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dollars of credit existing as open accounts on the books of American 

businessmen.

Governor Marriner Eccles of the Federal Reserve Board stated before 

the House Banking and Currency Committee that: "Debt is the basis for 

the creation of money."

Large holders of trade acceptances got the use of billions of dollars 

worth of credit-money, besides the rate of interest charged upon the 

acceptance itself. It is obvious why Paul Warburg should have devoted 

so much time, money, and energy to getting acceptances adopted 

by this country’s banking machinery.

On September 4, 1914, the National City Bank accepted the first time-

draft drawn on a national bank under provisions of the Federal Reserve 

Act of 1913. This was the beginning of the end of the open-book 

account system as an important factor in wholesale trade. Beverly 

Harris, vice-president of the National  City  Bank  of  New  York,  issued  a 

pamphlet in 1915 stating that:

"Merchants using the open account system are usurping the functions 

of bankers."

In The New York Times on June 14, 1920, Paul Warburg, Chairman of 

the American Acceptance Council, said:

"Unless the Federal Reserve Board puts itself heart and soul behind the 

untrammeled 

 

development of acceptances as a prime investment for 

banks of the Federal Reserve Banks the future safe and sound 

development of the system will be jeopardized."