TABLE OF CONTENTS
Page 12 – How Benjamin Franklin Caused the Revolutionary War
Page 22 – The First Bank of the United States
Page 27 – One Nation, Under Debt, with Liberty and Justice for Few
Page 35 - Fractional Reserve Banking
Page 40 – The Rothschilds
Page 44 – The Second Bank of the United States
Page 53 – Andrew Jackson’s Epic Battle against Evil
Page 70 – The Panic of 1857
Page 74 - Bank Notes vs. Government Notes
Page 78 – Lincoln’s Two Wars
Page 85 – The National Banking Act – The Way We Make Money
Page 92 – The Reign of Tight Money – Three Decades of Depression The Contraction Act - The Credit Strengthening Act – The Refunding Act – The Coinage Act – The Resumption Act - The Bland – Allison Act
Page 148 – The Elusive Silver Slippers of Prosperity
Page 156 – America’s War with Spain
Page 159 – The Bankers’ Panic of 1907 – The First Bailout
Page 168 – Playing Monopoly with Real Money
Page 175 – The Trip to Jekyll Island
Page 185 – The Abortion is Born
Page 189 - So, What’s Wrong with the Federal Reserve?
Page 207 - The Endless Curse of Debt Money
Page 219 - How Banks Make Money
Page 226 – Interest in Banking
Page 229 – An Interest-ing Paradox
Page 232 – The Incredible Shrinking Dollar
Page 235 – Now, We can have a Really Great War!
Page 242 – The Bankers’ War Board
Page 248 – The Bankers’ Revolution - Capitalism Funds Communism
Page 252 – Manufacturing an Agricultural Depression
Page 260 – 1929 – Bad News for the Little Guy
Page 267 – The Tinkle Down Theory
Page 277 – The Great Gold Grab
Page 283 – When is a Dollar Not a Dollar?
Page 290 – Deflation in the Depression
Page 296 – The Birth of Hitler
Page 306 – Finally, World Peace and Prosperity
Page 317 – A Central Bank for Central Banks
Page 327 – The Bankers’ Final Solution
Page 336 – Manipulating Minds
Page 349 – Bush’s Bank Bailout Scam
Page 364 – Why is Economics so Complicated?
Page 370 – The Cure
Page 376 - Parting Thoughts
Preface
“There is a principle which is a bar against all information, which is proof against all arguments, and which cannot fail to keep a man in everlasting ignorance – that principle is contempt prior to investigation.” – Herbert Spencer. “Convictions are more dangerous enemies of truth than lies.” Friedrich Nietzsche.
This book is not what you think. “Vile Acts of Evil – Banking in America” does not discuss your bank’s usurious interest rates or ridiculous fees – irritants you know too well - and the title reflects neither joke nor hyperbole. This is the story of money, greed, and power in America. If you dare continue, you will soon realize, that the vast underbelly of our American history - the recessions, depressions, panics, and wars - the enormous amount of needless human turmoil, suffering, and carnage - the millions of wasted lives over hundreds of years - are but byproducts of extremely wealthy bankers seeking further wealth - mere corporate externalities, not worthy of a bookkeeping entry. Truly, Vile Acts of Evil.
This book almost wrote itself. With minimal prodding on my part, this long-buried story tenaciously clawed its way to daylight through thick strata of rock-solid historic and economic dogma. I took quotes from Thomas Jefferson, Benjamin Franklin, Andrew Jackson, Abraham Lincoln, Woodrow Wilson, Franklin Roosevelt, and about a hundred other notables and wove together a web of intrigue. Each of these venerable men spoke the truth as he saw it in his day and their isolated patches of quotes – spanning over two hundred years - formed a flowing, continuously consistent story quilt when sewn together. So, when you find your comfortable, well-worn convictions at odds with what you read, when you suddenly discover yourself angry, muttering or yelling at this book, when you absolutely refuse to believe what is written, take it up with those gentlemen, because it is his story, his story, history.
Newsworthy events are typically viewed through many eyes, from several angles, and refocused through the mental lens of each observer’s personal predisposition. What we have been taught as a child to believe is straightforward factual “history,” is actually a complex mélange of personal opinions, usually written to bolster or undermine a person or cause, always to the detriment of truth. “History is mostly guessing, the rest is prejudice” - According to Ariel and Will Durant, whose mammoth collection, The Story of Civilization, defined world history for generations. Writers invariably have a reason for writing and discerning their motive is the key to interpretation and understanding. I claim nothing more here, other than this honesty: You will find my feelings open and transparent, not disguised in twists or spin, or hiding behind the patently deceptive mask of “Fair and Balanced.” Judge accordingly.
“We cannot understand the role of the people in history unless we also understand the historical illusions which misrepresent history in order to serve the interests of privileged classes.” “Man cannot fully master his present without reconquering his own history, repossessing the hidden heritage of the past.” – John Howard Lawson, The Hidden Heritage, 1950. Your history has been hidden from you. History is written by the winners and, as you will soon understand, these winners, these privileged few, do NOT want you to know their history. Our ignorance enhances their power and knowledge undermines. “He, who controls the present, controls the past. He, who controls the past, controls the future.” - George Orwell, 1984, 1948. I want you to reach into this book with both hands and wrest out your long lost past with vengeance – with it, together, we can control our future. As you read, consider how the various historical events affect your life today and how it affected the lives of your ancestors. The tools you need are the facts found here, documented by quotations from noted eyewitnesses of each era. These are the actual words of the individual, not the typical, subjective author’s interpretation followed by a reference number. I figured you would sooner believe the people who actually participated in the events discussed, rather than the random rants of this writer. You may be surprised to find that this is a history new to you. Your brain will naturally repel against the information presented here – These facts universally rail against the well-ingrained framework of our carefully cultivated cultural preconceptions, but they remain facts, nonetheless. Please, willingly suspend your preprogrammed disbelief, honestly weigh the evidence presented, and use your innate ability to judge truth for yourself. “The great enemy of the truth is very often not the lie - deliberate, contrived and dishonest - but the myth - persistent, persuasive and unrealistic.” – John F. Kennedy.
This book is filled with information you will not find assembled anywhere else. You may have a nodding acquaintance with some of the quotations used; you may know a few of these stories; but, barring a soul bereft of compassion, I guarantee you a continuing series of jaw-dropping revelations. This book brings to light past evils, explains confusing economic terms, unravels mysterious conspiracies, and shows how they relate to today’s financial headlines. I present you a view of our American history previously hidden, discuss problems intentionally ignored, and offer solid policies for improvement. By necessity, the format is very loosely structured, being both chronological and organized by subject matter – explained in useful order. Our journey doesn’t just roar down the main highway of this tale, we take the scenic route, with side trips visiting interesting folks telling incredible tales, and particularly, poking at all the dead skunks in the middle of the road, stinking to high, high heaven.
Our world is divided into Red States and Blue States – Between those who Believe and Trust versus those who Doubt and Test – Faux News versus MSNBC. Those who would rather not waste their valuable TV time thinking, either believe world history is a grand chessboard of conspiracy or that humanity is continually bombarded, like cosmic rays from heaven, by random, unconnected events. These people form the lips of our cultural bell curve. Obviously, truth lives somewhere in the middle and as sentient beings, we should have the urge to determine which events are which. Those who would disparage sinister plots label it all “Conspiracy Theory” and, although conspiracy is universally ridiculed by our educational industry and corporate media, many historical events can best be explained within this context. Perspective often defines our terms: The bankers’ long-range business plan is seen as a sinister conspiracy by victimized workers. “The shepherd drives the wolf from the sheep – for which the sheep thanks the shepherd as his liberator, while the wolf denounces him for the same act as the destroyer of liberty. Plainly, the sheep and the wolf are not agreed upon the definition of liberty.” – Abraham Lincoln.”
