Chapter III
18TH AND 19TH CENTURY
MONEY MANIPULATIONS

Behind every great fortune
there lies a great crime
— BALZAC

From the time that Columbus discovered the Americas in 1492, a steadily increasing number of ships came to the New World to seek wealth and plunder.  The early Spanish traders were not interested in establishing colonies.  They wanted gold and would resort to any means to obtain it.  Tales of glittering wealth attracted all sorts of buccaneer types who plundered and ravaged every area where they frantically searched for gold.  Probably every known crime has been committed in the name of gold by these early invaders.  In fact, it might be said that they resurrected the ancient worship of the golden calf.

As trade developed, however, the North American continent attracted a new type of colonist.  Hardy, self reliant people came to the new world to escape from government tyranny and to find religious and economic freedom.  These people worked hard, established farms, towns and gradually began to expand their economy.  By the 18th century the American colonies were beginning to prosper and enjoy an active and flourishing trade.

In the early years much of the trade in the Colonies had been by barter.  With the increase in the population such measures became impractical and other means of exchange were sought.  As early as 1652 the province of Massachusetts established a mint and began striking Pine Tree shillings.  At this moment the contest between the control of our money by bankers began—and the problem exists even more acutely today.  Some royalist sympathizers considered the Pine Tree coins a violation of the royal prerogative, but they still circulated, to be followed later with Colonial Bills of Credit.  Other colonies soon opened mints and people were encouraged to bring in bullion for melting into coins.  These coins were declared legal tender by some of the colonies.

A land bank had been organized in South Carolina around 1675 which issued private notes upon the security of estates.  Massachusetts also began the issuance of Provincial Notes and even authorized a private bank to issue its own notes for a short period, between 1714 and 1720.  Many types of money circulated, including colonial and foreign paper and many varieties of metal coins.  About 1727 the government of England, prodded by the Bank of England, began to interfere with their money system, and ordered the governor to contract the currency.  This led to great hardship, and despite the protests of the Assembly, further contractions of Colonial currency were ordered by the Crown.  Many people were reduced to poverty, securities lost their value and loans were recalled.  Commerce collapsed to such an extent that many people were forced to pay their taxes in kind.

The people were now in a state of open defiance, and by 1755 they had begun to import coins from France.  Counterfeiting became rampant and, in 1751, the Riot Act was passed to prevent violence by mobs of angry citizens.  The same year the Massachusetts Assembly authorized the liquidation of current expenses through the issue of interest-bearing certificates.  These bills immediately began to circulate as money and provided a great deal of financial relief to the colonies.  When the British heard that these notes were circulating as money, they decided this had to be stopped.  In June 1751, Parliament prohibited the circulation of these bills and forced some colonies to borrow all of their money from England with interest.  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.”

Prior to the enactment of the acts restricting the issuance of money by the Colonies, they had been more prosperous than any nation in history.  The colonies which had the most stable monetary system were those which geared the amount of paper money to the requisites of their trade and commerce.  Connecticut and Delaware were very successful in maintaining a stable monetary system.  To illustrate how important the issuance of money was to the colonies, Benjamin Franklin was asked when he was in London in 1763 why the Colonies had prospered so much.  His answer was, “because we issue our own money.  It is called colonial script—we issue it in proper proportion to the demands of trade and industry.”

Since the efforts of the Colonists to establish a monetary system of their own were thwarted, the passage of the Stamp Act in 1774 was the last straw.  This act required that a stamp be placed on every instrument of commerce.  Outside of the minor skirmishes of Lexington and Concord, “the emission of paper money was the first act of open resistance and defiance which the American Colonies offered to the Crown.”^[1]

Less than two weeks after the first hostilities of the Revolution, the Committee of Safety, which had been appointed by the Provincial Congress, passed a resolution providing for the issuance of paper currency.

During the American Revolution it was necessary for the Continental Congress to find a way to finance the war.  Therefore paper money (continentals) was issued by the Continental Congress and this money circulated side by side with metal coins and currencies of the various states.  Congress also borrowed money from France and requisitioned contributions from the several states.  Some of the states declared Continentals legal tender, but others were not so cooperative.

The colonies were jealous of their money-regulating prerogatives and thus did not immediately give the Continental Congress legal power to create money.  Yet on May 10, 1775 the Continental Congress, meeting in Philadelphia, passed a resolution for the issuance of $2 million in bills of credit—redemption was to be the faith of the “United Colonies.”  This money was not backed by bullion.  It was issued solely on the full faith and credit of the government.  The power to issue money by the Continental Congress was not actually granted by the Articles of Confederation until 1781;  when they were ratified by all the states, but the money was issued and circulated freely and was accepted until the counterfeiting problem became acute.

Anguished cries rose up in England and among British sympathizers that the Colonies had usurped the royal prerogative in issuing money—however, they forgot to mention that the government had already surrendered this government function to the Bank of England in 1694.  The Colonists were familiar with the system of debt money as it operated in Europe and would have no part of it.

