American Minute with Bill Federer
THE BANK WAR: Jackson v. Biddle
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Money supply has a mixed history.
Originally, wealth was measured in precious metals of
gold, silver,
or
copper.
Exodus 25:3 "And this is the offering which ye shall take of them;
gold,
and
silver,
and
copper."
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Items of
gold, silver,
or
copper
had to be
weighed.
A
"shekel"
was a fixed
unit of weight.
Shekels
were placed on one side of a
scale
and on the other side were placed the items of
gold, silver,
or
copper
to be
weighed.
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The
Bible
admonished not cheat, Deuteronomy 25:13 "Do not have
two differing weights
in your bag -- one
heavy,
one
light."
(NIV)
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In the 6th century BC,
King Croesus of Lydia
is credited with being the
first to mint coins,
a mix of
gold and silver
called "electrum," which had a
specific weight
and
image stamped
on it.
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Croesus,
who was associated with the legend of
King Midas' gold,
asked Greek leader
Solon
who was the happiest man.
Solon,
because of the fickleness of fortune, responded, "Count no man happy till he be dead."
Croesus
later lost his wealth and his life when
Lydia
was conquered by
King Cyrus of Persia
in 546 BC.
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Other kingdoms began minting coins, such as the
Assyrians, Egyptians, Persians,
and
Romans,
whose coin was called
denarius.
“'Is it lawful for us to pay taxes to Caesar, or not?' ... Jesus said to them 'Show Me a
denarius.
Whose likeness and inscription does it have?' They said, 'Caesar's.'
And He said to them, 'Then render to Caesar the things that are Caesar’s, and to God the things that are God’s.'” (NASB Luke 20:22-25)
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Methods of cheating developed.
One was
clipping off the edges of coins.
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Another, used by
Egyptian
and
Roman
governments,
was to mix in less expensive
base metals
with the gold, silver, or copper, thus
debasing the coins.
Eventually, coins lost their
"intrinsic" value
and simply took on a
"token" value.
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Decades of irresponsible policies weakened Rome's economy:
- out-of-control government spending;
- enormous government debt;
- continual expensive wars; and
- government projects and welfare programs.
Hyper-inflation was followed by
Diocletian's
infamous
wage and price controls,
which caused people to abandon their debts and leave.
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To prevent people from running away from their debts,
Diocletian
commanded that men, women, and children, be tied to their
debts
and
mortgaged lands.
Rome collapsed,
but this policy continued for centuries as the Medieval
feudal system.
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Another development was
paper currency.
Rather than carrying around heavy bags of coins, individuals would store their gold and silver in secure
"banking houses."
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When conducting a transaction, a customer could simply write a note with their signature, which the merchant would later take to the banking house and exchange for coins.
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Banking houses
realized that not all the money was used everyday, so they would keep a reserve amount for day-to-day transactions and
lend the rest out at interest,
thus making a
profit.
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Banks
began printing their own currency notes, and as there were little means of regulating them, unscrupulous over-printing could occur.
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The
Continental Congress
printed a fiat currency, called a
"Continental,"
which was not backed by gold or silver.
It lost nearly all its value, giving rise to the phrase:
"not worth a Continental."
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Learning this lesson, the
U.S. Constitution
did
not
give the Federal government permission to
print currency,
only authority to
mint coins,
with a value tied to the stable Spanish silver dollar (Article 1, Sec. 8):
“Congress shall have power … to
coin money,
regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."
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Roger Sherman,
a signer of the Constitution, authored Article 1, Section 10:
"No State shall ... make anything but
gold
and
silver coin
a tender in payment of debts."
Sherman
wrote in
A Caveat Against Injustice or, An Inquiry into the Evils of a Fluctuating Medium of Exchange,
1752:
"(Currency) bills of credit
are of
no intrinsic value,
and their ...
value is fluctuating
and very uncertain, and therefore it would be unjust that any person should be obliged to receive them in payment as money ...
Money
ought to be something of
certain value,
it being that whereby other things are to be valued."