I would like to transcend the word “Conspiracy” here, because of its overuse and denigration. In order to avoid that distraction, what I have attempted to do is show you how and why certain historical events happened and ask you, the reader, what you would have done in the same situation. This world and our lives are not by ruled by alien reptilian monsters, but by humans possessing the very same thoughts and emotions as us all. Let there be no misunderstanding, the events described in this book are indeed vile, and their perpetrators evil, but I believe many of us would duplicate their actions if given their opportunity. But don’t fret; you will never be given that chance. I will ask you to look into your mental mirror and honestly tell yourself what you see. Would you have Congress enact a law that required every American send you half of their money? Would you, if you knew a hundred million people would suffer for years and millions die because of your actions? Would you start or prolong a war if you could make billions? These questions may be repulsive and seem ridiculous, but these are legitimate questions entertained by people who have the power to make such things happen. What? You don’t believe me? Read on.
By wading through a vast morass of sycophantic banking blathering, economic double-speak, intentional misdirection, and a myriad of paranoid conspiracy theories that lead to factual dead ends, I was able to glean the few hard kernels of truth presented here. If you grew up in the same America as I, where free enterprise and fair play were extolled, you will find these kernels extremely difficult to swallow. Because of this, you will find this an angry book - You will hear it in the voices of those whose words you read. These disparate people, spanning centuries, are unified by our collective morality: Man’s common sense of right and wrong. Big fish eating little fish is universal truth; but we are not fish. Most of us acknowledge that humans should act humanely and the powerful should not pilfer pennies from the pockets of the poor. But they do. My hope is that this book acts as a contagion spreading both anger and awareness - Anger to motivate action and awareness of what action to take. The information presented here is vitally important to our national history, identity, and destination but, amazingly, none of it is part of our national dialog. That must change. Share this book, this information, with others. It would be disgustingly
self-serving for me to say, “Buy ten copies and give them to knowledgeable people,” so I won’t. “The important thing is not to stop questioning.” – Albert Einstein.
“The truth, to be sure, is sometimes hard to grasp, but it is never so elusive as when it is not wanted.” - Herman H. Dinsmore, Editor, New York Times. “Just let me have my toaster, my TV, and my steel-belted radials and leave me alone.” - Howard Beale, “Network,” written by Paddy Chayefsky, 1976. False frames formulated by foundation spin specialists focus our eyes away from the truth and we have been conditioned to consume only sterilized, plastic-packaged reality in thirty-minute segments, but you will have to adjust your brain: “NBC will not be able predict the winner at 8:32 … the revolution will not be televised.” – Gil Scott-Heron. The “Vast Wasteland” may let your mind slumber; for that is its purpose, but I will not. If you dare proceed, your next few hours of reading will very likely enrage you because, as Gloria Steinem aptly stated: “The truth will set you free - But first it will piss you off.” Much of what you find here will be too outrageous, too preposterous to believe and the continual, irritating dissonance will compel you to seek the truth. Hopefully, you are already convinced that what I am writing must be pure, hyperbolic poppycock. Good. For you, this book will be a begrudging battle fought fact by fact and your ultimate realization will be profound. True believers convince themselves. I dare you: Google every doubt. The truth is out there - Still. All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. - Arthur Schopenhauer.
We are trained to entertain the trivial - to detest substance. We see only what others place before us. “The most successful tyranny is not the one that uses force to ensure uniformity, but the one that removes the awareness of other possibilities that makes it seem inconceivable that other ways are viable, that removes the sense that there is an outside.” – Allen Bloom, The Closing of the American Mind, 1987. “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.” – William Shakespeare, Hamlet, 1600.
“Most people, sometime in their lives, stumble across truth. Most jump up, brush themselves off, and hurry on about their business as if nothing had happened.” - Winston Churchill. Please, don’t jump up, brush yourself off, and hurry on about your business. Take your time reading and savor every word - every Vile Act of Evil. Let each penetrate your mind and saturate your soul. Now, rub away the comfortable fog that clouds your eyes and relaxes your mind – focus and sharpen your brain. I dare say, “You have stumbled across truth.”
Introduction
There is something you should know... Beyond the blatant theft of our nation’s assets outlined in today’s headlines, beyond the loss of our jobs, our meager savings, our homes, and our children’s futures, bankers have conspired to steal our money and property for hundreds of years. Today, without your knowledge, we exist as sharecroppers, toiling in their economic fields, sending them a significant portion of our income every year. As you read, you will come to realize that there exists a power more dominant than Congress or the President - A small cadre of wealthy bankers, manipulating the money supply of the world, controls our daily existence and the destiny of our children. Each day, we are all ever more tightly bound by their chains, made from debt, forged by bankers’ pens. These wealthy few, through their all-embracing media, control popular opinion and direct the areas of interest for the mass of humanity. They command Congress to create laws favorable only to them, to the detriment of all others. They tell us who our enemies are, they tell us when to fight, and they tell us when to stop. Those who know their power dare not deny their will, for they are grand wizards who control the mystical force that controls us all, money.
As money and its pursuit occupy more and more of our lives, we seem to fall further and further behind. Americans work more hours and pay more for healthcare than citizens of any other industrialized nation. Yet typically, we Americans are one car wreck, one hospital stay, from the total collapse of our financial house of cards. We are now witnessing this wreck on a national scale. We no longer live in the world of our fathers, with two-week vacations, eight-hour workdays, where only one parent is employed – unless the other one was just laid off. Occasionally, rarely, one of us escapes our seemingly pre-ordained fate and, just like the variable reinforcement strategies so successful in casinos, inspires the rest to continue plugging along. Stable jobs and a stable economy are curiosities found only in history books. Turmoil and inflation are as natural to us as sunrise and sunset.
“The history of the world has been a struggle between the few and the many. The few have used money as the instrument to enslave the many. It is said that nothing occurs without precedent in history. ... The people of the world have never been sufficiently on their guard against the unjust and improper use of money. They are too slow to believe that others would do that which they feel they would not do themselves. The commonly accepted idea of a crime is the infraction of an existing law. It does not occur to the ordinary citizen that it is possible to successfully covet and possess your neighbor’s property by and with the use of statute law.” – William Hope Harvey, A Tale of Two Nations, 1894. I promise, you will soon know exactly how it is possible to “possess your neighbor’s property by and with the use of statute law.”
Voter, you hold in your hands the documentation you need to understand our current economic turmoil. You will soon realize that what is now happening to you, happened to your parents, your grandparents, your great grandparents and beyond. You will come to recognize common themes as we travel through history from the Revolutionary War to our endless War on Terror – From the Panic of 1811 to the bank bailouts of today – From the debt money of the Bank of England to the debt money of the Federal Reserve. While myriad variations exist, the song remains the same: The wealthy few make their fortunes by simply taking money from those who work and earn it. This is not a mystery book so I don’t feel bad about telling you the plot upfront – This is an adventure book! Your adventure – your thrill – your reason for reading this book will come with your gradual realization and acceptance, that you have been totally screwed. It’s the same adventure and thrill you get coming home after a nice dinner at a good restaurant, to find that someone has broken into your home and stolen all your possessions. Maybe adventure and thrill are not the right words… Anyway, remember Gloria Steinem’s adage: “The truth will set you free - But first it will piss you off.” This is not a story you have ever seen on TV or read in your newspapers, magazines, or history books – nor are you likely to. You will be amazed with what you will discover within these pages. Amazed and pissed.
“If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.” -Thomas Jefferson, 1802. Despite over two hundred years of warnings, just as poignant, pointed, and precise as this, we continue to let private banks control the issue of our nation’s currency and Jefferson’s prophesied problems have come home to roost. As you will soon see, time after time, throughout our history, bankers have used the same techniques to pick our pockets and steal our dreams. They continue unabated today, while their media has us look the other way.
Like the fisherman casting his net, then pulling it back in: By expanding the money supply and then contracting it - by inflation and then deflation - by making credit easy and then difficult - by fomenting war and then proposing peace and by charging us interest on every dollar in circulation, wealthy bankers have bled us dry, both literally and figuratively, for hundreds of years. Come with me now on a journey you have never gone and I will show you how these vile acts of evil are done ... and undone.