During the period in which the Articles of Confederation were in force (from 1775 to 1789) many kinds of money circulated.  Continental bills of credit, bills issued by the Colonies, Spanish gold pieces as well as silver and gold coins from various countries all circulated freely.  In a period of four years, the Continental Congress had issued twelve series of Continental bills totaling $242 million.  This was a staggering amount of money in those days.  These bills gradually began to lose their value because of the presence of so much counterfeit money.  In fact, many of the bills had been so successfully counterfeited that whole issues had to be recalled.  Their value did not decline because of lack of specie backing, as some propagandists would have us believe, but simply because of the dumping of huge quantities of counterfeited bills circulated by the British in the Colonies.  Some of the counterfeit bills were brought from England and others were made in New York.  The problem became so acute that a convention was held in Springfield, Massachusetts in 1777 to discuss the problem.  Another factor contributing to the decline of the value in Continentals was the legislation which some states passed limiting the legal tender value of these notes.

On November 15, 1777 the Articles of Confederation were agreed upon between the states, but they were not ratified until 1781.  The Confederation was now given the power to regulate the value and denomination of coins issued by both the Confederation or the states and to borrow money and emit bills of credit.

Many people are confused by the wording of Article 1, Section 10, Paragraph 1 of the Constitution which provides that :

No State shall enter into any treaty, alliance, or confederation;  grant letters of marque and reprisal;  coin money;  emit bills of credit;  make anything but gold and silver coin a tender in payment of debts ...

As we have seen, the colonies issued their own money prior to the Revolution.  From 1776 to 1789 under the Articles of Confederation, the Colonies continued their practice of emitting bills of credit and coining money, which circulated along with Continental currency and other types of money.  After the adoption of the Constitution, the states were now prohibited from issuing money.  Since the national government had banned the state’s money-issuing powers, colonial script could not be received in payment of debts owed to the central government.  This is the reason for the insertion of this article.  It never was intended to establish a metallic basis for money.  The Colonies had successfully avoided a metallic standard of money and the Continental Congress issued its currency on the faith and credit of the government.  Since the Revolution was primarily fought over the issuance of money, the framers of the Constitution wanted to be totally free from having to borrow money into circulation.  None of the colonies had used the goldsmith’s fractional reserve method of issuing bills against gold or any other metallic backing.  Their currency had been issued on the basis of the commercial needs of the colonies.

Additionally, Section 10 of Article 1 is a limitation on the powers of the states and does not pertain in any way to the national government.  There is nothing in the Constitution which suggests a metallic basis for the issuance of money by the United States government.  It is this prohibition which was directed against the states which has apparently caused a great deal of misinterpretation of the intent of the Constitution in this matter.

Shortly after the establishment of the United States government, it became apparent that a national coinage system must be established, so a committee was appointed to study the matter.  The result of their work was the Coinage Act of 1792.  During the time the committee was studying the problem of a national money system, powerful interests sought to gain control of the money through the establishment of a bank similar to the Bank of England.  Alexander Hamilton was one of the foremost spokesmen for this group.

During the debates over the Coinage Act, the European money interests began lining up support in Congress to get the First Bank of the United States approved for a twenty year charter.  As early as 1780 Alexander Hamilton had urged the establishment of a bank similar to that of the Bank of England.  It might be of interest to note in passing that internationalist banker agent Hamilton was the person instrumental in getting the clause inserted in the United States Constitution which declared that treaties are the supreme law of the land—an absurd fallacy since no treaty obviously could violate the fundamental law of the land and be valid.

Hamilton gave the following arguments for the establishment of the First Bank of the United States :  1.  It would provide a safe place for the storing of government funds;  2.  It would serve as an agent in the collection of taxes;  and 3.  It would issue bank notes (thus usurping the function of Congress in violation of the Constitution).  This Bank was to be partly owned by the government, but private interests would control 80 per cent of its assets.  Thus any money in the banks would accrue interest for the private owners as well as putting public funds under the control of private individuals.

The Coinage Act of 1792 established the Mint.  It also permitted the people to bring in gold, silver and other metals to be made into United States coins free of charge.  Due to a shortage of metals, appeals were made to the people to bring in anything they could find in the way of metals.  As a result, candlesticks, foreign coins, copper utensils or anything which could be fabricated into coins were brought in.  The denominations of coins provided for by the Coinage Act were gold eagles in $10, $5 and $2½ dollar denominations.  Silver coins were dollars, half dollars, dimes and half dimes.  Copper coins of a cent and half cent were also included.

With the passage of the First Coinage Act in 1792, silver became the unit of value for money.  Alexander Hamilton (the first Secretary of the Treasury) had made a report to Congress in the previous year establishing that gold was fifteen times more valuable than silver and recommended that the ratio of the gold eagle to silver be made by fixing the ratio at 15 to 1 so that the relationship of the gold and silver coins would be stable.  This suggestion was adopted and the value of the gold eagle was set at ten silver dollars.  Around 1802 both France and England went on the gold standard and this caused an exodus of gold coins to Europe.  Since the French and English valuations for gold were slightly higher than that of the United States, the Americans were able to ship their gold to these countries for a five to six per cent profit.

