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 (Alan Greenspan 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).

He remarked further that the day the Federal Reserve Act was passed in 1913, “the
Constitution ceased to be the governing covenant of the American people,
and our liberties were handed over to a small group of international bankers” (p.

Clearly, there is a discrepancy between the two lists.  According to
Kah, foreigners own shares of the New York Fed directly, but Mullins stated
they owned and controlled the Fed indirectly through ownership of American
banks.  So who is right?  Mullins cited the Federal Reserve Bulletin
for his information on share ownership, but that publication has never reported
the shareholder list of any Federal Reserve Bank.  Kah’s source is equally
elusive – unnamed Swiss and Saudi Arabian contacts.  Despite the difficulty
in verifying their sources, it may be possible that both men are correct.  The
two authors published their lists eight years apart.  Since Mullins’ was
the earlier of the two, it may be possible that sometime between 1983 and
1991 foreigners acquired a substantial amount of stock in the New York Fed.  Of
course, it is also possible that they’re both wrong.

To clarify this mystery, let’s first look at the Federal Reserve Act of
1913.  The law requires that all nationally chartered commercial banks
and S&Ls buy stock in their regional Federal Reserve Bank, thereby becoming “member
banks” (12 USCA §282).  State
chartered banks may also join voluntarily.  The amount of stock a given
bank must purchase is proportional to the bank’s size, so we would expect
that the largest shareholders to be the biggest commercial banks operating
in the district.  This agrees with Mullins since all of the banks on
his list were the largest banks in the New York region in 1983.

Gary Kah’s list of alleged shareholders is more suspect.  The law does
not permit the stock of a Federal Reserve Bank to be traded publicly like
the stock of a typical corporation (12
USCA §286
).  The original Federal Reserve Act called for each
regional Bank to sell stock to raise at least $4 million to begin operations
(12 USCA §281).  The
stock was to be sold only to banks, not to the public.  Only in the
event that sales to member banks did not raise the necessary $4 million would
the regional Fed Banks be permitted to sell shares to the public.  However,
all Banks raised the requisite amount of capital.  No stock in any Federal
Reserve Bank has ever been sold to the public, to foreigners, or to any non-bank
U.S. firm (Woodward, 1996).  Foreign interests comprise half of the
alleged owners on Kah’s list.  Moreover, three of the hypothesized American
owners are not even banks: Goldman-Sachs, Lehman Brothers, and Kuhn-Loeb
are all investment banks, not commercial banks, and so are ineligible to
own any shares of a Federal Reserve Bank.  The law prohibits the general
public, non-bank firms, and foreigners from owning anything more than a trivial
amount of stock in any Federal Reserve Bank (12
USCA §283
).  The only institution on Kah’s list that could
possibly own shares of the New York Fed is Chase Manhatten.  All the
others named on the list are incorrect.  Kah’s list is mostly bunk.

Fortunately, we can take a more direct approach to the question of ownership
of the New York Fed and the other Federal Reserve Banks.  The New York
Fed reports that its eight largest member banks on June 30, 1997 were:

  • Chase Manhatten Bank
  • Citibank
  • Morgan Guaranty Trust Company
  • Fleet Bank
  • Bankers Trust
  • Bank of New York
  • Marine Midland Bank, and
  • Summit Bank.3

All of the major shareholders seen here and all of the banks on the complete
list are either nationally- or state-charted banks.  All of them are American-owned.  Kah’s
claim that foreigners directly own the N.Y. Fed is completely wrong.  This
list is consistent, however, with Mullins in that all the owners are domestic
banks functioning within the N.Y. Federal Reserve district.  The discrepancies
are likely due to mergers or other significant changes in the size of district
banks since the publication of Mullins’ list.  To obtain a list of member
banks of other Federal Reserve banks, click

  Global Domination Through the Back Door?

Although foreigners do not own the New York Federal Reserve Bank directly,
perhaps, Mullins argued, they own and control it indirectly via ownership
of domestic banks.  Since the money-center banks of New York own the
largest portion of stock in the New York Fed, they hand-pick its board
of directors and president.  This would give them, and hence the London
Connection, control over Fed operations and U.S. monetary policy.

