Beware of False Friends

[Re: article ‘JFK vs The Federal Reserve’ in the last issue! -- BL]

Keith Wilde

Gerald McGeer, MP: "Why should a government with the power to create money give that power away to a private monopoly? And especially, why should it then borrow from the banks and pay interest?"

Graham Towers, Governor, Bank of Canada: "Parliament can change the way the banking system operates if it wishes to do so."1

The foregoing exchange is from the 1939 Parliamentary committee proceedings to discuss the first annual report of the Bank of Canada to the Government. It encapsulates an issue that has festered among groups with an interest in the nature of money and credit since at least the Great Depression days following the virtual collapse of an over-extended banking system. Money Reformers in general are incensed by the power of banks and want governments to issue money directly. The American Monetary Institute spearheaded by Stephen Zarlenga is a contemporary exemplar of this position. Zarlenga has produced a substantial book to support his call for a fourth branch of government to be in charge of "100 percent money." Other proponents of government against bankers are not so thorough in their advocacy and sometimes get inflamed by arguments that are half-baked superstitions based on fragments of "evidence "that do not make the case.

One of these inflammatory arguments is that Abraham Lincoln was assassinated by a conspiracy of international bankers who feared that he was about to curb their power over money and credit by putting the United States on a fiat, paper money standard. Lincoln had in fact been forced to issue Notes based on "the credit of the United States government" (by an Act of 1862) instead of on the promise to redeem in gold, in order to finance the Civil War. "Sound money" men opposed this and "greenbacks" did not become the norm in US monetary policy. They continued to have advocates, however, throughout the remainder of the 19th century. They were favored by people who believed that inflation is a better climate for prosperity than is deflation, and they were joined in this attitude by advocates of bimetallism. The latter was actually official policy for some time, and it means that silver as well as gold were recognized as monetary standards, a silver dollar being defined as a certain weight and fineness of the white metal. Bimetallism was favored by those who believed that there was not enough gold in the country to serve as the basis of a sufficient money supply to support a growing level of commerce. Also, of course, by people in the silver mining and refining business (depending on the price of silver for non-monetary purposes).

Whether or not Lincoln was assassinated by a conspiracy of international bankers is a question I will leave to those who find it interesting. It has spawned a more recent conspiracy theory, however, which is much easier to debunk. This one is that John F. Kennedy was assassinated by the same gang of thieves because he dared to commit the same monetary heresy as Lincoln. Unfortunately for the campaign of the Canadian Action Party, a version of this conspiracy theory was circulated widely in August of this year. The article is signed by one John P. Curran as of April 2007 and may be consulted at

In Search of Exciting Fiction

The opening paragraph reads as follows: "On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superceded by any subsequent Executive Order. In simple terms, it is still valid."

Every sentence of the foregoing is false. Kennedy did sign EO 11110 on the said date, but the intent and effect was not at all what the author claims. The research claimed by the Christian Law Fellowship is either woefully incompetent or a deliberate lie. The said Executive Order has been in fact revoked. Furthermore, it would not have had the effect of emasculating the Federal Reserve System even if it were still in force. The author was ignorant of big elements of US monetary history and did not know how to read the documents.

The Executive Order itself may be read at

The conspiracy theorists do reproduce its text accurately in observing that it gave the Treasury Department the explicit authority: "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This means that for every ounce of silver in the US Treasury’s vault, the government could introduce new money into circulation based on the silver bullion physically held there.

Accuracy ends there, however, for in his next breath the author says that this brought into being a substantial issue of United States Notes! If it were so, it contravened the Order, which called for issuance of Silver Certificates. If United States Notes were in fact issued after June 4, 1963, it had nothing to do with this particular Order. The author obviously did not know the difference between Silver Certificates and United States Notes, or he was deliberately making a big lie and depending on the ignorance of readers (too often a successful tactic). He does say that the amount of currency issued after the Order was about $4 billion. That would be a believable figure if the currency was actually Silver Certificates rather than United States Notes, for the amount of silver in the Treasury is acknowledged to be limited. That fact of physical limitation is why EO 11110 was never a threat to the dominance of the Fed. It is a picayune quantity compared to the total money and credit supply, even that many decades ago. The U.S Treasury had silver in its vaults probably as a carryover from days when the government was obliged by law to purchase a limited quantity of silver every year, if offered by suppliers, under the 19th century policy of bimetallism.