VILE ACTS OF EVIL
VOLUME ONE
BANKING IN AMERICA
How Benjamin Franklin Caused the Revolutionary War
Our American story begins calmly enough, by the mid 1700s, the Colonies were well established and fairly prosperous, there was no income tax, full employment, and prices were generally stable. Benjamin Franklin wrote, “There was abundance in the Colonies, and peace was reigning on every border. It was difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread.” – U.S. Representative, Charles Binderup, Unrobing the Ghosts of Wall Street, July 5, 1941.
When Franklin London England England Franklin Franklin
“It passed through no banker’s hands, but was loaned to the people direct, thus saving banking toll and banking restriction of volume; nor are there any panics or fluctuations recorded. Thomas Powell, M.P., of England, who had acted as governor and commander-in-chief of all provinces, in a book written by him in 1768, says in regard to this colonial system of money: ‘I will venture to say that there never was a wiser or better measure, never one better calculated to serve the uses of an increasing country, and never was a measure more steadily pursued or more faithfully executed for forty years together than the loan office in Pennsylvania, formed and administered by the assembly of the province.’” – Samuel Leavitt, Our Money Wars, 1894.
“Gold and silver are not intrinsically equal value with iron. Their value rests chiefly on the estimation they happen to be in among the generality of nations. Any other well-founded credit is as much an equivalent as gold and silver. Paper money, well-founded, has great advantages over gold and silver; being light and convenient for handling large sums, and not likely to have its volume reduced by demands for exportation.” – Benjamin Franklin.
“A legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. When your bankers here in England
Realizing Colonial Scrip was cutting into their profits, the Bank of England pressed Parliament for the passage of the Currency Act of 1764. Franklin “…went before a committee of Parliament to answer a report of the Board of Trade, dated February 9, 1764, containing reasons for restricting the issue of paper bills of credit in America ‘as a legal tender,’ and, in his unanswerable argument against the restriction, he said: ‘If carrying out all the gold and silver ruins the country, every colony was ruined before it made paper money. But far from being ruined by it, the colonies that have made use of paper money have been and are all in a thriving condition. … Pennsylvania, before it made and paper money, was totally stripped of its gold and silver … The difficulties for want of cash were accordingly very great, the chief part of trade being carried on by the extremely inconvenient method of barter; when, in 1723, paper money was first made there, which gave new life to business, promoted greatly the settlement of new lands (by lending small sums to beginners on easy interest, to be paid in installments), whereby the province has so greatly increased in inhabitants that the export from hence thither is now more than tenfold what it then was, and by their trade with foreign colonies they have been able to obtain great quantities of gold and silver to remit hither in return for the manufactures of this country.” – Freeman Otis Willey, Whither are We Drifting as a Nation, 1882.
“In 1763 the British Parliament declared all Colonial acts for the issue of paper currency to be void. ‘Every medium of exchange,’ said the British Board of Trade, ‘should have an intrinsic value, which paper has not.’ Dr. Franklin there and then exploded this bosh – more than a century and a quarter ago – though many parrots are still repeating it. ‘However fit, (said Franklin) a particular thing may be for a particular purpose, whenever that thing is not to be had, or not to be had in sufficient quantity, it becomes necessary to use something else, the fittest thing that can be got in lieu of it. Bank bills and banker’s notes are in daily use here (in London), as a medium of trade, yet they have no intrinsic value, but rest on the credit of those that issued them, as paper bills in the Colonies do on the credit of the respective settlements there.” … “Being payable in cash upon sight by the drawers is indeed a circumstance that cannot attend the Colony bills, their cash being drawn from them by the British trade; but the legal tender being instituted, is rather a greater advantage to the possessor, since he need not be at the trouble of going to a particular bank or banker to demand the money.” – Gordon Clark, Shylock: As Baker, Bondholder, Corruptionist, Conspirator, 1894.
The passage of Parliament’s 1763 Currency Act forced the Colonies to use only British money and put the colonists squarely under the thumb of the British central bank, just like the citizens of England. The American colonists were forced to borrow all their money from the Bank of England and pay them interest, in order to conduct their business. With the loss of Colonial Scrip, there was a sharp decrease in the money supply and an economic depression set in. Whenever the money supply is reduced, recession / depression invariably result. You will see this principle in action again and again – throughout our history. “I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money, and equally of no sharp decline in the stock of money that was not accompanied by a severe depression.” – Milton Friedman, economist. One more time because this is important: If banks cut the amount of money in circulation, there is less money to go around, but everyone’s debts remain the same - Businesses fail, people become unemployed, foreclosures rise, and farmers get less money for their crops. It’s an economic depression and only the wealthy prosper.
“After Franklin gave explanations on the true cause of the prosperity of the Colonies, the Parliament exacted laws forbidding the use of this money in the payment of taxes. This decision brought so many drawbacks and so much poverty to the people that it was the main cause of the Revolution. The suppression of the Colonial money was a much more important reason for the general uprising than the Tea and Stamp Act.” – Peter Cooper, Presidential candidate in 1876 and inventor.
“In an evil hour, the British Government took away from America its representative money, commanded that paper bills of credit should be issued no more and cease to be legal tender, and collected the taxes in hard silver. This was in 1773. Mark the consequences. The contraction of the circulating medium paralysed all the industrial energies of the people. Ruin seized upon those once flourishing colonies; the most severe distress was brought home to every interest and every family; discontent became desperation. In 1775 the first Congress was held in Philadelphia. In 1776 America became an independent state.” – John Twells, London Banker, Parliamentary Debates, Volume 80, 1895.
Franklin England Franklin England Americas
“There are two passions which have a powerful influence on the affairs of men. These are love of power and love of money. When united, they have the most violent effects.” “The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators, was probably the prime cause of the Revolution.” - Benjamin Franklin.
As the American economy progressed from bad to worse, many colonists ignored the British ban on their scrip. Various colonies, seeing the destruction caused by a lack of money, reinstituted their scrip – At great personal peril. “Says Jefferson: ‘Before the 19th of April, 1775’ the day succeeding the Battle of Lexington, ‘I never had heard a whisper of a disposition to separate from Great Britain. The Colonies had not yet cut asunder the ties of allegiance to the Crown. The Continental Congress had sent a petition to the King denying any intention of separation from England.’ But, although the Colonies were as yet uncertain of their course with respect to separation, there was no uncertainty with regard to their monetary system. This they had determined should be independent of the Crown and this determination the had expressed in overt acts that had long marked them as disaffected rebels and were now to mark them as outlaws. Lexington and Concord were trivial acts of resistance which chiefly concerned those who took part in them and which might have been forgiven; but the creation and circulation of bills by revolutionary assemblies in Massachusetts and Philadelphia, were the acts of a whole people and coming as they did upon the heels of the strenuous efforts made by the Crown to suppress paper money in America, they constituted acts of defiance so contemptuous and insulting to the Crown that forgiveness was thereafter impossible. After these acts there was but one course for the Colonies; to stand by their monetary system. Thus the bills of credit of this era, which ignorance and prejudice have attempted to belittle into the mere instruments of a reckless financial policy, were really the standards of the revolution. They were more than this: they were the Revolution itself!” – Alexander del Mar, The History of Money in America, 1899.
“When Great Britain commenced the present war upon the colonies they had neither arms nor ammunition, nor money to purchase them, or pay soldiers. The new government had not immediately the consistence necessary for collecting heavy taxes; nor would taxes that could be raised within the year during peace have been sufficient for a year’s expense in time of war; they therefore printed a quantity of paper bills each expressing to be the value of a certain number of Spanish dollars, from one to thirty. With these they paid, clothed, and fed their troops; fitted out ships and supported the war during five years against one of the most powerful nations of Europe.” – Benjamin Franklin. Some Colonists accepted this paper money without problem, some, more loyal to the King, were coerced: “… any person who shall hereafter be so lost to all virtue and regard for his country as to refuse to receive said bills in payment, or obstruct and discourage the currency or circulation thereof, and shall be duly convicted … shall be deemed, published and treated as an enemy of his country, and precluded from all trade or intercourse with the inhabitants of those colonies.” – Continental Congress Journal. Talk about being cut-off! – No trade or intercourse with the other Colonists. That’s a stiff sentence.
