Chapter XI More of the Steps in the Creation of Money

growing out of the fact that a corporation deposited a Reserve cheque with them. Can you find in the whole chain where the Austin Bank paid one thin dime for its reserves, its bank credit, its $50 billion in notes, etc.? Now I have written many words in an effort to let you see how bankers have euchered the Government out of the Nation's credit — taken over the creation of money and the control of credit. How the Government must borrow from the private corporations. The story is astounding in its volume and implications. At the end of World War II the Government had issued $250 billion in bonds. At the beginning of the war, the previous bonded indebtedness was a mere $46 billion. Mr. Patman had tried to get Congress in 1943 to adopt a resolution which would make all bonds owned by banks non-interest bearing; and said at the time that "we are entering a war that will probably cost us $300 billion." Then the bonded debt of the United States increased as a result of World War II, over $250 billion, falling $50 billion short of Mr. Patman's fears. The Reserve authorities bought the entire $250 billion, and then sold part of the $250 billion to persons and corporations. They prefer this for two reasons: First, it lets them say that the people let the Government have the money to fight the war; Second, they got the bonds as a free gift from the Nation, so when they sold them to the people, as many of them as they did sell, they converted the bonds into deposits to the bank's credit. That's why they fought Mr. Patman's desire to make bonds into two classes: (a) those to sell to the people directly; (b) the rest to sell to the bankers directly. Had this been done the bankers would have been deprived of one of their richest revenue sources; for as often as they sell a bond (and they could not sell a bond if it did not bear interest) they add the price to their deposits; and as often as they buy a bond back, they give new deposits for the bonds; thus they get them back from the people just as they got them from the Government, free. The Reserve Act gave the Reserve Banks arbitrary and absolute control of credit, enabling them to increase bank loans or restrict the flow to a trickle. Their chief method is to increase or decrease the ratio between a