The international money interests succeeded in getting Alexander Hamilton, in December, 1790, to submit a plan for the establishment of a Bank of the United States, with a constitution similar to that of the Bank of England.  The Act establishing the bank was signed into law by a reluctant George Washington on Feb. 25, 1791.

The First Bank of the United States opened in Philadelphia and operated under a United States charter.  Soon branches were opened in Boston, New York, Baltimore, Washington, Norfolk, Savannah and New Orleans.  All of these national banks issued paper currency and used the fractional reserve system which had been developed by their European predecessors.  A fractional amount of their paper money was redeemable in coin and much more paper was issued than there was bullion available.  This feature permitted the bankers to call loans in by demanding their payment in specie rather than in paper currency.  These banks issued their own notes, handled commercial and governmental loans and issued charters to state banks.  During this period they not only usurped the constitutional prerogative of issuing paper money, but engaged in political favoritism in the granting of charters and loans.  They even engaged in open speculation.  Their arrogant attitudes and intervention into the nations economy aroused a great deal of opposition to them in Congress.  So much coinage had been taken out of circulation that in many sections of the country, municipalities, insurance companies and business firms issued script.  The technique of the money squeeze had been used by the European goldsmith bankers for centuries and now our fledgling nation was witnessing the power drive for control of the economy and destiny of America.  During this period William Pitt remarked, “The American Colonies have won their independence, but it will do them no good because they have adopted a private banking system.”

The charter of the First United States Bank expired in 1811.  Because of the growing hostility to the monopolists, enough support was gathered in Congress to defeat its renewal.  The opposition was bitter, and in the discussion prior to the defeat of the bill, veiled threats had been made to Congressmen that if the charter were not renewed, the United States would be involved in a war.  The Americans refused to take this threat seriously and accordingly did not renew the charter.  In 1812 the United States was at war.

Congress declared war on England June 18, 1812.  The causes for the war were listed as follows :  1) the United States commerce was being interferred with to the extent that the economy of the nation was being adversely affected;  2) agricultural and maritime interests were interferred with;  3) the British had established blockades around American ports and 4) they had provoked the Indians to attack frontier areas with bloody and horrible massacres of men, women and children.

To the casual observer, the timing of the war was extremely perplexing.  Several factors indicated that the British maritime policy would shortly be relaxed.  In 1812 Napoleon was more of a threat to the United States than England and a depression was raging in England.  The British merchants were angry over the loss of American markets and many observers of this era regarded the war as a means of aiding Napoleon.  Additionally, five days after the American declaration of war, Lord Castlereagh suspended the Orders in Council which had been cited as one of the primary reasons for the war.  This was the policy of impressing American seamen into service on British vessels.  Can we suppose that the people in charge of governments and wars knew so little about the situation that they simply plunged two nations into a foolish and fruitless war ?  Or should we suspect that powerful forces were manipulating the ministerial councils to bring about the exact situation which occurred ?

The treaty ending hostilities was signed on Christmas Eve of 1814, but the struggle had left a deep impact on the American economy.  Business had been hampered by the war effort and the government was in debt.  During the war years European money interests were represented in the United States by such names as John Jacob Astor, David Parish and Stephen Girard.  David Parish had been the New York representative of the Rothschild interests during the War of 1812.

Support of the war had by no means been unanimous, and in several instances the Federalist-controlled state administrations refused to provide militia and also discouraged individuals and banks from lending money to the hard-pressed national government.  These measures brought the government to the brink of bankruptcy on several occasions.^[2]

During the war, the National government issued Treasury Notes to raise money.  These notes ranged from one to three years and carried an interest rate of five per cent.  Since the government was often unable to borrow money from banks (at interest) and did in fact issue Treasury Notes (a form of bond), could it not issue money as provided for by the Constitution ?  Again a war had been fought over the issuance of money and after several years of fruitless fighting, this crucial issue remained unsolved.  All the other reasons for the war had disappeared shortly after its beginning.

If the War of 1812 accomplished nothing else, it did enable the promoters of the United States Bank to get another charter.  The second United States Bank was chartered in 1816 for twenty years, and during its existence it reestablished its control over the nation’s entire banking system.  Due to manipulation of reserves and loans, they were able to call in bank notes for redemption in specie which they knew the affiliate banks did not possess.  This forced many thousands of smaller banks into insolvency.  The welfare of the American people was never considered by the United States Bank crowd and its manager, Nicholas Biddle.  By the time Andrew Jackson became president in 1829, the United States Bank had twenty-six branch offices throughout the nation.  Biddle boasted at one point that he “could destroy nearly any bank in the United States simply by forcing it to exchange specie for its banknotes.”^[3]  This is why the goldsmith bankers want gold or silver as backing for their money.

The bank controversy became so intense that the campaign of 1832 was based on it.  Congress urged Biddle to seek renewal of the bank’s charter in 1832, although it would not expire until 1836.  Among those who lined up on the side of the banking interests were Henry Clay and Daniel Webster.  The bill passed Congress but Jackson vetoed it in his famous veto message.  Jackson’s position was that the bank was :  1) unconstitutional, 2) a dangerous private monopoly, 3) largely owned by foreigners and 4) the government received no interest from money kept in the banks.  During his administration, Jackson had all government deposits removed to various state banks.

