If the USA government isn't a corporation, then WHY does PRIVATE BANKS own the Federal Reserve?

Question

When we pay taxes it isn't to keeping our infrastructure going because other companies from all around the world have been sold it so they can put toll booths on our roads and make money that way, including in this is selling our interstate highways. Same way with electricity and gas. We pay for our own medical, and there is NO way that education and welfare and fire/law enforcement comes close to taking that amount of money. Still, to get back to my question if the US isn't a Corporation then why is it owned via the private banks?

The "Queen" and all the others who keep thinking that the Federal Reserve is owned via the government. LOOK at who is on their Board...it isn't all Americans. Look deeper than what their front webpage may say...

Answer 1

Hey Mike W, what grade did YOU complete. For you people that THINK you know what you're talking about, you haven't got the first clue. Obviously, none of you have read Title 12 of the United States Code - you know the codified federal laws.

For you "unwashed" masses, here is what Title 12 USC says:

Title 12 USC - Banks & Banking
*Chap. 3 - Federal Reserve System
*Subchap. 6 - Capital and Stock of Federal Reserve...

Section 281. Capital - No Federal reserve bank shall commence business with a subscribed capital less than $4,000,000.

Section 282. Subscription to National Stock by National Banking Association - Every national banking association within each Federal reserve district shall be required to subscribe to the capital stock of the Federal reserve bank for that district in a sum equal to 6 per centum of the paid-up capital stock and surplus of such bank, one-sixth of the subscription to be payable on call of the Board of Governors of the Federal Reserve System, one-sixth within three months and one-sixth within six months thereafter, and the remainder of the subscription, or any part thereof, shall be subject to call when deemed necessary by the Board, said payments to be in gold or gold certificates.

Section 283.Public Subscription to Capital Stock - No individual, copartnership, or corporation other than a member bank of its district shall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be transferred on the books of the Federal reserve bank by the chairman of the board of directors of such bank. NOTE: this is was section 283 says now, it used to say the following -- "Should the subscriptions by banks to the stock of said Federal reserve banks or any one or more of them be, in the judgment of the organization committee, insufficient to provide the amount of capital required therefor, then and in that event the said organization committee may, under conditions and regulations to be prescribed by it, offer to public subscription at par such an amount of stock in said Federal reserve banks, or any one or more of them, as said committee shall determine, subject to the same conditions as to payment and stock liability as provided for member banks. No individual, copartnership, or corporation other than a member bank of its district shall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be transferred on the books of the Federal reserve bank by the chairman of the board of directors of such bank."

So, let's see, 12 USC (a U.S. law) requires that banks within the various federal reserve districts MUST purchase the capital stock of the federal reserve. That would be like saying that every defense contractor must purchase the capital stock of the Dept. of Defense. Can ExxonMobil or ChevronTexaco purchase capital stock in the Dept. of Energy? How about Alcoa or Archer Daniels Midland purchasing capital stock of the Dept. of the Interior? They can't, BUT banking associations MUST purchase the capital stock of the federal reserve.

Don't believe me? Look up Title 12 of the United States Code yourself, just type in "Title 12 USC" into any search engine and read it yourself.

And Fedup is correct. In 1984 Ronald Reagan commissioned a study into government waste and spending. It was called the President's Private Sector Survey on Cost Control. It was comprised of people within the private business sector (CEO's, CFO's, Corporate Presidents and VP's, etc - not a bunch of academic bureaucrats). The person that headed up that Commission was J. Peter Grace, hence it's called the "Grace Commission". When the commission issued their findings, it was 21,000 pages in 47 volumes. What is of interest is a passage from the Grace Commission Report which states:

"With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government."

Now stop and think about that. Prior to 1913, there was no Income Tax, yet the government functioned well, so how did we pay for government operation. As a matter of fact, in the year prior to the Federal Reserve Act, the secretary of the treasury went on record as say the gov't was running "embarassing surpluses", that is, our coffer's were so full and over flowing that is was embarassing.

So, our country was formed in 1776, the 16th Amendment (Federal Reserve Act) didn't come into existence till 1913 -- 137 years later. So Queen and Mike W, how then did the US government pay it's bills?

So, what is the purpose of the income tax? In 1945, a gentleman by the name of Beardsley Ruml gave a speech before the American Bar Association. The speech was entitled "Taxes for Revenue are Obsolete". Ruml at that time was the Chairman of the New York Fed, the most powerful of the Fed Banks and a personal advisor to FDR, so you know what this man is talking about. In his speech this is what Ruml said:

"Federal taxes can be made to serve four principal purposes of a social and economic character. These purposes are:

1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;

2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;

3. To express public policy in subsidizing or in penalizing various industries and economic groups;

4. To isolate and assess directly the costs of certain national benefits, such as highways and social security.

In the recent past, we have used our federal tax program consciously for each of these purposes. In serving these purposes, the tax program is a means to an end. The purposes themselves are matters of basic national policy which should be established, in the first instance, independently of any national tax program.