“By the time the first shots were fired in Lexington and Concord, Massachusetts on 19 April, 1775, the colonies had been drained of gold and silver coin by British taxation. Consequently, the Continental government had no choice but to print its own paper money to finance the war. At the start of the Revolution, the American colonial money supply stood at $12 million. By the end of the war, it was $500 million. This was partly a result of massive British counterfeiting. Consequently, the currency was virtually worthless. Shoes sold for $55,000 a pair.” – Alexander del Mar, historian and first Director of the U.S. Bureau of Statistics, 1866-69. “It is a fact too well authenticated to admit of dispute that Gen. Howe aided the making and uttering of counterfeit Continental bills. In the same newspaper, in New York, in which the British official documents were printed, there were also printed advertisements proposing to supply counterfeit money to persons going into other colonies, so nearly and exactly executed that no risk attended their circulation.” – Alexander del Mar, The History of Money in America, 1899.
The paper Continentals issued by the colonists promised to pay – a few years later – their face value plus interest in “Spanish milled (silver) dollars.” “The fulfillment of these promises was impossible. They were made in good faith and with the hope of speedy success for the American army. For a year, the bills circulated at par with silver, and in their third year the premium on the coin was only seventy-five percent. But, as the struggle continued, the people came to realize the huge joke of attempting to redeem, in ‘Spanish milled dollars,’ an amount of paper, genuine and counterfeit, calling for more than fifty times the whole sum of coin in the country, and counting interest, three or four hundred times the sum of coin specified in the promises. Still, the paper circulated; and the determined, patriotic people kept passing it from hand to hand, as it went down, buying and selling with it – receiving it for something – until 1781. It then sank out of sight at a depreciation of five hundred per cent, but ‘with indulgence for its memory,’ said Jefferson, ‘as a thing which had vindicated the liberties of the country’ and ‘fallen in the moment of victory.’ In other words, the American people came to regard the loss on Continental money – a loss borne by the whole of them – as a general tax on their property, to secure American independence. Thus the losers were not cheated. It was they, in fact, who insisted on letting their losses go, and would sanction no attempt to recover them. Congress did its best to fulfill its pledges, but the people laughed away every effort to fund or redeem the currency, and ‘barbers papered their shops with it.’ For once we got the better of the British bullionists and counterfeiters.” – Gordon Clark, Shylock: As Banker, Bondholder, Corruptionist, Conspirator, 1894.
After the War, several of the Colonies, even knowing that the bulk of the Continentals were bogus, still took them as payment for taxes. The last two quotes mention British counterfeiting: In 1776, the British brought a printing press out the H.M.S. Phoenix, moored in the New York harbor and started printing up “Continentals.” They distributed these to Colonists loyal to the Crown and they dutifully spent them - For the times, a very innovative strategy. Soon, General Washington had a hard time purchasing supplies for his troops and the phrase, “Not worth a Continental,” entered the American lexicon.
“A wagon load of money will scarcely buy a wagon load of provisions.” – George Washington.
“In 1764 the prohibition against issuing their money was extended to all the colonies. It then became mandatory for all the colonies to borrow their money into circulation at huge interest rates. It is probable that these acts were more responsible for the Revolution than any other factors. Many of our founding fathers were keenly aware of the problem this debt money created and this is one of the principle reasons why our constitution so clearly provided for an honest money system. Article 1, Section 8, Par. 5 of the Constitution provides that ‘Only Congress shall have the power to coin money and regulate the value thereof.’” – June Grem, The Money Manipulators, 1971.
Today, we Americans borrow every single dollar into circulation from private bankers - just like pre-Revolutionary War colonists had to do with the Bank of England. This “borrowed money” is called, “debt money” and as you can imagine, the interest costs that are generated by borrowing every single dollar in the U.S. economy are staggering. Go get your wallet, I’ll wait... Now, pull out some Federal Reserve Notes and look at them. Every “dollar” you have there is money that is owed, with interest, to the Federal Reserve Bank. I know, you think you own that dollar free and clear – You don’t. If you pay income tax, you pay an annual interest, not only on the dollars in your hand, but on every “dollar” in circulation, whether physically printed on paper, or floating in the ether as an electronic computer digit. Remember the Bank of England lent every pound and penny into circulation in England and, unlike a real “loan,” didn’t demand it back – It was content to sit back and collect interest year after year after year - forever. Same here.
This debt money interest is the principle reason why we have to pay Federal Income Tax. Imagine, for a minute, what your personal economic situation would be like if you didn’t have to pay your income tax. If you are a worker, take a look at your pay stub or refer back to last year’s federal income tax filing. Imagine keeping those hundreds, thousands, or tens of thousands of dollars for your own use. That approximates the price you personally pay – annually – for the privilege of using debt money. As Franklin pointed out, there is an alternative and the economic life of the American Colonies before and after the advent of debt money illustrates just how dramatically these two systems can influence our nation’s welfare.
Our forefathers saw first-hand how the debt money leech sucked the life out of their struggling economy and they wanted no part of it. They were willing to fight and they were willing die so that their children would not have to suffer under its continual, intolerable weight. Such was the magnitude of their disgust. They stipulated in Article 1 of our Constitution that, “Only Congress shall have the power to coin money and regulate the value thereof.” Also, and equal in importance: “No money shall be drawn from the Treasury but in consequence of appropriations made by law.” This put the creation of money exclusively in the hands of the U.S. Treasury and its issuance, strictly controlled by Congress. Period. These concepts were so important that they were in Article 1 of our Constitution! - Top billing! – Page one! The Founding Fathers may have even used highlighter pens to let future generations know just how important this section was. Unfortunately, we can’t tell if they did use highlighters because the whole thing turned yellow with age. Anyway, either way, nobody seemed to notice, and now we have that private corporation, the Federal Reserve Bank, lending us our own money – debt money - and even telling us how much of it we can have and how much interest we have to pay them. Where is Congress in all this? Where’s the Treasury? Is our Constitution so old that it no longer matters? Is it now JUST a tourist attraction?
Our Forefathers had just fought a war to stop the injustice of debt money - money that carried interest payments, and I’m sure they thought that this issue was well taken care of – that there was nothing to worry about – nobody would ever be stupid enough to try that again. Now, let me ask you a question (and you can just think the answer): You’ve just read the words of Benjamin Franklin and Thomas Jefferson and understand how important a debt-free money system was to our Founding Fathers in fighting the Revolutionary War and in the framing of our Constitution, had you ever – at any time in your life – heard this story? Do you think the reason for fighting the Revolutionary War is an important story in our American history? Had you ever learned that our currency was debt money? Or that you have to pay interest on the money in your wallet? Or that most of your personal income tax goes to pay the interest on this debt money? Here’s the follow-up question for extra points: Why? If you don’t know, keep reading...
Unbelievably and unfortunately, the Bank of England’s debt money system is exactly what we have in America today and, just like in the past, the interest payments are sucking the vitality right out of our economy. Five hundred billion dollars is lost every year through interest payments for the use of our own money. If equally distributed, that’s almost $2,000 for every man, woman, and child in the U.S. – Every year. $10,000 for a family of five. Could your family use that money this year? Last year? Next year? Every year, forever? Do you think that much extra money in circulation might aid our ailing economy? Would that stimulate your personal economy? Americans could have an additional $500 billion in our pockets every single year – year after year - without adding one penny to our national debt - if we simply had our U.S. Treasury Department issue our dollars instead of that private corporation, the Federal Reserve. Is that worth fighting for? What happened? How did we get back to the same stinking situation our Founding Fathers fought so valiantly to end? Let’s find out….
The First Bank of the United States
“All communities divide themselves into the few and the many. The first are the rich and well-born; the other, the mass of the people.” – Alexander Hamilton, 1787. Just to let you know where his head was at.
By 1783, the American colonists finally freed themselves from the Crown of England, but the war against the international bankers – a war we would eventually lose – had just begun. (Sorry if I spoiled the ending for you.) “The rich will strive to establish their dominion and enslave the rest. They always did. They always will… They will have the same effect here as elsewhere, if we do not, by government, keep them in their proper spheres.” – Gouverneur Morris, Constitutional Convention, July 2, 1787.