One of his famous statements in the veto message was :

The bold efforts the present bank has made to control the government, the distress it has wantonly caused, 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.

You are a den of vipers.  I intend to rout you out and by the Eternal God I will rout you out.

If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.^[4]

The monied interests did not accept the revocation of their charter as defeat.  They immediately mobilized their forces and planned a new avenue of attack.  Their efforts were now concentrated on state banks as a means of rebuilding their power.  Although the United States Bank continued in business after 1836 it was no longer empowered to act as a central bank.  Thus Biddle lost his direct control over the state banks but was still able to exert a great deal of indirect influence.

The Panic of 1837 was the first severe panic to hit the United States.  It was caused entirely by the bankers and occurred at a time when the Federal government was solvent and expansion in the economy was occurring at all levels.  Canals were being built, westward expansion increased each year and new enterprises were developing new opportunities in many fields.  But the banking pool decided to punish the nation for its defeat and they did so by withdrawing money from circulation.  This was accomplished simply by calling in loans from banks which in turn led to a further calling in of business and commercial loans.  As a result, people were again left without enough currency to carry on their normal business.  This same tactic had been used on the Colonies prior to the Revolution.  As a result of the contraction of money, a slowdown in economic activity began and its effects were felt by the nation for several years.

Martin Van Buren was also opposed to the monopolistic United States Banks;  and during his administration (1836-1840) he wanted to find a substitute for state banks where federal funds were kept.  In order to separate government from banking activities, the Independent Treasury Bill was enacted whereby government owned vaults would be constructed in various parts of the country.  The money could be kept safely in these vaults until needed without the fear of banking failures.  This system was continued, with some modifications, until the adoption of the Federal Reserve Act in 1913.

The money crowd used the decades between 1840 and the turn of the century to consolidate their influence and power.  It was also during this period that New York became the financial center of the country.  August Belmont, a Rothschild agent, went to New York in 1837 and established himself as a powerful figure in monetary circles.  Some of the banking firms which became established during these decades were Kuhn, Loeb & Company, established in 1867 through a merger of the Kuhn Loeb interests.  Lehman Brothers was founded in 1850.  J.P. Morgan & Co., originally founded about 1860 was merged in 1959 with the Guarantee Trust Company of New York to form the Morgan Guarantee Trust Company of New York.  Goldman Sachs & Company opened its doors for business in 1869 and J. & W. Seligman & Company was founded in 1864.  S.G. Warburg & Company, Ltd. of London incorporated the business of Seligman Brothers in 1957.  It might be interesting to note that their present New York correspondents are :  The Chase Manhattan Bank, Chemical Bank, First National City Bank, Irving Trust, Manufacturers Hanover Trust, Morgan Guarantee Trust and the Philadelphia International Bank.  At the present time, S.G. Warburg & Company of Frankfurt and S.G. Warburg & Company, Inc. of New York are affiliate companies.  This is how the banking fraternity maintains its control over the financial affairs of nations.

Prior to the Civil War the tariff question was one which evoked great hostility from the South.  The tariff was so designed that it favored the industrial North and wrought economic hardship on the South.  As a result, the South was forced to bear a disproportionate burden in the costs of running the government.  Added to this was a very strong states rights sentiment throughout the South.  The Mexican War occupied the nation from May 13, 1846 to February 2, 1848.  With the Treaty of Guadalupe Hidalgo, the United States received over 525,000 square miles of territory, including California, Nevada, Utah, most of Arizona and New Mexico and parts of Colorado and Wyoming.  It also revived the issue of slavery in the sense that the new territories would soon decide this question.  Shortly after the treaty was signed, gold was discovered in California and the gold rush was on.

Economic development continued and thousands of European immigrants poured into this country, settling for the most part in industrialized New England or New York.  During this great influx of European immigrants, slavery was becoming economically burdensome and would probably have been impossible to maintain indefinitely.  Irish labor was available in the 1850s for $1.00 per day, and these men assumed the burdens of supporting their families.  According to Kenneth M. Stampp in his book on slavery in the Ante-Bellum South, entitled The Peculiar Institution, “Slavery had nearly ceased to be profitable in the antebellum period—that some masters made money in spite of slavery rather than because of it.”^[5]  Slavery was not the real issue behind the Civil War.  It was used as an emotional trigger point to stir up the unsuspecting citizens to rally around the flag and fight another war for the bankers.

Powerful interests felt that it would be desirable for the United States to be divided, lest it become too much of a rival for the European nations.  Additionally, there was always money to be made on a war.  Since trained propagandists could fan sentiment, it was an easy matter to mobilize sectionalist fervor over issues.

The Hazard Circular, distributed to American bankers by European interests in 1862, is a cynical and revealing insight into the thinking of the money barons.