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James Madison
wrote:
"Paper money
is
unjust
... It is unconstitutional, for it affects the rights of property as much as taking away equal value in land."
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George Washington
wrote Thomas Jefferson, August 1, 1786:
"Paper money
has had the effect in your state ... to
ruin commerce,
oppress the honest, and
open the door to every species of fraud
and injustice."
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Jefferson
wrote to Colonel Edward Carrington, May 27, 1788:
"Paper is poverty
... it is only the
ghost of money,
and not money itself."
In 1817,
Jefferson
predicted
paper money
will bring:
"...
abuses
also are
inevitable
and, by breaking up the measure of value,
make a lottery of all private property."
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Over the
objections
of
Thomas Jefferson, James Madison,
and
U.S. Attorney General Edmund Randolph,
the
nation's first "centralized" bank
was created on February 25, 1791.
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Called the
Bank of the United States,
it was a private institution founded with the help of
Alexander Hamilton.
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Overseas foreigners
were allowed to be
stockholders
in the
Bank,
though they were not allowed to vote.
British Prime Minister William Pitt,
whose nation's debt doubled to £243 million during the American Revolutionary War, stated:
"Let the
American people
go into their
debt-funding schemes
and
banking systems,
and from that hour their boasted
independence will be a mere phantom."
Jefferson
described the
Bank of the United States
"as a
machine for the corruption
of the legislature."
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In 1811,
James Madison
refused to recharter the
Bank of the United States.
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As
British financiers
reportedly
owned two-thirds of the Bank's stock,
this may have been a factor
precipitating the War of 1812.
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France
incurred enormous
debt
helping America win independence from Britain.
This destabilized the country, leading to
King Louis XVI
being forced from the throne and then
beheaded
on January 21, 1793.
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The
French Republic
was formed, but by 1799 it was
bankrupt,
setting the stage for
Napoleon
to take power.
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R. McNair Wilson's book,
Monarchy or Money Power
(1933), stated:
"It was ordained by
Napoleon
that money should not be exported from
France
on any pretext whatever except with the consent of the Government,
and that in no circumstances should loans be employed to meet current expenditure whether civil or military.
The object was to withhold from finance the power to embarrass the Government as it had embarrassed the Government of
Louis XVI.
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... When a
Government,
Bonaparte
declared, is dependent for
money upon bankers,
they and not the leaders of that Government
control
the situation, since
'the hand that gives is above the hand that takes'
...
'Money,'
he declared, 'has no motherland;
financiers are without patriotism
and without decency: their sole object is gain.'”
An important banking family in Frankfurt, Germany, was that of Mayer Amschel Rothschild (1743–1812). His five sons led branches which significantly shaped Europe in the next century:
- Amschel Mayer Rothschild, Frankfurt;
- Salomon Rothschild, Vienna;
- Karl Rothschild, Naples;
- James Rothschild, Paris;
- Nathan Meyer Rothschild, London.
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Nathan Rothschild helped finance the
Duke of Wellington's
British armies against
Napoleon
in Spain and France.
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A legend persists that
Nathan Rothschild
obtained early information of the British victory over
Napoleon
at the
Battle of Waterloo,
June 18, 1815.
He began to sell his shares on the London Stock Exchange, leading investors to suspect he had inside information that the British lost the battle, resulting in a panic-selling off of stocks.
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The story continued that Rothschild bought up devalued shares at low prices, and when news arrived the next day that the British had actually
won the Battle of Waterloo,
the stock market enthusiastically exploded, resulting in Rothschild making a million pounds sterling in a day.
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A maxim attributed to the House of Rothschild was: "Let us control the money of a nation, and we care not who makes its laws."
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On April 10, 1816, the
Second Bank of the United States
received its charter.
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By 1822, the rechartered
Second Bank of the United States
was run by
Nicholas Biddle
who boasted of having more personal power than the President.
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Nicholas Biddle
set interest rates and reserve requirements, which allowed him to amass an enormous personal wealth.
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Nicholas Biddle
bought political influence by financing the election campaigns of politicians.
Biddle
owned newspapers and would have them editorialize and sway voters during elections.