In 1781, the Bank of North America was formed with Robert Morris as its president and a young Alexander Hamilton, fresh out of law school, as his aide. The bank was funded with gold loaned to the U.S. France England
A few years later, in 1790, there was another push to establish a central bank, modeled after the Bank of England. Alexander Hamilton, by then, Secretary of the Treasury, was tasked by Congress to devise a national bank plan and drew-up what would become, The First Bank of the United States.
The bill passed the Senate, December 23, 1790 and the House, February 8, 1791. “President Washington called for the written opinion of the Attorney General, Edmund Randolph, on the Constitutionality of the bill. It was given adversely to the measure. He then asked for that of the Secretary of State, Mr. Jefferson. This was also adverse. Jefferson held that there was no warrant in the Constitution for the incorporation of a bank by Congress and that it could not be considered ‘necessary’ for carrying into effect any other power expressly conferred upon Congress. … The opinions of Randolph and Jefferson were then sent to Hamilton for such answer as he might be able to make. He held that the word ‘necessary,’ as used in the Constitution, did not mean absolutely necessary, but fitting and appropriate.” – Horace White, Money and Banking: Illustrated by American History, 1902.
Thomas Jefferson argued against the bank, citing Constitutional concerns on the limitations of government. "I consider the foundation of the Constitution as laid on this ground that: ‘All powers not delegated to the United States United States Jefferson
Nowadays, our Supreme Court tries to guess what the Constitutional framers meant; Jefferson is actually telling us what HE meant: The Central Bank is unconstitutional. Try to imagine how our present-day Supreme Court would rule if they ever had such a clear-cut statement concerning any point by Thomas Jefferson. Don’t you think they would agree with him? (Except, perhaps, the Bush appointees.)
Then why do we currently have a central bank? Answer: Unbelievably, the Constitutionality of our central bank has never been argued before the Supreme Court.
“I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” – Thomas Jefferson. Since the very birth of our nation, bankers challenged our government and the laws of our country.
“The founders of our government had a salutary dread of the bankers' influence making itself felt in shaping the national legislation. They anticipated the evils that we have seen in our days to result from allowing the banking interest to become dominant in the halls of Congress. We find, therefore, the Third Congress of the United States Senate passing the following resolution on the 23d of December, 1798: ‘Any person holding any office or any stock in any institution in the nature of a bank for issuing or discounting bills or notes payable to bearer or order, cannot be a member of the House whilst he holds such office or stock.’ The resolution was signed by the President, George Washington. At that time there were only three banks in the whole country. Yet even then Congress thought that the bank influence was such a standing danger to the maintenance of legislative purity that it deemed it necessary to provide against it by special legislation.” – Sarah V. Emery, Seven Financial Acts which have Enslaved the American People, 1887.
“If the votes of those (members of Congress) who had an interest distinct from and contrary to the general interest of their constituents had been withdrawn, as in decency and honesty they should have been, the laws would have been the reverse of what they are in all the great questions.” Thomas Jefferson, 1793 - Complaining about how members of Congress always voted in favor of laws partial to themselves and contrary to the interests of the general public. Conflicts of interest existed from day one, and like today, instead of recusing themselves, Congressmen voted for personal profit. What would you do in that situation?
“Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies and debts and taxes are the known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.” - President James Madison, Political Observations, 1795. Something to think about, since we are currently fighting a war without end. Notice that Madison states that not just the physical presence of armies, but also debts and taxes are “known instruments for bringing the many under the domination of the few.”
President John Adams added his two cents with: “There are two ways to conquer and enslave a nation. One is by sword. The other is by debt.” Pretty much agreeing with Madison’s “armies, debts, and taxes” theory. As we shall shortly see, debt can enslave a population more completely and for a longer period of time than any army.
“Single acts of tyranny may be ascribed to the accidental opinion of a day, but a series of oppressions, begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery.” – Thomas Jefferson, 1799. “Thomas Jefferson warned that the newly rising ‘banking institutions and moneyed incorporations’ would destroy the freedoms won in the American Revolution becoming the foundation of a ‘single and splendid government of an aristocracy’ if given a free hand. So they were, to a degree that exceeded Jefferson’s worst nightmares, though not through the expression of popular will: rather, primarily by courts and lawyers…” – Noam Chomsky. As we travel through time to today, we’ll see over and over that old professor Chomsky is absolutely correct: We never voted to have the bankers take over our country; they simply bought the laws, lawyers, and legislatures necessary to make that happen.
"I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes; have not time to think, no means of calling the mismanager's to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers. ... till the bulk of the society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering." – Thomas Jefferson in a letter to Samuel Kercheval, 1816. Pretty much sums it up. Jefferson obviously knew the perils of debt money and fought hard to save us from England’s fate. Unfortunately, we are now experiencing his dread – as Chomsky said: “to a degree that exceeded Jefferson’s worst nightmares.” The vast natural resources of the United States combined with “Yankee ingenuity” and energy staved-off the inevitable for over 200 years, but no more. We can no longer afford to feed both the debt money leech and ourselves – We need to choose. We are becoming: “mere automatons of misery … sinning and suffering” “glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers.” And isn’t that where debt and poverty lead?
Besides the curse of debt money, bankers have also stolen our money using another, equally sinister tool: Control of the nation’s money supply. “The fluctuations of our circulating medium have committed greater depredations upon the property of honest men than all the French piracies.” – President John Adams, 1799. And, more famously: “If the American people ever allow private banks to control the issue of their currency first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered." -Thomas Jefferson 1802. Remember that line, “first by inflation and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property...” This line should have been etched in marble in the Jefferson Memorial. There is plenty of room for it on the base of his statue, which would serve as a fitting reminder for all who come to honor him.
As we shall see, Thomas Jefferson was exactly right and this is another basic point in this book. Bankers have used this very strategy repeatedly throughout our history, each time gaining a bigger piece of the economic pie while sucking the little guy dry. First, they make money plentiful and inexpensive so that people start or expand their businesses and buy farms and homes. Bankers collect their interest payments and then, in unison, they raise interest rates, or contract the money supply, or just stop giving loans, making money tight and take your property from you through bankruptcies and foreclosures. Then, they repeat the process.
What do you think is going on right now?
One Nation, Under Debt, with Liberty and Justice for Few
“I place economy among the first and most important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt.” – Thomas Jefferson – Just to let you know where his head was it.
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” - Thomas Jefferson. “No generation has a right to contract debts greater than can be paid off during the course of its own existence." -George Washington, in a letter to James Madison, 1789. Good idea, by George! - and by Thomas! (That tag line never caught on.) All this common sense! What happened? There was an opposing viewpoint... “No nation ought to be without debt.” And, “A national debt is a national bond.” – Thomas Paine. “A national debt, if it is not excessive, will be to us a national blessing. It will be a powerful cement to our nation. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry.” – Alexander Hamilton, advocating national debt and taxation.
“If the public debt should once more be swelled to a formidable size… we shall be committed to the English career of debt, corruption, and rottenness, closing with revolution.” –Thomas Jefferson, 1809. Jefferson’s admonition, recaps in one sentence, the reason for the Revolutionary War and warns us against adopting the British debt money system.
Our nation was born in debt (Original Sin) from the Revolutionary War. Jefferson wanted to eliminate the debt, and Hamilton argued debt was necessary to keep the nation together. The Hamiltonians, the Conservatives of their time, won and consequently it has been argued that this basic difference between these two Founding Fathers was the beginning of the Progressive vs. Conservative split in our country. It’s interesting to note that the ones who wanted the debt, just like today, were the “Conservatives.” I can almost hear you thinking: “What?” Contrary to popular opinion, (and remember that you read it here first) – even today, those “Borrow and Spend” “Conservative” Republican administrations are responsible for almost ALL $12 trillion of our national debt. Contrast that to the “Tax and Spend” or, perhaps we should say: “Pay As You Go” Democrats! Notice both spend, but the Democrats pay the bills every month while the Republicans simply put it on the taxpayers’ credit card, increasing both our National Debt and the associated annual interest payments. Republicans are the heroes of the easily distracted – “See, they cut our taxes!”– But, if you’ve ever had a credit card, you know, that lunch ain’t free. (Being observant, you may have noticed that you are holding a book or an electronic equivalent and once a number is printed, it’s like an ant in amber, it doesn’t change. To see what our National Debt is right now, go to www.usdebtclock.org and prepare to have your mind boggled.)