Slavery is likely to be abolished by the war power and chattel slavery destroyed.  This, I and my European friends are in favor of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital (money lenders) shall control labor by controlling wages.  This can be done by controlling the money.  The debt that capitalists (money lenders) will see to it is made out of the war, must be used as a means to control the volume of money.  To accomplish this the bonds (debts created out of the war) must be used as a banking basis.  We are now waiting for the Secretary of the Treasury to make this “recommendation to Congress.”

Actually, the Civil War was planned in London by the banking crowd.  Several of their agents were sent to this country.  Judah P. Benjamin, one of these agents, became General Lee’s top financial advisor.  August Belmont and John Slidel were also chosen to assist in the administration of the war.

The period from about 1836 to the 1860s was characterized by wildcat banking.  Banks were chartered on the basis of political expediency and often little management skill was evidenced by the promoters.  There were frequent bankruptcies, and speculation was widespread.  Because of the widespread circulation of these privately-issued bank notes, it is estimated that in the 1830s there were as many as 7,000 different currency issues.  During this entire period the government never resorted to its prerogative of issuing money for the nation, as provided in Article I, Section 8, Paragraph 5.  Instead, it continued to borrow money from private banks to finance its expenses.

After the outbreak of the Civil War both the North and South began to face currency shortages.  In some communities the shortage became so acute that local merchants began issuing script or tokens for community use.

The Confederacy began to issue its own money and also arranged to borrow money from European sources.  In 1861 John Slidel and James Mason were sent to France to negotiate a loan for the South.  This is the same John Slidel who had been sent to Mexico as minister by President Polk in 1845 to negotiate with the Mexican government prior to the outbreak of the Mexican War.  Although Slidel was a New York born northerner, he was negotiating for the South.  He also happened to be a nephew of August Belmont’s wife.  Negotiations were begun in Paris with Erlanger & Company, a banking firm which undertook to sell Confederate bonds.  M. Ralph von Erlanger, who was head of the firm, had been a Rothschild representative before his arrival in Paris.  The Erlangers underwrote the sale of a $15 million bond issue for the Confederacy which was to be redeemable in cotton at 6 pence per pound.  At the time of issuance of the bond, cotton was more expensive so the bonds were immediately over-subscribed.  Then a campaign was quietly begun by August Belmont (a Union agent) to discredit the bonds, and the price began to fall.  The usual practice by the money pool in these situations is to support the market, and James Mason was ordered to do just that.  Prices were stabilized, allowing the pool which had floated the bonds got out with a huge profit.  The innocent British investors were left with losses.  Later, when it appeared that Union victory was imminent, the Rothschild interests purchased blocks of Union Bonds.  These bonds had been previously picked up by the money pool at less than half their value.  They were later to become one of the overriding issues in the election of 1868 when General Grant reflected the interests of the money pool, led by August Belmont, to advocate their repayment in specie.  So faithful was Grant to the money interests that one of his first official acts after election was the signing into law of the Credit Strengthening Act of March 18, 1869.  By this Act the bonds were made redeemable in specie, thus increasing their value by about 100 per cent.

During the Civil War the North was continually short of money and at one point negotiations with some New York financiers was begun.  When the government was advised that the interest rate would be about 28 per cent, one of Lincoln’s associates suggested that he should resort to the Constitutional prerogative of issuing money.

The first bill authorizing the issuance of $150 million in United States Notes was passed by Congress in February, 1862.  The bankers agents within Congress permitted this temporary issue but obtained a conversion into bonds provision.  In July, 1862 another issuance of $150 million was authorized, again with the same convertibility feature present.  By having a convertibility into bonds feature the banking crowd expected to obtain legislation later authorizing the redemption of the bonds into specie.  This money was declared legal tender and was not in itself convertible into coin.  It also carried no interest.  This was the first actual currency the United States had issued since the adoption of the Constitution.  In March of 1863 another $150 million in Greenbacks (United States Notes) was authorized and this time the conversion feature was repealed.

The battle was on and the banking crowd began an immediate propaganda campaign to discredit these United States Notes.  They were called greenbacks and labeled as fiat money (e.g. unbacked by a fractional percentage of metallic specie).  The banking crowd was so afraid of this currency that in December of 1865 they were able to get a law passed providing for contraction of this debt-free money.  Their goal was the eventual retirement of all Greenbacks.  This battle continued until 1879 when specie payment was reestablished by the money mob and the volume of these notes was to be reduced to $300,000,000.  Without the issuance of this money it is probable that the North would have lost the war.

There are billions of dollars to be made by the money pool through the issuance and control of our money.  This has never been more evident than an admission by Mr. John Carlock, Fiscal Assistant Secretary of the Treasury Department in a letter dated March 19, 1963 to Mr. Wright Patman, Chairman of the Banking and Currency Committee.  In this letter the Treasury Department admitted that had the equivalent of United States Notes (Greenbacks) in the amount of $346 million been outstanding since 1863, the cost of borrowing these notes at 5% interest would have been $44 billion as of December 31, 1962.