The Securities and Exchange Commission requires that firms whose stock
is traded publicly report their major stockholders each year.  The
reports identify all institutional shareholders (primarily, firms owning
stock in other companies), all company officials who own shares in their
firm, and any individual or institution owning more than 5% of the firm’s
stock.  These reports show that only one of the N.Y. Fed’s current
largest shareholders, Citicorp, has any major foreign stockholders.  As
of January 1996, Price Alwaleed Bin Talad of Saudi Arabia owned 8.9% of
Citicorp stock.2   None of the member
banks on the above list have any significant portion of shares held by
any foreign individual or institution.  Mullins’ claim that foreigners
own the N.Y. Federal Reserve indirectly is also wrong.

Moreover, the ownership rights of Federal Reserve Bank stock are different
than the common stock of typical corporations.  Usually, the number
of votes a shareholder has is proportional to the number of shares he owns.  However,
ownership of Federal Reserve Bank stock entitles the shareholder to one
vote when voting for its regional Federal Reserve Bank officials regardless
of how many total shares the member bank may own.  A group of international
conspirators would need to purchase a controlling interest in a majority
of the banks operating in the N.Y. district to guarantee the election of
their desired minions to the N.Y. Fed’s board of directors.  Buying
that much stock in so many U.S. banks would require an outlay of hundreds
of billions of dollars. Surely there must be a cheaper path to global domination.

Mullins’ premise here is that the member banks control the policies of
the N.Y. Fed.  In the next section I detail why this is wrong, but
an historical example also illustrates the fault of this assumption.  Galbraith
(1990) recounts that in the spring of 1929 the New York Stock Exchange
was booming.  Prices there had been rising considerably, extending
the bull market that began in 1924.  The Federal Reserve Board decided
to take steps to arrest the speculative bubble that appeared to be forming:
It raised the cost banks had to pay to borrow from the Federal Reserve
and it increased speculators’ margin requirements. Charles Mitchell, then
the head of National City Bank (now Citicorp, one of the largest shareholders
of the N.Y. Fed at the time), was so irritated by this decision that in
a bank statement he wrote, “We feel that we have an obligation which is
paramount to any Federal Reserve warning, or anything else, to avert any
dangerous crisis in the money market” (Galbraith, p. 57).  National
City Bank promised to increase lending to offset any restrictive policies
of the Federal Reserve.  Wrote Galbraith, “The effect was more than
satisfactory: the market took off again.  In the three summer months,
the increase in prices outran all of the quite impressive increase that
had occurred during the entire previous year” (Ibid).  If the Fed
and its policies were really under the control of its major stockholders,
then why did the Federal Reserve Board clearly defy the intent of its single
largest shareholder?  

Does the New York Fed Call the Shots?

Mullins and Kah both argue that by controlling the New York Federal Reserve
Bank, the international banking elite command the entire Federal Reserve
System and thus direct U.S. monetary policy for their own profit.  “For
all practical purposes,” Kah writes, “the Federal Reserve Bank of New York
is the Federal Reserve” (Kah, p.13; emphasis his).  This is the linchpin
of their conspiracy theory because it provides the mechanism by which the
international bankers can execute their plans.  A brief look at how
the Fed’s powers are actually distributed shows that this key assumption
in the conspiracy theory is wrong.

The Federal Reserve System is controlled not by the New York Federal Reserve
Bank, but by the Board of Governors (the Board) and the Federal Open Market
Committee (FOMC).  The Board is a seven-member panel appointed by
the President and approved by the Senate.  It determines the interest
rate for loans to commercial banks and thrifts, selects the required reserve
ratio which determines how much of customer deposits a bank must keep on
hand (a factor that significantly affects a bank’s ability create new credit),
and also decides how much new currency Federal Reserve Banks may issue
each year (12 USCA §248).  The
FOMC consists of the members of the Board, the president of the New York
Fed, and four presidents from other regional Federal Reserve Banks.  It
formulates open market policy which determines how much in government bonds
the Fed Banks may buy or sell – the major tool of monetary policy (12
USCA §263

The key point is that a Federal Reserve Bank cannot change its discount
rate or required reserve ratio, issue additional currency, or purchase
government bonds without the explicit approval of either the Board or the
FOMC.  The New York Federal Reserve Bank, through its direct and permanent
representation on the FOMC, has more say on monetary policy than any other
Federal Reserve Bank, but it still only has one vote of twelve on the FOMC
and no say at all in setting the discount rate or the required reserve
ratio.  If it wanted monetary policy to go in one direction, while
the Board and the rest of the FOMC wanted policy to go another, then the
New York Fed would be out-voted.  The powers over U.S. monetary policy
rest firmly with the publicly-appointed Board of Governors and the Federal
Open Market Committee, not with the New York Federal Reserve Bank or a
group of international conspirators.

