Chapter XIX Money in the Atomic Age

the 20 percent reserves required against deposits of $100,000,000! End of quote. The parenthesis enclose my explanatory statements. — S.W. Adams, author of "The Legalized Crime of Banking." The Reserve authorities may do this without consulting the bank. Too, you will note that the Reserve authorities' cheque "created" two $20 million funds, and the third created $100 million: (a) it created for the seller of the securities $20 million bank deposits, subject to cheque; (b) then it went to the Reserve Bank to clear, and "created" $20,000,000 bank reserves to the credit of the commercial bank, and it could have demanded $20,000,000 in cash, but, of course, it didn't do that, so it left it there to the credit of its account; then the commercial bank too credit on its own books $100 million bank credit. This they used to make loans to customers, or to buy investment obligations - mortgages, promissory notes, debentures, deeds of trust, corporation stock, et cetera. In making loans and in buying investments obligations, they converted the $100 million into bank deposits, subject to cheque wherewith "business men and other persons make the bulk of their monetary payments." Adding the $20 million the stock seller deposited in his bank, and we have added in new money to our money supply $120 million! And in addition to that the commercial bank holds $100 million in notes, mortgages and other investment obligations, which increases our monetary fund another $100 million, making a grand total of $220 million monetary values, which grew out of the Reserve authorities buying only $20 million corporation stock. And remember the Reserve authorities wrote a cheque against no funds, which would make it a hot cheque if you wrote one against no funds, so the $20 million of corporation stock became the property of the Federal Reserve Corporation, gratis, the $100 million of bank credit became the property of the commercial bank, gratis, which it used to buy $100 million of investment obligations; and when the commercial bank collected all notes, or resold all corporation stock they may have bought, the banker had $100 million plus interest, less cost of doing business, gratis — and not a penny cost the bank one thin dime! "We boast of