This is why, after the first issue of $150 million in United States Notes was authorized, fanatical attacks on the greenbacks immediately began.  Within a few months the money interests were able to get their Congressional stooges to pass the Exception Clause which provided that subsequent issues of greenbacks would contain the following clause :  “Good for all debts both public and private except duty on imports and interest on Government debts.”  The effect of this legislation was to drive down the value of greenbacks to about 30 cents on the dollar and was one of the factors which led to the passage of the National Banking Act.

The result of the confusion resulting from the adroitly contrived loss of value of the greenbacks enabled the conspirators to get the National Bank Act of 1863 passed.  Although President Lincoln opposed the legislation, the National Bank Act passed and again the issuance of our nations money passed into private hands.

In 1863 it is estimated that there were about 1,600 different kinds of bank notes in circulation in the country.  Most of these notes were issued by private banks with a specie redemption feature.  This was one of the arguments used in promoting the National Banking Act which purported to provide a national currency.  The real reason for this Act was to use government bonds as the basis for banking.  Another portion of the Hazard Circular documents this intent as follows :  “It will not do to allow Greenbacks, as they are called, to circulate as money for any length of time as we cannot control that.  But we can control the bonds ...”  National Banks continued to issue bank notes until this power was revoked in 1935.

Had the constitutional money system been permitted to function, this nation would never have been faced with the spectacle of an era of wildcat banking (1836-1864).  Additionally, no group of privateers could have illegally gained control of our entire economy or money control.  Private issuance of money has been the continuing problem faced by modern nations, and it seems that the legislators are unable or unwilling to learn any lessons from history.  They simply compound error after error by legislating into law the demands of the international banking interests.  We will never enjoy peace and prosperity until the people and their representatives learn this simple truth and put into law the provisions of the Constitution which wisely provided for sovereign, rather than the private, issuance of money.

The National Banking Act established the office of Comptroller of Currency.  Under its provisions, national banks were required to deposit one third of their capital with the Treasury, but were allowed to issue notes against them to the extent of ninety per cent (another twist to fractional reserve banking).  This permitted the banks to hold the notes on a ten per cent margin, but to collect interest in full.  The cash reserves requirement against the notes outstanding were later dropped.  Another monopolistic factor was the fact that in 1866 the national government required state banks to pay ten per cent annual tax on their notes as against the one-half per cent for national bank issues.  As a result of this discriminatory legislation, many state banks became national banks.  It also gave these banks control over the profitable government bond market.  “By the end of 1865 there were over 1,600 national banks in existence, largely eastern, most of them former state institutions.”^[6]

Lincoln had been aware of the power of these money interests and during the Civil War he made the following statement to Congress :  “I have two great enemies, the Southern Army in front of me and the financial institutions in the rear.  Of the two, the one in my rear is my greatest foe.”  If Lincoln won the war because of the money issue;  there is evidence to indicate that he lost his life as a result of it too.

After the Civil War, the nation began to prosper despite the attempts of the money pool to manipulate the wealth which was being produced by hard-working Americans.  They feared a strong middle class, as this backbone of economic strength might thwart their plans for world economic domination.  The National Banking Act of 1863 did not give the conspirators all the controls they desired, but they now devised a plan to train economists and professors who would be subservient for their positions to the wealthy interests sponsoring them, and who, in turn, would train the students and public to think in the terms the bankers desired.  It was also necessary to make the subject of money so difficult to understand that only the “experts” could speak with authority.  This is illustrated by the following remarks by Professor Irwin Unger :

Ordinary folk might well lose their way in the tortuous problems of money, but even businessmen found themselves perplexed by the mysteries of gold premiums, refunding, hedging, and eventually mint ratios, seignorage charges, bimetallism, and remonetization.  Under the circumstances the interested public—a remarkably large group for so abstruse a subject—turned to the 'experts’ for guidance.

The ultimate aim was the control of the entire economy through the creation of a central bank and monopoly over the issuance of money.

The attack on sound money continued.  Congress capitulated to the money pool by passing the Credit Strengthening Act which redeemed the Civil War debts in coin.  Many of these bonds had been redeemable in greenbacks when issued.  When the money pool had driven the prices down through their various legislative techniques, huge blocks were purchased at a fraction of their value, to be later redeemed in gold at par value.  This maneuver gave the conspirators another huge windfall in profits.

In 1873 the Coinage Act was passed.  This was represented to Congress as a measure to revise and amend the laws relative to the Mints and coinage, but its hidden purpose was to demonetize silver and put the United States on the gold standard.  Because of the fact that silver coin was still being used in the United States, the money mafia decided to have it demonetized.  Rothschild’s agents had been busy bribing Congressmen with the idea that silver should be demonetized and the gold standard adopted.  The bill which was eventually passed in 1873 bore the deceptive title “A Bill to Reform Coinage and Mint Laws.”  Its real purposes were concealed beneath cleverly-drafted words and it was not until several years after its passage that the full import of its effects were realized.  The passage of this Act deprived Americans of about one third of their circulating medium and caused a great deal of economic dislocation.  The Coinage Act was later referred to by its critics as the Crime of 1873 and was blamed for the panic that ensued as the result of its passage.  Many people of that time recognized that foreign interests had masterminded the act and that the payment of bonds in gold had the net effect of increasing the national debt.

