The Nature of Money

Document Sample
The Nature of Money Powered By Docstoc
					                                                                                                 Picture the scenario we have been
                                                                                              asked to ratify with serious consideration:
                                                                                              The United States and its debt-money
                                                                                              machine is to wet-nurse the world, fight
                                                                                              its wars, and keep it on relief via the
                                                                                              agency of perpetual trade deficits and col-
                                                                                              lateral wars. Eisenhower’s terse warning
                                                                                              to “beware of the military-industrial com-
                                                                                              plex” is as relevant today as it was when
                                                                                              he uttered it. Eisenhower could see quite
                                                                                              clearly that the objective was not to meet
                                                                                              military requirements, but the require-
                                                                                              ments of the military suppliers.
                                                                                                 China has become dependent on an
                                                                                              American trade deficit much as urban

The Nature
                                                                                              America has become dependent on a rural
                                                                                              and farm deficit. The 1996-2003 trade
                                                                                              deficit illustrates the approach of a termi-
                                                                                              nal point. It jumped from $191 billion to
                                                                                              $485 billion. Hardly anything in the

of Money
                                                                                              American malls has an American label.
                                                                                              Take this down to something a second
                                                                                              grader can understand, but which eludes
                                                                                              tenured professors: since 1996 the United
                                                                                              States has imported $1.31 worth of goods
                                                                                              for every dollar’s worth exported. As
                                                                                              these lines are set down, the numbers are
by Charles Walters                             lished as our national policy way back in      close to $2 imports for every dollar of
   On September 7, 1942, at 9:00 p.m.          ’33. It means that the farmer and the city     exports. It can now be computed that the
CWT, President Roosevelt delivered one         worker are on the same relative ratio with     deficit has to grow by at least $50 billion
of his famous fireside chats. It was an        each other in purchasing power, as they        a year, perhaps $100 billion a year for the
economic message that in retrospect is a       were during a period some 30 years ago         NAFTA/WTO model to continue.
message for our times. The year 1942 was       . . . [when] the farmer had a satisfactory        The talk in favor of world trade has it
wartime. It was also an economic crisis.       purchasing power; 100 percent of parity        that the import-export razzle-dazzle is
   The war effort required structural bal-     therefore has been accepted by farmers as      necessary for world peace. Each nation is
ance for the American economy. Inflation       the fair standard for the prices they          to spend what it earns, this so each trader
had to be controlled. Speaking in his          receive,” Roosevelt said. He went on to        nation can exhibit its comparative advan-
homey way, Roosevelt said the cost of liv-     explain that the parity norm could not be      tage. The banana grower grows bananas.
ing meant what a dollar can buy. Since         exceeded, nor could it fall short.             The Third World country sells what it has,
Pearl Harbor, the cost of living had               Later, when the Employment Act of          mainly cheap labor. In turn, the United
increased 15 percent. In May 1942, the         1946 was passed, Roosevelt’s concept           States is to sell its high-priced trucks, air-
government attempted to freeze the cost        was confirmed. Structural balance was          planes and supercomputers. Never
of living. This was proving impossible         absolutely necessary for stability, and dis-   explained is how a 25-cent-an-hour work-
because the congressional authority was        parity was the real road to serfdom. The       er will be able to buy a pickup truck or a
exempting some sectors from rules gov-         very first Economic Report of the              bottle of French wine. All this leaves
erning the rest. In the process of giving      President confirmed the parity require-        unanswered the question, Just where is
his explanation, the chief executive drew      ment if the nation did not wish to court       the necessary trade expansion going to
attention to agriculture. Earlier, Roosevelt   impossible debt and ruinous inflation.         come from when one and all are tapped
had asked Congress to stabilize basic stor-        During the postwar years, U.A.W.           out? This much stated, it seems the
able commodities.                              President Walter Reuther settled an auto-      American farm model was a poor one for
   At that time the President told             mobile strike at near parity because, in his   international trade to follow.
Congress that there were seven elements        words, “I’m not going to bargain for the          China and Japan seem to hoard their
in the national economy which had to be        wooden nickels of inflation.” He knew, he      earnings in U.S. Treasuries. Germany is
controlled, and any element out of bal-        said, that labor could not have a higher       tapped out. The idea that South America
ance made control of the cost of living        parity than agriculture.                                       Reprinted from
impossible. At issue were stabilization of
taxes and farm commodities at parity.                     WORLD TRADE
   “Parity is the standard for the mainte-       These few thoughts come to mind as
nance of good farm prices. It was estab-       world trade arrives at the breaking point.             Nov 2003-Feb 20004 • Vol. 33/34
can take more imports is about as ridicu-         history is in the terminal stages of experi-     ing that money reproduce like bacteria in
lous as praying for Australia’s Ayers Rock        ence!                                            a Petrie dish or rabbits in a cage. The
to levitate. Africa is a relief client, a drain                                                    entire economic situation has been built
as lethal as Iraq and Afghanistan.                           BIGGEST SCAM                          on these premises, which has been the
    This business of exploiting the poverty          Sometimes the pen outraces the mind.          same as asking physical impossibility to
pockets of the world is an ephemeral pro-         Biggest scam? I can think of one that is         keep pace with mathematical ambition.