Among the policy questions with which we have to deal are these:

Do we want a dollar with reasonably stable purchasing power over the years?

Do we want greater equality of wealth and of income than would result from economic forces working alone?

Do we want to subsidize certain industries and certain economic groups?

Do we want the beneficiaries of certain federal activities to be aware of what they cost?

These questions are not tax questions; they are questions as to the kind of country we want and the kind of life we want to lead. The tax program should be a means to an agreed end. The tax program should be devised as an instrument, and it should be judged by how well it serves its purpose.

By all odds, the most important single purpose to be served by the imposition of federal taxes is the maintenance of a dollar which has stable purchasing power over the years. Sometimes this purpose is stated as "the avoidance of inflation"; and without the use of federal taxation all other means of stabilization, such as monetary policy and price controls and subsidies, are unavailing. All other means, in any case, must be integrated with federal tax policy if we are to have tomorrow a dollar which has a value near to what it has today."

So, fedup to answer your questions why do private banks own the Fed, I don't know why they must. All I know is that federal law (Title 12 USC) required them to do so.

Answer 2

Private Banks do not 'own' the Federal Reserve.

To summarize...

The Federal Reserve System is a congressionally-chartered agency like the USPS and NASA. It is organized with a 100% government agency at the top (the Board of Governors), and branches beneath them that resemble corporations. (http://www.federalreserveeducation.org/fed101/structure/ )

The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it's charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level. Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code)

The 12 branches are organized similar to private corporations. But because there are no 'articles of incorporation' filed in any state, there is not a legal mechanism for private ownerhip. Member banks are required to buy shares in their branch. They can vote for 6 of their 9 board members. The shares get a standard 6% dividend. These shares cannot be sold on the open market. All 'profit' from the Federal Reserve branches are turned over to the Treasury at the end of the year. (that's been about 95% since 1913).

- Re " When we pay taxes...there is NO way that education and welfare and fire/law enforcement comes close to taking that amount of money."

I would like to encourage you to actually examine the Federal Budget and look at revenues and expenditure.

The unforunate truth is that the U.S. spends far beyond what it takes in.

Answer 3

The reason why the Fed is funded by private banks is because we switched from the gold standard to a debtor state many decades ago. This was so a small, fortunate few could benefit from the contributions of the many. It also creates the illusion that the government has more money than it does. If you are operating on debt, if you run out of money on paper, you just print more. That is why our country is in a state of near financial collapse. If a business ran the way the Fed does, it would have been bankrupt a long, long time ago.

Ron Paul wants to go back to a system by which our country's wealth is based on a tangible (much like gold) so that we have an actual commodity by which our value is measured. We may look less financially powerful on paper, but at least our debt would be minimal and our value would be based on something other than fiction. Of course, we'd have to pay off the deficit first. But over time, it's possible for Ron Paul's strategy to work. If we don't do this, we will collapse. It's just that simple.

Answer 4

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

It exists in a quasi "Twilight Zone" within and apart from the constitutional 3 branches of government.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

Answer 5

The Federal Reserve is owned by the Government not Private Banks....

In fact The Federal Reserve governs private banks in what they can and can not do. They also provide services to financial institutions and operates as the Bank to the Government.

You need to get your facts straight.

http://www.federalreserve.gov/aboutthefed/default.htm

Scroll to the bottom and either download the booklet or take the Fed 101 ...

Answer 6

I debated whether I should even bother answering another obvious conspiracy theorist question.

First, many conspiracy theorists misinterpret the meaning of "United States is a corporation". When this phrase is used in court cases and even in legislation, it is used mainly to identify that the United States Government functions similar to a corporation in regards to tort claims, the ability to enter into contracts, take, hold, and convey property. Basically, it "is a legal being capable of transacting some kinds of business like a natural person, and such a being is a corporation." (State of Indiana vs. Woram.)

Now to the second part of the question, the Federal Reserve is NOT owned by private banks. As other answers have pointed out, the Federal Reserve is setup in accordance with LAW. Specifically, Title 12 U.S.C. Chapter 3. In that law, it specifies that in order for banks to become MEMBERS of the Federal Reserve system, they must SUBSCRIBE to shares in the Federal Reserve district bank. The amount of their subscription is set to a MINIMUM SPECIFIC AMOUNT as a percentage of their paid-in capital. These shares that the member banks subscribe to cannot be sold, traded or even given away. Also, private persons, corporations, and foreign governments CANNOT OWN Federal Reserve shares other than a very small amount. Federal Reserve shares are not traded on any exchange either.