In 1871, at the conclusion of the Franco-Prussian War, Germany went on the gold standard.  This is one of the added factors which led the gold pool to agitate for the adoption of the gold standard in the United States.  Because of Germany’s adoption of the gold standard, the price of silver declined somewhat in the commercial nations of the world.  As the price of silver declined, there was some agitation, especially from the mining interests;  for free coinage but the era of bimetalism was about over.  In 1874 Congress passed an act which deprived the silver dollar of any legal tender value.  This is how an establishment economic expert describes the situation :  Actually, “no demonetization, real or imaginary, could have affected the currency in 1873, since there had been no gold nor silver coins in circulation for a dozen years.”^[7]  But according to the figures on currency in circulation :  1860 to 1957, while gold coins in circulation in 1865 amounted to $148,557 million, in 1874 there were $78,948 million still in circulation.^[8]  In establishing the gold standard, the word coin was redefined to mean gold (instead of silver).  The ratio of gold to silver was destroyed and silver was then rendered relatively valueless.  Since gold was more expensive than silver, the net effect was to increase the tax burden on the taxpayer.  Now all government bonds were to be repaid in gold.

According to Richard P. Bland, Congressman from Missouri who opposed the act, repayment in gold alone “were in the interest of stock jobbers and speculators in government bonds.”^[9]

The money question was a burning one with people lining up sharply on both sides of the issue.  In 1867 there had been an international monetary conference which aimed to establish a universal gold standard.  Since national banks and the money interests were lined up on the side of gold, the propaganda was geared to favor its adoption.  Opponents were vocal, however, including the Greenback Party which advocated the circulation of greenbacks as a permanent, inconvertible currency.  Congressman Bland favored the greenback theory and he was regarded as the voice of the “insolent masses.”  The radicals in the West violently opposed the gold standard and the political campaigns reflected the alignment of the candidates into two violently opposing camps.

In 1870 all the banks in the United States temporarily suspended operations because of the financial disaster which began on Black Friday.  The immediate effect was another scarcity of money which eventually threw thousands of people out of work.  These maneuvers had been carefully planned by the banking clique so that they could get increased controls over the industry and further centralize their power.  Continued assaults against the economic integrity of the nation came from the legislative halls in Washington.  John Sherman, Secretary of the Treasury, began a policy of deflating currency (withdrawing greenbacks) after the passage of the Specie Resumption Act, January 14, 1875, until the currency was on a par with gold.  Since the national banks drew interest on government bonds in gold, it can be clearly seen where their interest would be aligned.  The radicals of the day were astute enough to realize that the monetary legislation was clearly directed for the benefit of the monied class.

The circulation of debt-free greenbacks caused terror in the hearts of the money pool and they continued their campaign to rid the nation of United States Notes and totally return to the fractional reserve system of specie payments.  In 1865 the newly appointed Secretary of the Treasury, Hugh McCulloch, announced his policy of returning to specie basis.  He asked Congress for authority to retire greenbacks, and, as a result, the Contraction Act was passed in December, 1865.  This act provided for the gradual withdrawal of greenbacks from circulation.  During 1866 the amount of greenbacks withdrawn went from around $433 million in August of 1865 to $399 million by the end of 1866.  The purpose of the withdrawals was to replace the interest-free money with interest-bearing notes.  The effect of the contraction of money was adversely felt by the business community and resistance to this policy became intense.  In fact the opposition became so strong that the act was repealed in January of 1868.  By the time of the repeal of the Contraction Act, $44 million in greenbacks had been retired.

In 1866 when the nation was in the midst of the Civil War the Bank of England faced failure.  This was due to the failure of the Overend, Gurney financial institution in London in 1866 which brought on a panic-like demand for gold by financial institutions who were afraid that paper would be turned in for gold.  American bonds were being dumped in European and American markets, but Secretary of Treasury McCulloch protected European banking interests by buying bonds below the gold market prices.  His actions aroused so much opposition that even some Wall Streeters accused him of saving the Bank of England.

In 1875 another step was taken by the gold crowd.  The Resumption Act was passed which provided for the resumption of gold payments on all government bonds.  This act provided for the withdrawal of $80 worth of greenbacks for every $100 of new bank notes issued.  The interest-free money was thus retired so that interest-bearing bonds could be issued by the banks.  One of the results of this act was to again contract the currency until adverse effects on business were felt throughout the nation.  Railroad construction slowed down and business failures increased.  The depression raged, simply because of a deliberately-contrived lack of money.

A further withdrawal of currency and credit restrictions was made in 1878, resulting in thousands of business and banking failures.  This banker-sponsored depression was halted in 1879 when Congress authorized the issuance of more coins.  However, the money pool continued their relentless efforts to dismantle our economy and between 1882 and 1887 the per capita money in circulation was reduced to $6.67.  As a result, business failures increased to staggering proportions and thousands of foreclosures were made on farms and other property.  The poverty and business failures were blamed on the business community, but the cause was solely in the hands of the criminals who manipulated the money market.

