[Congressional Record Volume 140, Number 17 (Thursday, February 24, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 24, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                    HOW THE FEDERAL RESERVE OPERATES

  The SPEAKER pro tempore. Under previous order of the House, the 
gentleman from Texas, Mr. Gonzalez, is recognized for 5 minutes.
  Mr. GONZALEZ. Mr. Speaker, for several days I have taken advantage of 
this privilege and have addressed my colleagues for 5 minutes on the 
subject matter of the Federal Reserve Board and some of the current 
aspects of its activities that have become a little bit more than 
usually noticed and reported.
  After doing this now for several weeks, these 5 minute addresses, I 
am reminded of the fact that very few of my colleagues seem to 
recognize the nature of this system that has grown and identified as 
the Federal Reserve System of our country.
  For years, going back to long before anybody would make use of this 
privilege known as special orders, but which not always have been 
labeled as special orders, few members, unfortunately, and it shows 
today in the deliberations concerning this privilege, know the history 
of this.
  When I came 32 years ago, 10 days after I was sworn in, I made use of 
this privilege, and have been doing so since then. Of course, at that 
time there was no thought of any kind of external coverage, such as 
television, such as we take for granted today, and the practice was 
that you weren't even supposed to come physically on the House floor 
and make the speech. You could write it out, submit it, and it would be 
printed as if you had uttered it on the House floor.
  But I was conversant with the history of this. And I said no, I don't 
think that is the intention of this privilege. The idea is that in a 
numerous body such as this, a Member shall have an opportunity to 
expand and enlarge on a given subject matter that impresses him much, 
agitates him very much, and which during regular debate, the 
limitations of a numerous body prohibit, this is his opportunity.
  But it was always intended that it was an address. And when I saw 
that they weren't doing that, I thought it was not in keeping and 
conformity with the intended purpose. So I would come physically, and 
some of the old-timers thought I was quite a little bit rare in doing 
it.
  Nevertheless, from the beginning in the sixties, I addressed this 
question of the Federal Reserve Board. What I want to do in just 1 
minute is just say this: I don't thing the majority of my colleagues in 
the Congress or the citizens outside of the Congress really know. For 
instance, the question I get from almost every State, a citizen in 
every State that has corresponded with me or has called me on the phone 
is, is the Federal Reserve Board a federal governmental agency, or is 
it a private agency?

  I will laugh and I will say, ``This is an issue that has been 
discussed, and you have had about 50 percent of the Federal Reserve 
Chairmen and others and economists saying it is a political entity of 
the Government. And you have had others say, ``No; it is a strictly 
private entity, a creature of the private commercial banking systems of 
the United States.'' My colleagues, unfortunately, that version is far 
more closer to the truth than the other.
  In the first place, the banks constitute the constituency of the 
Federal Reserve Board. It is only bankers who are selected to govern. 
And that narrow view, naturally, sooner or later, is in conflict with 
that view that should be the national policy makers' view, that is, the 
Congress, from the standpoint of the greatest interest of the greatest 
number.
  Now, does the President sit in on the deliberations of the board? Of 
course not. Does the Congress have anything to do with the 
deliberations, or is it privy to the deliberations? Of course not. Does 
the Congress or the President or the executive branch own stock in the 
Federal Reserve Board? Of course not. The commercial banks own it.
  Now, If you have an issue and the bankers are making the decision, 
and this is an observation that was made in the very beginning of our 
nationood when the First Continental Congress was formed and the need 
for a banker or physical agent was apparent, and the decision was made 
to charter the Bank of North America in Philadelphia, and Thomas 
Jefferson inveighed against the bankers, because, yes, they would be 
the bankers, but the Congress would have to pay a prohibitive usurious 
interest rate, and it was only because of men like Jefferson that that 
wasn't done.
  So, I just want to say that I will try to explain a little bit more 
about what the Federal Reserve Board really is so that then perhaps I 
can be better understood where I am coming from.

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