The author compounds his error in the next paragraph by asserting that "United States Notes were issued as an interest-free and debt-free currency backed by silver reserves in the US Treasury." It is highly unlikely that this statement was ever true because of the existence of Silver Certificates that were so backed. It seems from his other statements that the author has never seen a Silver Certificate, which suggests that he isn’t very old. I lived in the United States for about twelve years between 1955 and 1973 during which time I was conscious that the currency in my pocket could be labeled any one of Silver Certificate, United States Note or Federal Reserve Note, although the latter were by far the most common. I was introduced early to the distinction by university courses in US economic history and its money and banking institutions, and as a consequence I had an interest in examining the contents of my billfold from time to time.

I have not seen a Silver Certificate for a long time, on infrequent visits to the US, and it seems plausible that by this time they would all have been redeemed as the price of silver for industrial purposes rose to exceed its value as money. (If you have ever priced a silver dollar from coin collectors or a mint you will get the idea.) For the same reason, silver producers would not have been bringing their metal to the Treasury even if the Silver Purchase Acts were still in force. United States Notes are a fiat currency, the successors of Lincoln’s greenbacks. In this respect the money reformers are correct, although one of my American correspondents tells me that at some times in the past the Notes have been redeemable in gold. That cannot be anymore, of course, since the United States cancelled its commitment to redeem its currency in gold, in 1971.

As I was thinking about the preparation for this rant, I encountered some evidence that the preposterous idea of Kennedy’s assassination because of Silver Certificates may be due to the ignorance of authors rather than vicious mendacity. While browsing idly in a professor’s office last week I picked up a copy of A New Economic History of America, published in 1976 and written by Gerald Gunderson. If it is typical of such history texts published since 1975 then the blame should lie with a failure of education programs. A brief section on the money supply between the end of the Civil War and the initiation of the Federal Reserve System makes no mention of bimetallism and the silver issues. Those words do not even appear in the index, let alone any mention of silver purchase acts. The section speaks only of gold-backed money and the retirement of greenbacks as the policy of sound money advocates. The consequence is noted to have been a long period of general deflation, but with no mention of the pressure from Populists for inflation via silver backed money or greenbacks.

As for the longevity and continuing applicability of EO 11110, failure to notice that it has been revoked is the consequence of failure to read carefully. The author reproduces the following information from an official source: Executive Order (EO) 10289 dated Sept. 17, 1951, 16 F.R. 9499, was as amended by: EO 10583, dated December 18, 1954, 19 F.R. 8725; EO 10882 dated July 18, 1960, 25 F.R. 6869; EO 11110 dated June 4, 1963, 28 F.R. 5605; EO 11825 dated December 31, 1974, 40 F.R. 1003; EO 12608 dated September 9, 1987, 52 F.R. 34617.

Then he says that, "The 1974 and 1987 amendments, added after Kennedy’s 1963 amendment, did not change or alter any part of Kennedy’s EO 11110. A search of Clinton’s 1998 and 1999 EOs and Presidential Directives has also shown no reference to any alterations, suspensions, or changes to EO 11110."

He is wrong there, for it was revoked in EO 12608 in 1987. Notice above that all of the EOs above are based on EO 10289, which is officially described as "Providing for the performance of certain functions of the President by the Secretary of the Treasury."

(In other words, don’t bother the President about these administrative trivialities.)

When we get down to EO 12068 in 1987, it is titled as: "Amendment of Executive Order No. 10289 as Amended, Relating to the Performance of Certain Functions Affecting the Department of the Treasury."

(And the next lines identify the original document.)

Source: The provisions of Executive Order 10289 of Sept. 17, 1951, appear at 16 FR 9499, 3 CFR, 1949-1953 Comp., p. 787, unless otherwise noted.