Again in 1893 another panic was thrust upon the nation and the money question once again became a major issue in the campaign.  A letter addressed to the members of the American Bankers Association reveals how the panic of 1893 was caused.

Dear Sir :

The interests of the National Banks require immediate financial legislation by Congress.  Silver certificates, and Treasury notes, must be retired, and national bank notes, upon a gold basis, made the only money.  This will require the authorization of new bonds in the amount of $500,000,000 to $1,000,000,000 as the basis of circulation.  You will at once retire one-third of your circulation and will call one-half of your loans.  Be careful to create a money stringency among your patrons, especially among influential business men.  The life of the National Banks, as fixed and safe investments, depends upon immediate action as there is an increasing sentiment in favour of government legal tender and silver coinage.

William Jennings Bryan became the spokesman for free silver, but the bankers propaganda was too effective to be offset by one lonely voice.  The goldsmiths were now fully in control—after over a century of manipulation, planned panics, contrived wars and controlled politicians.

In 1907 another planned money panic was unleashed upon the nation.  This one caused such violent dislocations that a Congressional investigation began to probe the banking industry.  The money pool had been working long and hard for just this situation.  The probe resulted in the appointment of a National Monetary Commission to study the situation and submit recommendations for banking and currency legislation.  Senator Nelson Aldrich (Governor Nelson Rockefeller’s grandfather) was selected to head the commission.  This group spent two tax-financed years in Europe studying their central banking systems.  Among other members of this delegation were Jacob Schiff of the New York banking firm Kuhn, Loeb & Company, and A. Piatt Andrews, Assistant Secretary of the Treasury, who acted as special assistant to the National Monetary Commission.  Nelson Aldrich was so closely affiliated with the Rockefellers that his daughter Abby married John D. Rockefeller, Jr.

When the delegation returned to the United States, they were joined by a group of wealthy New Yorkers who boarded a private railroad car and headed for Jekyll Island, Georgia, to the estate owned by J.P. Morgan.  Among those present on the trip were A. Piatt Andrews, an economist from the Treasury Department, Henry P. Davison, senior partner of J.P. Morgan & Co., Charles D. Norton, president of Morgan’s First National Bank of New York.  Also present were Frank Vanderlip, president of the National City Bank of New York, which represented the Rockefeller oil interests.  Paul Warburg, of Kuhn & Loeb Co. and Benjamin Strong, a stock market manipulator, were also deeply involved in the drafting of the banking act.

The purpose of the meeting was to draw up plans for a central bank which they proposed as the solution to the monetary problems which had plagued the nation for many decades.  They misrepresented the true nature of the bank and couched the bill in such garbled phraseology that it would require a codebreaker to understand it.  They called it the Federal Reserve Bank which would deceive most people into thinking that it had something to do with the government.  They did not reveal that this private money cartel would now be given complete control over the issuance of our money and the entire economic life of this nation.

The passage of this sinister Federal Reserve Act was delayed until 1913 when they were certain of its passage.  “Their man”, President Wilson, was in the White House, and shortly after its passage on December 23, 1913, it was signed into law by the president.

Now after more than fifty years of this institution, we are faced with bankruptcy, both nationally and individually.  We are plagued by inflation, internal chaos and international wars.  All planned by the agents and pawns of the money manipulators.  How much longer will the people of the United States permit this financial vampire to continue to rob, exploit and murder us ?  Their entire exploitive empire could be dismantled by the passage of one single law :  the purchase of the Federal Reserve Bank by the United States Government and the restoration of the constitutional power to issue our own money, debt free.  At this very moment (1971), a bill is before Congress which will permit the government to purchase the Federal Reserve Bank stock and return to Congress control over our nations money.  Submitted by Congressman Rarick, H.R.351 will lie dormant in Committee unless enough Americans are informed of its existence and DEMAND ITS PASSAGE.  Only then will the end of this satanic money control over our nation be ended.

1. Alexander Del Mar, The History of Money in America (Hawthorne, California : Omni Publications, 1966), p, 94.

2. John A. Garraty, The American Nation, A History of the United States (New York : American Heritage Publishing Co., 1966) E178.1 .G24

3. Garraty, The American Nation, p. 270.

4. It might be interesting to note that during Jackson’s administration, the entire debt of the United States was paid off with the exception of a small amount of around $37,000.

5. Kenneth M. Stampp, The Peculiar Institution ;  Slavery in the Ante-Bellum South (New York) Vintage Press, 1956), p. 348.

6. Irwin Unger, The Greenback Era, Princeton, N.J., Princeton University Press, 1968.

7. Don Taxay, The U.S Mint and Coinage (New York : Arco Publishing Company, Inc., 1966) p. 261.

8. U.S. Bureau of the Census, Historical Statistics of the U.S. Colonial Times to 1957;  (Washington, D.C., 1960) p. 649.

9. Mint Directors Report in House Document 2, 44 Congress, Second Session (Library of Congress), pp. 296, 307, 311.