Introduction

The Federal Reserve System is the primary regulatory agency governing the U.S. banking industry.  It has singular importance in setting monetary policy and many economists believe it has substantial influence on the course of the business cycle.  Yet, could it be that the most important economic institution in the United States is actually owned by foreigners?  Gary Kah (1991) and Eustace Mullins (1983) authored separate books alleging that a secretive international banking elite owns and controls the Fed.  Furthermore, his shadowy group uses its power to manipulate financial markets and to control the U.S. economy.

The focus of both books is the Federal Reserve Bank of New York.  What we typically call the ‘Fed’ is actually a two level system: 12 regional Federal Reserve Banks (the New York Fed is one of them) and the Board of Governors that runs them (Bernanke is the Board’s chair).  Gary Kah claimed foreigners directly own the New York Fed, the largest and most important of the dozen regional institutions.  Through it the international collaborators control the entire Federal Reserve System and reap its gigantic profits.  Eustace Mullins agreed on the importance of the New York Fed, but instead claimed it is owned indirectly by foreigners – through a European banking club he termed the “London Connection” which controls the Fed’s policies from abroad.

Are any of allegations true?  In this article I focus on whether foreigners own the Federal Reserve Bank of New York either directly or indirectly, whether it controls the enitre of the Federal Reserve System, and whether foreigners receive the Fed’s large annual profits.  

Who Owns the New York Federal Reserve?

Each of the twelve Federal Reserve Banks is organized as a corporation in much the same way as many other firms.  According to Kah, foreigners own a controlling interest in the shares of the New York Fed.  He claimed that “Swiss and Saudi Arabian contacts” identified the top eight shareholders as

• Rothschild Banks of London and Berlin
• Lazard Brothers Banks of Paris
• Israel Moses Seif Banks of Italy
• Warburg Bank of Hamburg and Amsterdam
• Lehman Brothers of New York
• Kuhn, Loeb Bank of New York
• Chase Manhatten Bank, and
• Goldman, Sachs of New York (Kah, p. 13).

He also described these groups as the bank’s “Class A shareholders” (p. 14).  This is curious because Federal Reserve stock is not classified in this manner.  It can be either “member stock” or “public stock,” but there are no such things as ‘Class A’ shares.  However, the directors of a Federal Reserve Bank are separated into classes A, B, and C depending on how they are appointed (12 USCA §302). This may have been the source of Kah’s confusion.Eustace Mullins compiled a very different list.  He reported that the top 8 stockholders of the New York Fed were

• Citibank
• Chase Manhatten Bank
• Morgan Guaranty Trust
• Chemical Bank
• Manufacturers Hanover Trust
• Bankers Trust Company
• National Bank of North America, and
• Bank of New York.

According to Mullins these institutions in 1983 owned a combined 63% of the New York Fed’s stock.  These American banks, in turn, were owned by European financial institutions.  Since the commercial banks in the New York Fed’s district elect its board of directors, the London Connection is able to use their American agents to pick the Bank’s directors and ultimately control the whole Federal Reserve System.  He explained,  

… The most powerful men in the United States were themselves answerable to another power, a foreign power, and a power which had been steadfastly seeking to extend its control over the young republic since its very inception. The power was the financial power of England, centered in the London Branch of the House of Rothschild.  The fact was that in 1910, the United States was for all practical purposes being ruled from England, and so it is today (Mullins, p. 47-48).   Read more…