I both sense and applaud your skepticism. You should be leery of what others tell you – especially politicians. So, let’s look at the numbers: From the founding of our country up through the Carter administration, our U.S. National Debt was about one trillion dollars. After two hundred years of history, including the Revolutionary War, the Civil War, two World Wars, the Great Depression with those “wild and crazy socialist” spending policies of Franklin Roosevelt, the Korean War, the Vietnam debacle, and the Free Love Hippie era, - From the Minuet to Acid Rock - our National Debt was less than $1 trillion. Let’s blame Liberal Democrat Jimmy Carter for the whole shebang, $1 trillion. I know it’s not fair, but Jimmy’s a nice guy – I’m sure he wouldn’t mind. venerated Conservative Republican, Ronald Reagan, with his staunchly Republican Congress, tripled our National Debt – congratulations! After only 8 years of blessed Reaganomics, our debt stood at $3 trillion and the United States had made that epochal swing from a creditor nation to a debtor nation. Congratulations again! Four years of Conservative Republican George H.W. Bush, who disparaged Reaganomics as “Voodoo Economics,” got it to $5 trillion – Duplicating eight years of Reagan deficits in a mere four. Eight years of Progressive Democrat Bill Clinton raised it another $1trillion to $6 trillion – But remember, he dug his way out of the deep budgetary hole left for him by Bush I - and Clinton’s budgets were actually running surpluses at the end. And finally, after 8 years of Arch Conservative Republican Bush II, we owe an additional $5 trillion dollars. Of course, that’s not counting the multi-trillion dollar mess Conservative Republican Bush II left for Liberal Obama - and us taxpayers. Republicans and their Faux news outlets have been blaming Obama for Bush II’s mess since the moment he was sworn in and, amazingly, there are many (particularly the ones who trust Faux news) who are gullible enough to believe it! “No one ever went broke over estimating the stupidity of the American public.” – H.L. Mencken, The Sage of Baltimore. “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.” – Albert Einstein. It will take years of record budget deficits for us to dig out of Bush II’s hole.
Right now, in 2009, our National Debt is $12 trillion with a bullet - and we taxpayers are paying $500 billion in interest on that every year. That’s $500 billion in taxes – most of what we pay in our individual Federal Income Tax – completely wasted every year. $500 billion that will never build a freeway or school – Never even fill a pothole – This is the curse of debt money and this is the curse of the “Borrow and Spend” Conservative Republicans. You tell me what you think Conservative means today – It means exactly the same as it did 230 years ago. To me, and you, and to Thomas Jefferson, it means DEBT, economy crippling debt and endless, escalating taxation to pay the credit card bills. Hey, DON’T believe me. Like I said: “Google it.” “Blessed are the young, for they will inherit the national debt.” – Herbert Hoover, Conservative Republican.
So, why do our elected politicians - the ones who are supposed to represent us and do the things that we would like done and not do the things we don’t want done - continue to put us deeper and deeper into debt? It is because our “representatives” lack the courage to tax us appropriately (you know, to “pay as you go”) for the services we citizens hope to get from our government with the few dollars left over after they spend all that money on the sweetheart contracts that corporations demand from them in return for political contributions. Raising taxes is typically political suicide (voters pay attention to very few things, but they do pay attention to taxes) and most politicians like their “job” and their perks.
The alternative to taxes is debt. If you spend more than you earn, you go into debt and if our government spends more than it collects in taxes, we ALL go into debt. Unfortunately, we taxpayers will pay our National Debt three times: Once in unending interest payments; twice in inflation – the continual dilution and diminution of our dollars; and, theoretically, a third time when we actually repay the debt (AS IF that’s ever going to happen.) The next time you hear that our national “Debt Ceiling” (I’m capitalizing National Debt and Debt Ceiling because they are so big) has been raised – again – stop and realize that you and your children and your children’s children will be paying interest on that forever and that the only reason your representative is doing that is so that he or she can keep their paycheck and perks a little longer. Sad, true, but there’s a subtler, sinister side to this story…
“Nearly every nation which has ever used paper money has fixed its amount, and set limits which it solemnly promised again and again not to pass, but such promises are in vain. The intention, when they are made, is honest, but it is impossible to keep them. A man might as well jump off a precipice intending to stop halfway down.” – William Sumner, A History of American Currency, 1874. Actually, Mr. Sumner, there never was the intent to stop. You see, there are two main ways our government raises its money: They can either tax you a dollar or they can just have the Federal Reserve print them a new dollar – which they then borrow. Taxation directly taxes the wealthy and middle classes, while printing money, through inflation, indirectly tax the poor and middle classes. Either way, the middle class pays and our government has another dollar to spend.
“Conservative” Republicans continually vote to increase our National Debt because they represent the rich and printing more money benefits the rich. You personally may be poor and vote Republican, there are many who do. You are typically splintered away from the Democratic Party using distractive, divisive issues such as abortion, gays, and guns - But the actual “Conservative” base is wealthy and by simply printing another $1 trillion in new money, that money does not have to be raised by taxation. When this new money enters our economy we have inflation, and inflation is a hidden tax which affects the poor and middle classes - and the poorer you are, the more it hurts.
If you are truly wealthy, what do you care if your driver fills your limo with gas at $3 a gallon or $10? You’ll probably just write it off as a business expense anyway – Something, obviously, your workers can’t do. And you own your home, so inflationary rent increases are not your problem; it’s a problem for all your tenants. In fact, the rich actually benefit from inflation with an increase in the value of, and income from, their properties, raw materials, and manufactured goods. During inflationary periods, the “asset managers” of the wealthy are able to reposition their assets out of cash and bonds and into real estate, stocks, oil, and gold.
If you work or are retired, you suffer as the world around you costs more and more - and you have precious little in the way of assets to move. Even if you are lucky enough to have a cost of living adjustment, that always lags a year or more behind inflation – ensuring you will be gouged deeply before this small bandaid is applied. So that’s why all you old-school Conservatives have been scratching your heads for the last 25 years, appalled, watching as your political heroes increased our National Debt like crazy. It wasn’t lice – well, maybe it was - but increasing the National Debt wasn’t an accident - That’s the plan, Stan. We’ll revisit inflation a little later.
Progressives, on the other hand, favor a progressive income tax - incrementally targeting the rich, instead of the workers, retired, and the poor. That’s why the Democrats want to “pay as you go” rather than to continually charge government expenses on our national platinum credit card. Due to the influences of both Democrats and Republicans over the years, our government is funded by a combination of taxes and just plain printing money. We must pay for our government, one way or the other - Printing more money favors the rich and taxation favors everyone else. Pick your poison and vote appropriately.
“I have never seen more senators express discontent with their jobs. ... I think the major cause is that, deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. ... We have defrauded our country to get ourselves elected.” – Senator John Danforth, April 22, 1992. An honest assessment. Thank you.
“The significant problems we face cannot be solved with the same level of thinking we were at when we created them.” - Albert Einstein. As our National Debt rises significantly over the next few years because of the current bailout and attempts to jump-start our Bushwhacked economy, more and more of our taxes will go to pay the interest on the Debt. Interest rates for Treasuries, currently low because of the severe recession, will rise with the inevitable inflation and because of the universal expectation that the Federal Reserve will continue to print its way out of financial trouble in the future.
Of course, investors will be paid back, that’s not the problem, the printing presses will work overtime to pump out the number of dollars required to make good our government’s promise. The trouble, as always, is that these dollars will be worth considerably less than the dollars invested. A high inflation rate will demand an even higher interest rate be paid on our national debt - our U.S. Treasuries - and the longer the term, the higher the rate. The U.S. Treasury should take advantage of this recession and sell as many 30 year bonds as possible now, and homeowners should lock-in 30-year fixed rates, before the interest rates again skyrocket. Our income taxes will be consumed by these interest payments and we will get less and less of the services that we think our government should provide, even as our taxes rise. These service cuts have been occurring, and will continue to occur at a faster and faster rate and at all levels of government, not just nationally.