Mullins also made a great to-do about the Federal Advisory Council.  This
is a panel of twelve representatives appointed by the board of directors
of each Fed Bank.  The Council meets at least four times each year
with the members of the Board to give them their advice and to discuss
general economic conditions (12
USCA §261
).  Many of the members have been bankers, a point
not at all missed by Mullins. He speculates that this Council of bankers
is able to force its will on the Board of Governors:

The claim that the “advice” of the council members is not binding
on the Governors or that it carries no weight is to claim that four times
a year, twelve of the most influential bankers in the United States take
time from their work to travel to Washington to meet with the Federal Reserve
Board merely to drink coffee and exchange pleasantries (Mullins, p. 45).

A point Mullins neglects entirely is that the Council has no voting power
in Board meetings, and thus has no direct input into monetary policy.  In
support of his hypothesis Mullins offers no evidence, not even an anecdote.  Moreover,
his Council theory is inconsistent with his general thesis that the London
Connection runs the Federal Reserve System via their imagined control of
the N.Y. Fed.  If this were true, then why would they also need the

Who Gets the Fed’s Profits?

Gary Kah and Thomas Schauf (1992) also maintain that the huge profits of
the Federal Reserve System are diverted to its foreign owners through the
dividends paid to its stockholders.  Kah reports “Each year billions
of dollars are ‘earned’ by Class A stockholders of the Federal Reserve” (Kah,
p. 20).  Schauf further laments by asking, “When are the profits of
the Fed going to start flowing into the Treasury so that average Americans
are no longer burdened with excessive, unnecessary taxes?”

The Federal Reserve System certainly makes large profits.  According
to the Board’s 1999
Annual Report
, the System had net income totaling $26.2 billion, which
would qualify it as one of the most profitable companies in the world if
the System were a typical corporation.  How were these profits distributed?  $342
million, or 1.4% of the profits, were paid to member banks as dividends.  Another
$479 million, or 1.8%, was retained by the 12 Reserve Banks.  The balance
of $25.4 billion — or 96.9% of the profits — was paid to the Treasury.  Obviously,
Schauf’s statement that the member banks are getting “billions” in dividends
every year is absurd.  In addition, the Fed has been rebating its profits
to the Treasury since 1947.  


The allegation that an international banking cartel controls the Federal
Reserve is wrong.  Contrary to Kah’s claim, foreigners do not own any
stock in the New York Federal Reserve Bank.  Neither do they currently
own any significant shares of the domestic banks that actually do own shares
in the N.Y.    Fed.  Moreover, the central assumption
that control of the New York Federal Reserve is the same as control of the
whole System is badly mistaken.  Also, the profits of the Federal Reserve
System, again contrary to the conspiracy theorists, are funneled almost entirely
back to the federal government, not to an international banking elite.  If
the U.S. central bank is in the grip of an international conspiracy, then
Mullins, Kah, et al have certainly not uncovered it.


1.  State chartered banks have the option of becoming
member banks of the Federal Reserve System.  Interestingly, only 10%
of have done so.

2. Compact Disclosure CD-ROM, v3.0


82nd Annual Report, 1995,  Board of Governors of the Federal Reserve
System,  U.S. Government  Printing Office.

Galbraith, John K. (1990), A Short History of Financial Euphoria.  New
York: Whittle Direct Books.

Kah, Gary (1991),  En Route to Global Occupation. Lafayette, La.: Huntington

Mullins, Eustace (1983),  Secrets of the Federal Reserve.  Staunton,
Va.: Bankers Research Institute.

Schauf, Thomas (1992),  The Federal Reserve, Streamwood, IL: FED-UP,

Woodward, G. Thomas (1996), “Money and the Federal Reserve System: Myth
and Reality.”  Congressional Research Service.

United States Code Annotated, 1994.  U.S. Government Printing Office.

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