I have a question for you. If the Federal Reserve is a private corporation, then why does the Federal Reserve pay excess earnings to the U.S. Treasury? If the Federal Reserve was owned by private banks, wouldn't you think they would keep all Federal Reserve earnings? In 2006, the Federal Reserve paid $29.1 billion to the U.S. Treasury out of the $36.8 billion in income.
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf

Look at the Federal Reserve Board? The Federal Reserve Board of Governors are all appointed by the President. The Boards of the Federal Reserve Banks are partially selected by the member banks and partially chosen by the Federal Reserve Board of Governors. Most members of the Board of Directors of a Federal Reserve District Bank cannot be an officer, director, or employee of ANY bank. Some of the directors cannot even own shares of ANY bank. This is prescribed BY LAW. So giving my answer a thumbs down means nothing other than you don't know what you are talking about.
http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_00000303----000-.html

Also, the Federal Reserve doesn't print money. The Bureau of Engraving and Printing (a part of the Treasury Department) prints money. The U.S. Mint makes coins. I would rather believe in verifiable LAW and facts. I don't fall for conspiracy theory blather that can't be verified by anything but other conspiracy theories.

Edit: Stock of the Federal Reserve District Banks - People misunderstand the purpose behind the subscription to stock that member banks are required to make. The main purpose was to provide a method for banks to become members of the system and a method to provide some revenue to the member banks in return for the loss of the use of that capital. The shares actually do not provide any additional rights to the holders. Common shares in a normal corporation usually give the holder voting rights on the election of most members of the board of directors and other issues the board deems in the interest of shareholders. These common shareholders get a single vote per share of stock they hold. Federal Reserve Bank stock does not convey all of those rights. While they do get to vote on six of the nine members of a district bank's board of directors, each bank only gets ONE vote. Also, each bank can only nominate TWO of the six members they get to vote on. Also, those nominees can not be a director, officer, or employee of any bank and half the nominees cannot even be shareholders of any bank. The other three members of the board of directors of a Federal Reserve district bank are chosen by the Board of Governors.
Title 12 U.S.C. SubChapter 7
http://www.law.cornell.edu/uscode/html/uscode12/usc_sup_01_12_10_3_20_VII.html

In answer to a question in another answer, YES, the Federal Reserve is audited and is audited every year. For the past few years, the Federal Reserve district banks have been audited by PriceWaterhouseCoopers. Anyone can view the last few audit reports ONLINE at http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf
The Federal Reserve system audits are part of the Federal Reserve's Annual Report to Congress.

Answer 7

The Federal Reserve banks are semi-governmental agencies. While the stock is held by the member banks, this does not give those banks any control over the Fed. It is simply a condition of participating in the Federal Reserve System. In any case, this "ownership" in no way indicates ownership of the country.

Answer 8

I don’t believe it is owned by the private banks. I think you are confusing our debt with our budget. Our debt is owned by private banks. We borrow money to no end to cover the cost of our Politicians pet projects. We setup a system in which the working man is working solely for the government for the whole of the first quarter of the year. Our finance is a mess. I am personally tired of see publics funds used to build toll roads that are sold to private companies. I am tired of seeing Public funds used to build Baseball facilities in order for the major League baseball association to rake in Billions of dollars. I am tired of seeing public funds bailing out privately own airlines so they can turn a profit for their stock holders. OK we may not be wholly owned by private companies, but they sure are pulling our strings. 

Answer 9

How can you anyone be so daft as to believe what the federal reserve say about themselves on their own website? Idiots, and no wonder you have us classed as 'sheeple.'

Someone said that we work the 1st quarter of each year for free. How do you think the pyramids were built? Slaves were used to work for the government for free...then, in England many years ago, people had to work on church lands for free also for fear of god....recurring theme here is FEAR.

The federal reserve is about as federal as fedex. They are owned by bankers.

For every single dollar that the government requests, the federal reserve prints it, and gives it to the government.

On said dollar given to govt, federal reserve charges interest, so that the public who have no choice but to vote for a government, have to pay taxes on a continual basis, with no hope at all of ever having the nation being debt free.

It is an incredible scenario and possibly the biggest case of business fraud ever...it is a continual cyclical loop of printing money, then charging interest, then keeping the working class down to maintain the elite.

How do you think that presidents of the US are connected to British royalty going back to 1066, and further back to Egypt? Is it just another coincidence? Evidence of protected bloodlines? Evidence of money scamming of the masses?

Think what you like but I will leave with this quote;

...give me control of a nations monetary system, and I care not for it's laws or constitution...Rockerfeller, early 20th century.

Answer 10

Because the US government is a corporation.

Answer 11

Ask this question, Has the Fed been audited and is the money trail clear as to were all the money goes?