cedure in any age. The money those                even bigger and more lethal. It is made              Most subjects can be best understood
Chinese workers earn weaving rugs and             possible by near-100-percent ignorance of        by studying other histories. Zarlenga has
stitching Wal-Mart                                                                                                      studied some 800
clothes does not                                                                                                        books on money. I
come back to the                                                                                                        have quite a few less
United States via
purchases.        From
                             When banks, not the nation’s treasury, have                                                in      my      library.
                                                                                                                        Therefore what is pre-
1996 to the present,       control of the money, they hold in their hands the                                           sented here relies on
foreign       exchange                                                                                                  the best evidence,
reserves of Asia have      success or failure of enterprise.                                                            often on original doc-
gone from $500 bil-                                                                                                     uments, never on con-
lion to over $1.3 tril-                                                                                                 jecture or blind theory.
lion. Japan’s reserves                                                                                                  It is absolutely amaz-
have escalated from $217 billion to $534          coin and money, and surely there is no           ing how much scholarship laws and
billion. Do a roll call of nations and the        solution to our economic dilemma with-           libraries contain, all of it ignored for rea-
pattern is the same — only the amounts            out a sound money supply. This is not my         sons that become apparent as this subject
differ. Hong Kong, from $64 billion to            observation alone. It is contained in            unfolds. Some of this history goes back
$116 billion. Taiwan, from $88 billion to         Frederick Soddy’s Wealth, Virtual Wealth         3,500 years, some of it is as new as our
$182 billion. South Korea, from $34 bil-          and Debt, and it is the backbone of my           own era. All of it explains how and why
lion to $128 billion. These data are gener-       own work Unforgiven.                             public policy has delivered us to our pres-
ally reported by the International                    No one with respect for the fictions of      ent impasse.
Monetary Fund, various financial papers,          academic economics dares touch the sub-              The primary work consulted was that
and world media such as USA Today.                ject of money. It was settled once and for       of Alexander Del Mar, possibly the great-
    The international trading system has          all during the Woodrow Wilson adminis-           est monetary historian of all time. His
about the same circularity as home-base           tration, when the Federal Reserve System         life’s work was completed by 1905, and
U.S.A. and the balance between wages,             was voted into existence. Today the con-         he passed from the scene in 1925.
capital costs and agriculture, as well as the     fusion that attends the creation of debt and         This report, then, is simply a merger of
imbalance between agriculture and corpo-          money, gold and its demonetization, silver       available information and several hours of
rations, rentals and business in general.         and its history, indeed the history of that      interviews with Stephen Zarlenga, as well
    Still the sound bites tell the people that    constitutional mandate to “coin the money        as select comments made by Zarlenga on
with free, unregulated trade everyone ben-        and regulate the value thereof” is so great      Tom Valentine’s Radio Free America pro-
efits. Because of this exchange between           that not one person in a thousand under-         gram.
poverty pockets and the United States,            stands it. Yet it is on the foundation of this
standards rise. Temporary collateral dam-         lack of comprehension that the House of                     THE DIFFERENCE
age is to be expected, but this is a small        Mammon has been built.                              If you reach into your pocket and pull
price to pay for the vast benefits for every-         Much of what is present here is codi-        out some quarters and some bills, what is
one. Consumers benefit by tripping to             fied in Stephen Zarlenga’s The Lost              the difference if the counts are the same?
Wal-Mart, and the 9 or 10 million unem-           Science of Money, Gertrude Coogan’s              What is the difference between paper
ployed by the trade model will ultimately         Money Creators and other texts men-              money and coins? The answer is lethal: It
find work. It’s all circular. That this analy-    tioned in this report.                           costs no interest to keep coins in circula-
sis begs the question Why? is ignored.                I will not detain you with stories about     tion. In fact, both of the currency forms
Why, indeed, haul stuff from here to there        cowry shells or the cultural decision of         are fiat money. Both are created by
if all you do is pollute the oceans?              almost all peoples to use precious metals        humans. The paper money is created by
    It is now admitted that unless each           as a stand-in for commodities and other          the banking system. For it to come into
nation spends what it earns, the logic of         goods. Instead, I will deal with the pen-        existence, a debt has to be created, and
free trade collapses. Probably it collapses       chant to create money out of absolutely          interest on that debt goes on ad infinitum,
because it is not supported by logic. It has      nothing, to balance it with debt and then        or until the end of the government. The
already become a job destroyer. It ships          expect the physical impossibility of hav-        coins, in turn, are issued by the govern-
unemployment around the world like ran-                                                            ment. The bank is not needed to create the
                                                                  Reprinted from
cid potatoes.                                                                                      coins. Because no debt is created, there is
    Well, ladies and gentlemen, the syn-                                                           no interest required to keep those coins in
thetic boom has been sandbagged, like a                                                            circulation.
