing power?

The main function of the Federal Reserve is to regulate the supply of money. Yet, if no one is able to define what money is, how can we have an opinion about how the System is performing?

The answer, of course, is that we cannot, and that is exactly the way the cartel wants it.

The reason the Federal Reserve appears to be a complicated subject is because most discussions start somewhere in the middle.

By the time we get into it, definitions have been scrambled and basic concepts have been assumed. Under such conditions, intellectual chaos is inevitable. If we start at the beginning, however, and deal with each concept in sequence from the general to the specific, and if we agree on definitions as we go, we shall find to our amazement that the issues are really quite simple. Furthermore, the process is not only painless, it is—believe it or not— intensely interesting.

The purpose of this and the next three chapters, therefore, is to provide what could be called a crash course on money. It will not be complicated. In fact, you already know much of what follows. All we shall attempt to do is tie it all together so that it will have continuity and relativity to our subject. When you are through with these next few pages, you zvill understand money. That's a promise.

So, let's get started with the basics. What is money?