How The 1929 US Great Depression Was Created by Private Banking Interests

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Executive Summary

Private banking interests have the ability to cause depressions to achieve their political objectives.
The 1929 US Depression is one example of this.

Introduction

There is strong evidence the Great Depression was initiated by private banking interests. All of the major private banking interests were “somehow” able to get out of the market before the crash. Many bought gold. The ensuring depression further concentrated private banking power.

This is explained in the following quotation.

Milton Friedman Blames the Federal Reserve for the Great Depression

“Who was to blame for this decade-long cyclone of debt and devastation? Milton Friedman, professor of economics at the University of Chicago and winner of the Nobel Prize in Economics stated categorically. “The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by 1/3. From 1929 to 1933.” and “The Federal Reserve System has been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close banks down, in which you would have a banking crisis. And yet under the Federal Reserve System, you had the worst banking crisis in the history of the United States. There’s no other example I can think of, of a government measure which produced so clearly the opposite of the result.” – Milton Friedman

The Fed did dramatically drop the money supply from 1929 to 1933 as observed by Friedman. It appears that the Fed did exactly what the private banking interests wanted the Fed to do.

This is explained in the following quotation.

“The Honorable Louis T. McFadden, Chairman of the House Banking and Currency committee went further he charged quote, the Depression was not accidental, it was a carefully contrived occurrence.

The international bankers thought sought to bring about a condition of despair here so that they might emerge as rulers of us all.

He went on to say, “recently in one of our states, 60,000 dwelling houses and farms were bought under the hammer in a single day. 71,000 houses and farms in Oakland County, Michigan were sold in their erstwhile owners dispossessed the people who have thus been driven out, or the wastage of the Fed, they are the victims of the Fed. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery.””

Source: The Web of Debt

https://www.amazon.com/Web-Debt-Shocking-Truth-System/dp/0983330859

How Private Banks Deepened and Lengthened the Great Depression Creating an Opening for Credit Unions and Post Office Banking

Private banks not only triggered the Great Depression, but they also extended it, which is covered in the following quotation.

Paralyzed by the risks of failure, the banks that survived the Great Depression had stopped lending, thereby halting the engines of the economy. Credit unions, their advocates claimed, could provide more credit faster. Credit unions also lowered the risks inherent in lending because they knew their borrowers. By providing an infusion of consumer credit, advocates claimed, credit unions would lead to a speedy economic recovery. Filene and Bergengren knew that for the movement to have any chance at spreading, it needed to be seen as legitimate and trustworthy. And they agreed that federal government support was the best way for any financial institution to achieve trust. Filene and Bergengren sought and eventually achieved that support, enabling the movement to survive and proliferate. The first federal government boost occurred when the U.S. Postal Service asked Bergengren to organize a credit union for its employees in 1923. Also proposed, but ultimately rejected, was linking the postal savings system with the credit union movement—as many post office branches already operated credit unions. (The relationship did solidify over time, leading to legislation that allowed federal post office buildings to house credit unions.) The second round of federal support came in 1932 when President Hoover signed a house bill, referred to as “the poor man’s bill,” to authorize credit unions in the District of Columbia. Filene and Bergengren sold the bill to President Hoover as a remedy to the problem of loan sharks. The suffering endured during the Great Depression had contributed to a Populist fervor that made cooperative banking a preferred alternative to profit-motivated commercial banks. But the major animating force legitimizing the credit union came when President Franklin D. Roosevelt, already familiar with the movement, included credit unions in his expansive New Deal reforms. Roosevelt said of the credit union: “I have sort of a hunch that we owe a duty to our fellow citizens not to violate the biblical injunction against usury.”

Source: How the Other Half Banks

https://www.amazon.com/How-Other-Half-Banks-Exploitation/dp/0674286065

This illustrates that the private banks don’t have the interests of the public at heart and cannot be trusted to act appropriately in a financial crisis, which they tend to cause. This is why FDR, who himself came from a private banking family emphasized credit unions, as they could be trusted to loan to the normal person.

When a Private Banking Controlled Central Bank Causes Inflation or a Depression, Mainstream Economists Still Blame the Government

The Federal Reserve was presented as a central bank that would increase prosperity and reduce bank runs and banking instability. The Federal Reserve became increasingly privately controlled in the year after the Great Depression. However, it was still strongly a private bank in 1929. What is inconsistent is that private banking interests always blame governments for central bank errors. This is true even when private bankers and not the government are controlling this central bank.

Milton Friedman, as with nearly all economists, was a cat’s paw of private banking interests.