Ambitious politicians sought his money and his ability to provide favorable media coverage.
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On JULY 10, 1832,
President Andrew Jackson
vetoed the charter renewal of
Nicholas Biddle's Second Bank of the United States,
stating:
"Some of
powers
and privileges possessed by the existing
Bank
are
unauthorized
by the
Constitution,
subversive to the rights of the States,
and
dangerous to the liberties
of the people ...
It is easy to conceive that great evils to our country and its institutions might flow from such
a concentration of power in the hands of a few men irresponsible to the people ...
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... Their power would be great whenever they might choose to exert it ...
to influence elections
or control the affairs of the nation.
But if any
private citizen or public functionary
should interpose to
curtail its powers
or prevent a renewal of its privileges, it cannot be doubted that
he would be made to feel its influence ..."
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Jackson
continued:
"Controlling our currency,
receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and
dangerous than the naval and military power of the enemy."
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Economist John Maynard Keynes
held a similar view, as he wrote in his book
The Economic Consequences of the Peace
(1920, reprinted 1971, p. 235):
"Lenin is said to have declared 'The best way to destroy the capitalist system is to debauch the currency.'"
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On September 18, 1833,
President Andrew Jackson
decided to remove all Federal money out of
Nicholas Biddle's Second Bank of the United States:
"The
Bank
is thus converted into a
vast electioneering engine,
with means to embroil the country in deadly feuds, and ... extend its
corruption
through all the ramifications of society ...
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... The President would feel that he was ... an accomplice in
a conspiracy against that Government
... if he did not take every step within his constitutional and legal power ... to ... putting an end to these enormities ...
Was it expected when the
moneys of the United States
were directed to be placed in that
Bank
that they would be
put under the control of one man? ...
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... This corporation now holds in its hands the happiness and prosperity of the American people, it is high time to take the alarm.
If the despotism be already upon us and our only safety is in the mercy of the despot ... how necessary it is to shake it off ...
One of the most serious objections to the Bank of the United States is the power which it concentrates."
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On December 3, 1833, in his 5th Annual Message,
President Andrew Jackson
condemned
Nicholas Biddle's Second Bank of the United States:
"This great and
powerful institution
had been actively engaged in attempting to
influence the elections
of the public officers
by means of its money
...
It being thus established by unquestionable proof that the
Bank of the United States
was converted into
a permanent electioneering engine
...
The efforts of the
Bank
to
control public opinion,
through the
distresses
of some and the
fears
of others ...
Through presses known to have been sustained by its
money
it attempts by unfounded
alarms to create a panic
in all."
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President Andrew Jackson,
whose wife died right before he took office, stated in a Protest Message to the Senate, April 15, 1834:
"The Bank of the United States,
a great
moneyed monopoly,
had attempted to obtain a renewal of its charter by
controlling the elections of the people
... to
control public opinion
and force the Government to yield to its demands ...
The only ambition I can feel is to acquit myself to Him to whom I must soon render an account of my stewardship ...
to persuade my countrymen, so far as I may, that it is not in a ... government supported by powerful monopolies ... that they will find happiness ... but in a plain system, void of pomp, protecting all and granting favors to none, dispensing its blessings, like the dews of Heaven."
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On December 1, 1834, in his 6th Annual Message,
President Jackson
stated:
"Events have satisfied my mind, and I think the minds of the American people, that the
mischief and dangers
which flow from
a national Bank
far overbalance all its advantages.
The bold effort the present
Bank
has made to
control the Government,
the distresses it has wantonly produced, the violence of which it has been the occasion in one of our cities famed for its observance of law and order,
are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
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On January 30, 1835, in the midst of the
"Bank War," Jackson
survived an
assassination attempt
when Richard Lawrence fired two pistols at him at point blank range.
Perhaps due to the humid, foggy weather in Washington, D.C., the
guns misfired.
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Davy Crockett,
who was with the President, ran up and wrestled the assailant, disarming him.