As government gets squeezed out of government business by debt and its attendant interest payments, who will take over? I’m sure that every aspect that can be privatized - will be. Horrible cuts will be made by these private corporations because they don’t have to put on that professional smiley face and lie to you to get elected - they just have to make a profit. By now, every thinking person knows the washed-up mantra that “Private enterprise is leaner and more efficient that the government” does not apply to those corporations suckling the high-fat milk exuded from the government teat. These private enterprises will be leaner only in the services they provide to those in need. Is this “private enterprise” government the ultimate goal of the “Conservative” Republicans responsible for our national debt? Or, is the intention to simply bankrupt, and thus eliminate our government? Intentional or not, our present course does not lead 99% of us Americans to a bright sunshiny future.
After much argument, Congress passed Alexander Hamilton’s banking bill in February, 1791. “Jefferson, who was then Secretary of State, gave a written opinion denying the power of Congress to incorporate a bank of issue, and Madison, who was in Congress, opposed it in a powerful speech, as a violation of the Constitution.” – William Agustus Berkey, The Money Question, 1876. Congress passed it anyway. I guess that, in those days, Jefferson and Madison were not idolized as they are today – They were just regular guys in Congress who had their own opinions on things, just like everybody else. Realize that their words had not yet been made into tourist attractions, etched in marble, enshrined in monuments. These guys were just making it up as they went along. These basic arguments for and against the creation of the national bank defined and outlined the “loose constructionist” versus the “strict constructionist” Constitutional viewpoints argued about even to this day.
The First Bank of the United States, tenured by a charter of 20 years, was set to expire in 1811. Its name, The Bank of the United States
“A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army." – Thomas Jefferson. Very true, as we shall see. Maybe there’s room at the base of his statue for that quote too.
“On Tuesday, January 14, 1794, the following resolution was introduced in the United States Senate: ‘…nor shall any person holding any office or stock in any institution in the nature of a bank, for issuing or discounting bills or notes payable to bearer or order, under the authority of the United States, be a member of either House whilst he holds such office or stock.’ It passed the Senate two days later, after being fought by the bankers, and amended at their instigation in order that they might be allowed to sit in Congress, but it still remained a protest to bankers controlling legislation in which they were personally interested.” – U.S.
“Think you our present Congress would pass such a law? That law is now on upon statute book, signed by George Washington in 1793. According to Moses W. Fields, M.C., our Congress is made up as follows: ‘One hundred and twenty bankers, ninety-nine lawyers, fourteen merchants, seven doctors, four mechanics, and not a single farmer or day laborer.’ Much evil and suffering has been brought upon the country, Fellow-citizens, by your own violation of that wise law, passed for your protection. You have been electing bankers and bondholders to Congress to legislate finance. What can you expect when you send the wolves to guard the lambs? – Freeman Otis Willey, Whither are We Drifting as a Nation, 1882. Our Founding Fathers, it seems, knew that by keeping our money free, that would help keep our people free. Later generations, either unaware of the danger, or simply greedy for bribes, ignored the warnings, pleas, and laws set down for their own protection.
Representative Lindbergh, again: “Ever since the Civil War, Congress has allowed the bankers to control financial legislation. The membership of the Finance Committee in the Senate and the Committee on Banking and Currency in the House have been made up chiefly of bankers, their agents, and their attorneys. ...In this way the committees have been able to control legislation in the interests of the few.” – Charles Lindbergh, Banking and Currency and the Money Trust, 1913. With a set-up like this, what chance does the “little guy” have?
Despite serious objections from several of our Founding Fathers, the "First Bank of the United States" was chartered for $10 million. Its stated purpose, to: “...effectively distribute the cost of the Revolution proportionately throughout all of the states.” The U.S. government chipped-in $2 million in gold to start up the bank and the rest of the shares were sold to the public – to Americans and foreigners alike.
The First Bank of the United States, like all other banks, used fractional reserve banking to make loans far greater than their gold reserves, issuing paper currency and thus creating new money. Over the first 5 years, the U.S. Government itself, borrowed $8.2 million of this new money and prices rose by 72%. Jefferson, commenting on this runaway inflation wrote, “I wish it were possible to obtain a single amendment to our Constitution – taking from the federal government their power of borrowing.”
“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits - profits which are the price of no useful industry of theirs.” - Thomas Jefferson. After the government sold its bank shares to help pay its debts, the First Bank of the United States was 100% privately owned.
Fractional Reserve Banking
If the concept of a bank loaning out more money than it has – That is: Just creating money out of thin air, is a bit too “Twilight Zone-y” for you, let me tell you the legend of Fractional Reserve Banking. I apologize in advance to those who are familiar with this term, because you are probably in the business and have heard versions of this story at least 50 times before. I don’t know if it is true, but it has been told so many times over the years that it has taken on the aspects of a legend. So let’s start it out with: Once upon a time… somewhere in medieval Europe, there lived a goldsmith named Mike. Ok, I wasn’t really around back then; I’m using a literary tool so I now can tell the story first-person. So, anyway, being a goldsmith, I had a safe in my shop to store my gold. Other merchants in town trusted me (who wouldn’t?) and since I had the only vault, they asked me to store their extra gold for them. Being basically honest, I gave them receipts for their gold and logged the information in my account books. Soon, these merchants started using their gold receipts in place of the actual gold in their transactions. The only problem was that they were typically for large amounts representing the total amount of gold they owned, so they began asking for deposit receipts in smaller denominations. Instead of one receipt for $100.00, for example, they wanted 3 for $20, 2 for $10, 3 for $5, and 5 for $1.00. These paper receipts, fully backed by gold in my vault, passed from person to person and were eventually used in everyone’s daily transactions all over town. Everyone was satisfied trading these pieces of paper back and forth.
Occasionally, especially in the beginning, someone would bring me their paper to exchange for the actual gold, but surprisingly, very little gold ever left my vault. Eventually, some merchants, knowing I had a bunch of gold, asked me for loans. Realizing that most of the gold just sat in my vault, I began writing extra receipts for gold that was not in my vault. I figured the merchants would eventually pay me back and I could earn a little interest on the side. Soon, I had loaned out the equivalent of 100% of the other people’s gold in the vault and I was making a lot of extra money on the interest. Almost ALL the gold stayed in the vault and what I had done was simply issue new receipts for non-existent gold. These receipts were used in the town and nobody was the wiser. (I thought it best if I didn’t tell them.) When the loans were repaid, I could either destroy the extra receipts or loan them out to somebody else. My little experiment worked so well that I, of course, loaned them out to somebody else and collected more interest on the fake receipts. Before you call me a lying, cheating, crook - let me ask you: What would you have done in this situation?
At first, I was uneasy about this business plan, but as the years went by, I felt more and more comfortable. If anybody wanted their gold back, I could give it to them. The only problem would be if everybody wanted their gold at the same time. To prevent that, I built the biggest, most impressive building in town, a bank with great marble pillars. I lived in the largest mansion; I dressed in the finest clothes, and smoked big, fat cigars so everybody would believe their gold was safe with me. I found that people respected me, they had to, after all, I was now a very wealthy banker and controlled their financial lives.
This process of loaning out money that doesn’t exist is called “Fractional Reserve Banking.” If, in my example, I had $1,000 worth of gold in my vault and wrote receipts for $2,000, my fractional reserve would be 50%. If half the townspeople lined up in my bank and demanded their gold, I could give it to them. Before the Bush Bailout, American banks were supposed to have a 10% reserve, meaning that they were supposed to have $1000 in their vault for every $10,000 they loaned. They could only give back money to 10% of their depositors. That’s pretty standard and banks around the world have used this trick for hundreds of years. You would be correct in saying that virtually every bank in the world is, logically speaking, bankrupt. “One thing to realize about our fractional reserve banking system is that, like a child's game of musical chairs, as long as the music is playing, there are no losers." - Andrew Gause, quoted in Money as Debt, by Paul Grignon. Better hope that money music never stops because in the bankers’ perverted version, there is only one chair for every ten players and their game ends with, “Ashes, ashes, all fall down.”