novice card player. The biggest scam in                   Nov 2003-Feb 20004 • Vol. 33/34
   It is axiomatic that in order to have a      another. The various political systems         only gold and silver qualified as money.
developed economy run, the money sup-           need not confuse us. These political sys-      Some delegates to the Continental
ply has to grow with the population and         tems are not economic systems — com-           Congress wondered whether the people
commerce. If the system requires more           munism, fascism, socialism, all fall under     should be in charge of anything as impor-
debt to create more money, the interest         one economic system, the capital system.       tant as money. Alexander Hamilton
payments bring on a collision between               The standard of living under any sys-      favored bank management. The debate
money and physical reality. As recently as      tem is simply the result of production of      ultimately became a challenge to men.
mid-decade 1990s, fully 14 percent of the       goods and services. The perception that        Was authoritarianism necessary? Do men
federal budget was required to feed the         socialism has an advantage because the         have to be told what to do by an authority,
interest mill. Failure to enlarge the money     government can crank up the printing           or is self-rule possible? Jefferson’s answer
supply in tune with population growth and       press and turn out money is a myth. An         was that he trusted the people.
commerce concentrates the wealth of a           even bigger scam than world trade is the           Hamilton wanted a monarchy. In fact,
nation into the hands of a few. Power is        idea that capital can simply be printed.       the Federalists in general endorsed that
always concentrated into the hands of               Investment still has to come from prof-    idea, which is why John Adams was
those who have the money.                       it. Profit, in turn, comes from the gift of    tagged a royalist even though he was far
   The key question with money is con-          nature, humans debited, nature credited.       less a royalist than Jefferson. The Anti-
trol. It is control of the system itself — in   This is the gushing well that keeps the pri-   Federalists were saying pretty much what
addition to the control of interest — that      vate enterprise system moving. The total       the Libertarians say today, “You can’t
governs our times, and it is governing          house that keeps the economy moving is         trust the government.” The financial com-
badly.                                          enterprise, agriculture included as a main-    munity wanted a stronger government
   It is control of the money system that       stay. All societies have proved that they      then, while today the roles are reversed
determines how much is to be created.           cannot expand without a profit, and the        and the money people actually auction the
Debt is sacred to the system. All the lead-     hunt for profit takes us back to raw mate-     high posts in government. This explains
ing economists say, Hang the debt in            rials.                                         why the presidency nowadays goes to the
orbit, let it move around the world ahead           This much is stated as an introduction     best available mediocrity. This sub-
of the clock. The new system of debt and        because it must be understood before the       servient role of the presidency to the
money is better than having a scoop shov-       money system can come into focus. It also      money powers explains why a ruinous
el at Fort Knox.                                explains why and how a debt-money sys-         world trade scenario became public policy
   Consumer debt is awesome, but in gen-        tem mucks up a society, giving it “debt        — why jobs are shipped out and shoes,
eral economic terms the great debtors are       and wars for pence doled out by kings          cars, household goods and clothes
industrialists one and all — they have to       from its own stores.”                          shipped in — until unemployment dogs
go into heavy debt to create a factory or a         Control of money determines the seat       urban America the way insolvency dogs
pig farrowing facility Smithfield-style.        of power that permits a people, a nation,      farmers.
When the money supply does not advance          an economy. A money system based on
in tune with commerce, then the debtor          debt is an inherent fraud because it deliv-                   CURRENCY
has a new burden bestowed in terms of           ers the wealth of a country into the hands         Currency is a creation of law. By defi-
repaying the debt. The fallout on the soci-     of a few. When banks, not the nation’s         nition it is a function of government. A
ety as a whole is fantastic.                    treasury, have control of the money, they      decent respect for the opinions of
   The puzzlement seems to beggar the           hold in their hands the success or failure     mankind argues that the money-creation
imagination because the creation of             of enterprise. They always define money        function cannot be brokered out. This
money ought to be in harmony with the           creation in terms of their own interest.       statement sounds abrasive — something
creation of raw material, not debt, in the      They select the industries that can be         like a rat-tail file on a sore tooth — to
economy. This is further explained by the       allowed to succeed, and those with the         those who hold that money is gold and
fact that there is only one economic sys-       right to fail.                                 gold is money.