And here is the wording of the original: "By virtue of the authority vested in me by section 1 of the act of August 8, 1950, 64 Stat. 419 (Public Law 673, 81st Congress), and as President of the United States, it is ordered as follows:

"1. The Secretary of the Treasury is hereby designated and empowered to perform the following-described functions of the President without the approval, ratification, or other action of the President:

"…(c)…" etc., down to "(i) The authority vested in the President by Section 5318 of the Revised Statutes, as amended (19 USC 540), to employ suitable vessels other than Coast Guard cutters in the execution of laws providing for the collection of duties on imports and tonnage. [Para. 1 amended by EO 10583 of Dec. 18, 1954, 19 FR 8725, 3 CFR, 1954-1958 Comp., p. 232; EO 10882 of July 18, 1960, 25 FR 6869, 3 CFR, 1959-1963 Comp., p. 413; EO 11110 of June 4, 1963, 28 FR 5605, 3 CFR, 1959-1963 Comp., p. 770; EO 12608 of Sept. 9, 1987, 52 FR 34617, 3 CFR, 1987 Comp., p. 245]"

There we have the original wording plus the information about subsequent amendments. Notice in particular that Paragraph 1 ends at sub-paragraph (i). The infamous EO 11110 amended Paragraph 1 by adding sub-paragraph (j). (It also revoked another clause in another part of EO 10289 which does not concern us.)

So, after Kennedy’s EO 11110, the primary document contained an additional subparagraph 1(j).

Turn next to EO 12608 of 1987 and note that it is a big housecleaning Order, to get rid of obsolete, no longer relevant items. I reproduce the opening lines:

"Executive Order 12608 – Elimination of Unnecessary Executive Orders and Technical Amendments to Others

"September 9, 1987

"By the authority vested in me as President by the Constitution and laws of the United States of America, and in order to eliminate certain Executive Orders that are no longer necessary, and to make technical amendments in others to correct outdated agency references or obsolete legal citations, it is hereby ordered as follows:

"Section 1. The following Executive Orders are revoked…."

A list of numbered EOs follows. Then:

"Sec. 2. Each of the Executive Orders, as amended, listed in this section, and any other order that relates to functions or areas of responsibility delegated to the Office of Management and Budget, are amended by deleting the words ‘Bureau of the Budget’ wherever they occur and inserting in lieu thereof ‘Office of Management and Budget,’ and by deleting the word ‘Bureau’ and inserting in lieu thereof ‘Office’ wherever the word ‘Bureau’ is used as a reference to the Office of Management and Budget…."

Then follows the table of references to the EOs that are to have this change. Next, one that is irrelevant to our concern:

"Sec. 3. Executive Order No. 9979 is amended by revoking paragraph 1 and deleting the ‘2’ introducing the remaining paragraph."

Then we get the important one:

"Sec. 4. Executive Order No. 10289, as amended, is further amended as follows:

"…(e) By revoking Sections 1(g) and 1(j), and renumbering Sections 1(h) and 1(i) as Sections 1(g) and 1(h), respectively;

"(f) Adding a new subsection (i) to Section 1:

"(i) The authority vested in the President by Section 5318 of the Revised Statutes, as amended (19 USC 540), to employ suitable vessels other than Coast Guard cutters in the execution of laws providing for the collection of duties on imports and tonnage…"

And that is the end of amendments to EO 10289.

What could be more clear? The subject of Sec. 4 above is EO 10289 as amended (by other EOs like 11110). And specifically revoked is section 1(j), the content of which is the ballyhooed directive to issue silver certificates.

In other words, EO11110 concerned a minor administrative detail that had reached the end of its applicability by 1987, probably because there was no more silver in the Treasury that could be committed for Silver Certificates. It was certainly no threat to the power of the Federal Reserve System. It doesn’t prove that Kennedy never had an unkind thought about the Fed, but it certainly does not constitute evidence that he had mounted a campaign of sufficient significance against it to inspire his assassination.

Keith Wilde

1. This point is expressly confirmed in the Constitution Act, which may be read in full at Paragraph 91 under section VI on the distribution of legislative powers includes the provisions that concern coinage, banking and issuance of paper money.

– from Economic Reform, October 2008