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“In 1811, Congress refused to re-charter the bank, and as it had during its brief career obtained the mastery over the entire business of the country by its loans of circulating notes and the public revenues, and had built up a system of credit in the commercial centers, to intimidate Congress and the people, it made a concerted contraction of the currency and brought on the Great Panic of 1811.
“United States Senator (Thomas Hart) Benton (Democratic-Republican from Missouri – and yes, that political party actually existed – Founded by Jefferson and Madison to compete with Hamilton’s Federalist Party - was the dominant political party in the U.S. from 1800 to 1824, when it split into two factions), in a speech in the Senate during the administration of Jackson, thus graphically states the manner in which the bank contrived to manufacture public sentiment in its favor. He says: ‘All the machinery of alarm and distress was in full activity at that time as at present, and with the same identical effects - town meetings, memorials, resolutions, deputations to Congress, alarming speeches in Congress. The price of all property was shown to be depressed. Hemp sunk in Philadelphia from $350 to $250 per ton; flour sunk from $11.00 per barrel to $7.75; all real estate fell thirty per cent; five hundred houses were suspended in their erection; the rent of money rose to one and a half per month on the best paper; confidence destroyed; manufactories stopped; workmen dismissed and the ruin of the country confidently predicted.’” – M.W. Walbert, The Coming Battle, 1899. The “Great Panic of 1811” was brought about by the First Bank of the United States contracting the currency – That is, by calling-in existing loans and refusing to make new ones. By raising “the rent of money” to “one and a half per month on the best paper,” the bank was charging 18% interest to the most credit-worthy borrowers. You can imagine what those rates would do to our economy today. In 1811, it depressed our nation – It put the brakes on construction, caused the real estate market to tumble, cut prices on farmers’ crops, and, with little money for consumers, slowed manufacturing, causing unemployment, destitution, and ruin. Americans became homeless and hungry. Why did the bank cause this widespread misery? It hoped the “Panic” would intimidate Congress into renewing the bank’s charter. The bankers’ weapon is money and they are not afraid to use it - to have our nation suffer in order to get their way. Remember this strategy; you will see it again and again as we travel through time to today. For those Americans who suffered – through the loss of their savings, loss of employment, homelessness, starvation, and the crushing of their dreams, the Great Panic of 1811 was truly a vile act of evil.
“In 1811 the bank applied to Congress for a renewal of its charter, but it was not granted. (Henry) Clay and other leading statesmen opposed its re-charter on the ground that it was “unconstitutional, anti-American, and strictly a British institution.” – William Agustus Berkey, The Money Question,1878. “It was stated by Mr. Clay, in a speech delivered in the Senate, that seven-tenths of the stock belonged to British subjects...” - Matthew St. Clair Clarke and David A. Hall, Legislative and Documentary History of the Bank of the United States, 1832. U.S. Rep. Peter Buell Porter (N.Y.), like Jefferson before him, attacked the national bank and the implied Constitutional powers needed for its creation, saying Congress “would have planted in the bosom of the Constitution a viper, which would one day or another sting the liberties of this country to the heart.” Legislators of Pennsylvania and Virginia passed State Resolutions asking the U.S. Congress to veto the bank’s re-charter bill. Their chief complaint was that 75% of the bank's stock was held by British interests, which would have sent seven million dollars to England had the charter been renewed. “Just at this time the feeling against England ran high, and the fact that 18,000 shares of the bank (out of 25,000) were held abroad, mostly in England, aroused a strong feeling of resentment and opposition towards the bank. Mr. Gallatin reminded the people that foreigners had no voice in the conduct of the bank, and that in case the renewal of the charter was denied, it would be necessary to remit about $7,200,000 (out of a total capitalization of $10,000,000) abroad at once in settlement for the stock held there, that being its market value, and that the country could illy afford to spare that amount of specie on the eve of war, when every dollar would be needed at home, whereas if the charter was renewed it would only be necessary to remit to England the annual dividend of about 8 1/2 per cent., equivalent in effect to having an English loan of $7,200,000 at 8 1/2 per cent. to aid us in the war. But such arguments only seemed to inflame the opposition. Henry Clay, then just coming into popularity, threw his influence on the side against renewal, on the grounds that ‘the Constitution did not originally authorize Congress to grant the charter,’ hence a renewal of it would be unconstitutional for the same reason. Five years later Mr. Clay was a strong advocate of the establishment of the Second Bank of the United States, having reversed his former opinion on the question of constitutionality.” – O.M. Powers, Commerce and Finance, 1903.
English Banker and majority First Bank of the United States shareholder, Nathan Rothschild, declared, “Either the application for renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.” He is also quoted as telling Parliament, “Teach these impudent Americans a lesson. Bring them back to Colonial status.” The renewal bill passed by a single vote in the House and was deadlocked in the Senate. President James Madison, a staunch opponent of the bank (as you could probably tell by now), sent Vice-President, George Clinton (No, not the Funkadelic guy) to break a tie in the Senate and killed the bank. As promised by Nathan Rothschild, thousands of our citizens died in the War of 1812. Fortunately for us, the British were still busy fighting Napoleon and, with their forces divided, were not able to mount a full assault against us. The war eventually ended in a stalemate. After symbolically burning Washington D.C., the British signed a treaty in Ghent, Belgium on Christmas Eve, 1814, and went home.
“The trustees of the Bank of the United States applied for charters for new banks to succeed to the business, to the legislatures of New York and Pennsylvania. The charter of the Bank of America was finally granted by the state of New York...” – John Knox, Bradford Rhodes, and Elmer Youngman, A History of Banking in the United States, 1900. “... The bank, during the War of 1812, exerted its whole influence against the United States. It was a matter of little concern to it that Great Britain had impressed into her service thousands of native born citizens of this country, and compelled them, against their will, to man British guns. What cared the bank that hundreds of American merchant vessels were confiscated, in a time of profound peace, by orders of the English government, and that repeated insults had been heaped on this republic by the insolence of British statesmen? Although the bank was a creature of the legislative powers of Congress, and had received vast financial benefits from the country, it sought to embarrass the government in its struggle against Great Britain by arraying the moneyed class against the struggling Republic. Money could not be obtained by means of loans to organize, arm, and equip the American armies and to construct vessels of war to protect American commerce. In this emergency the counsel of Jefferson was requested, and he advised the issue of Treasury Notes by the Government in lieu of borrowing.” M.W. Walbert, The Coming Battle
“The question is asked, and ought to be looked at, what is to be the recourse if loans cannot be obtained. … Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. It is the only fund on which they can rely for loans; it is the only recourse which can never fail them, and it is an abundant one for every necessary purpose. Treasury bills bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation will take the place of so much gold and silver…” – Thomas Jefferson, September 11, 1813. America was at war with a powerful foe and her central bank would not loan money – Indeed, a vile act of evil. Bankers withholding money during time of war - when we needed it the most - illustrates one of the main arguments against the private issuance of a nation’s money: It is controlled by the wealthy few, frequently to the detriment of the many. Jefferson’s advice: Get rid of the bank paper – “Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.” The U.S. Government should print its own money. By having our own government issue its own money, as specified in our Constitution, the amount in circulation could be strictly monitored and adjusted to fit the economic times. As an added bonus, the taxpayers of our nation would not have to pay endless interest to the wealthy bankers in order to use our own money - as with debt money. What a great idea!
"The government is now issuing Treasury Notes for circulation, bottomed on solid funds and bearing interest. The banking confederacy and the merchants bound to them by their debts will endeavor to crush the credit of these notes; but the country is eager for them as something they can trust to, and so soon as a convenient quantity of them can get into circulation, the bank notes die." – Thomas Jefferson, March 2, 1815. Jefferson, finally vindicated with the government printing its own money, foresaw an end to banker rule in America. Regrettably, he underestimated the near limitless power of the bankers and his vision remains only a dream to this very day.
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