Senator Thomas Hart Benton
of Missouri wrote January 30, 1835 of how the incident:
"... irresistibly carried many minds to the belief in a
superintending Providence,
manifested in the
extraordinary case of two pistols in succession
-- so well loaded, so cooly handled, and which afterwards fired with such readiness, force,and precision --
missing fire
each in his turn, when
leveled eight feet at the President's heart."
When
King William IV of England
heard of the incident, he wrote expressing his concern.
President Jackson
wrote back:
"A kind of
Providence
had been pleased to shield me against the recent attempt upon my life, and irresistibly carried many minds to the belief in
a superintending Providence."
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On December 7, 1835, in his 7th Annual Message,
Jackson
stated:
"We have felt but one class of these
dangers
exhibited in the contest
waged by the Bank of the United States
...
The
Bank
is, in fact, but one of the fruits of a system at war with the genius of all our institutions ... whose great
ultimate object
and inevitable result ... is the
consolidation of all power in our system in one central government.
Lavish public disbursements and corporations with exclusive privileges would be its substitutes for the original ... checks and balances of the Constitution ...
Wherever this spirit has effected
an alliance with political power, tyranny and despotism have been the fruit
... It has to be incessantly watched, or
it corrupts
...
All history tells us that
a free people
should be
watchful of delegated power,
and should never acquiesce in a practice which will diminish their control over it."
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On December 5, 1836, in his 8th Annual Message,
President Andrew Jackson
stated:
"It was in view of these
evils,
together with the
dangerous power
wielded by the
Bank of the United States
and its
repugnance to our Constitution,
that I was induced to exert the power conferred upon me by the American people to prevent the continuance of that institution ...
The lessons taught by the
Bank of the United States
cannot well be lost upon the American people. They will take care never again to place
so tremendous a power in irresponsible hands."
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On March 4, 1837, in his Farewell Address,
President Jackson
stated:
"The
distress and alarm
which pervaded and agitated the whole country when the
Bank of the United States
waged war
upon the
people
in order to
compel them to submit
to its demands cannot yet be forgotten ...
The
Government
would have passed from the hands of the many
to the hands of the few,
and this
organized money power
from its
secret conclave
would have
dictated the choice of your highest officers
and compelled you to make peace or war, as best suited their own wishes.
The
forms of your Government might
for a time have
remained,
but its
living spirit
would have
departed
from it ..."
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Jackson
continued:
"The
distress
... inflicted on the people by the
Bank
are some of the fruits of that system of policy which is continually striving to
enlarge the authority of the Federal Government beyond the limits fixed by the Constitution ...
The
power
which
moneyed interest
can exercise, when
concentrated under a single head
and with our present
system of currency,
was sufficiently demonstrated in the struggle made by the
Bank of the United States
..."
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Economist Milton Friedman
stated:
"Concentrated power
is not rendered harmless by the good intentions of those who create it."
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Jackson
continued:
"The
paper-money system
and its natural associations --
monopoly and exclusive privileges
-- have already struck their root too deep in the soil, and it will require all your efforts to check its further growth and to
eradicate the evil ...
The
men
who
profit
by the
abuses
and desire to perpetuate them will continue to besiege the halls of legislation in the General Government ... and will seek by every artifice to
mislead and deceive the public servants
...
You have no longer any cause to fear danger from abroad; your strength and power are well known throughout the civilized world ...
It is from within,
among yourselves -- from cupidity,
from corruption ... and inordinate thirst for power
-- that
factions will be formed
and
liberty endangered.
It is against such designs, whatever disguise the actors may assume, that you have especially to
guard yourselves ...
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... Providence
has showered on this favored land blessings without number, and has chosen you as the
guardians of freedom,
to preserve it for the benefit of the human race.
May
He who holds in His hands the destinies of nations,
make you worthy of the favors He has bestowed,
and enable you, with pure hearts and hands and sleepless vigilance, to
guard and defend to the end of time,
the great charge
He has committed to your keeping."
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Schedule Bill Federer for informative interviews & captivating PowerPoint presentations: 314-502-8924
wjfederer@gmail.com
American Minute is a registered trademark of William J. Federer. Permission is granted to forward, reprint, or duplicate, with acknowledgment.
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