tem, namely, the capital system. Small                                                             History suggests that gold has seldom
businesses, rentals, corporations, agricul-                  THE PROCESS                       worked very well as a money supply. In
ture — the private enterprise sector —              How has this process been contrived to     theory, gold should arrive at the same rate
have one thing in common: they are all          strip naked a citizenry that once owned at     that population and industry grow. The
compelled to invest capital in order to         least 40 acres of virgin ground? Ferdinand     gold rushes in California, Alaska and
operate. They save or assemble savings          Lundberg asked that question in The Rich       Colorado come to mind. Suddenly gold,
and invest the capital that creates every       and the Super Rich, but he didn’t stay on      like raw materials, arrived in abundance,
job and every dollar of income. Wages           for an answer. He did not tackle that          and people had more money, or at least
and the cost of capital have to be carried      inscrutable money matter. The Founding         money in harmony with economic activi-
by the enterprise system one way or             Fathers sought to deal with it — “The          ty — all on an earned and interest-free
                                                Congress shall coin the money and regu-        basis.
                Reprinted from
                                                late the value thereof” — but they had no          By qualifying as money, gold was paid
                                                clear idea on just what constituted money.     for and required no debt. The arrival of a
                                                    A philosophical chasm asserted itself      wheat crop would function the same way
        Nov 2003-Feb 20004 • Vol. 33/34         from the start. Adam Smith decreed that        under conditions of parity. Does gold
comply with the needs of an industrial           the only way to keep it reasonably stable         The Constitutional Convention chose
society? Or does its shortage confer such        over time in a just manner that does not       to rely on theory — Adam Smith theory
a value that only government monetiza-           favor one class over another.                  — and on one Rev. John Witherspoon,
tion at a fixed price prevent it from anni-          The language was vague. Those in           who published a book on money just
hilating those who have debts to pay?            attendance were not agreed on what “coin       before the convention. Both Smith and
                                                 the money and regulate the value thereof”      Witherspoon stonewalled the basic expe-
           THE LABORATORY                        really meant. The old Articles of              riences the Colonies had endured.
    America has been a monetary laborato-        Confederation document allowed the gov-           The rightness of theory in the face of
ry from the start. English laws forbade the      ernment to emit bills of credit, but the       irreducible facts confronts the United
sending of coinage to the colonies, so the       Madison Constitution remained vague.           States because the drumbeat has been
colonies had to create their own money           Why was “emit bills of credit,” that is,       ordered. Alan Greenspan dismisses recita-
system. They tried commodities. They             “print money,” left out? It is safe to say     tion of history that does not comply with
tried gold coins. They tried tobacco ware-       that confusion ruled. This right to issue      the wishes of his patrons as being self-evi-
house receipts. Finally, Massachusetts           bills of credit was not stated, nor was it     dent. Through this device, the same tired
issued bills of credit. Yes, fiat money. But     omitted.                                       theories gain rebirth.
a mature look at money tells us that all             Because of this oversight, the mone-          The First Bank of the United States
money is fiat, because it is the legal aspect    tary powers entered through the back door      was formed in 1791. Washington
that makes it money. It is helpful if money      and over time has managed to overwhelm         endorsed Hamilton. Jefferson objected.
keeps its value, but it also has to facilitate   the entire edifice so that they now control    The bank did exactly what all central
exchange. The idea that gold keeps its           our nation through the agency of war and       banks do upon formation. It demanded
value is nice, but it doesn’t remedy a mon-      debt.                                          war. The Bank of England had shown the
etary-created depression. Even in a primi-           It is argued that the government can’t     way. War invites debt. It forces a govern-
tive society, money is a creature of the         be trusted, but that the Federal Reserve       ment to borrow.
law. Its value is determined by the amount       can — yet history reveals that in all cases       The First Bank tried to ignite war with
of it in circulation.                            in which the agencies of government have       Canada. This failed. Algeria was next.
    When the Constitutional Convention           issued money exactly as authorized, and        That failed. War with England was next.
was convened, it was to consider the             when inflation followed — as with the          Finally they settled for a war with France
Northwest Ordinance and other commer-            Civil War — it fell equally on all citizens,   over New Orleans. It is a matter of record
cial matters. Thomas Jefferson was in            excepting no one.                              that Thomas Paine said to Jefferson, then
France at the time. Thomas Paine was also            Immediately after the Constitution was     President, “Make them an offer to buy
in France. Ben Franklin was tortured with        ratified, Hamilton started agitating for       Louisiana.” The Louisiana Purchase cir-
gout — another delegate had to read his          laws to serve the financial interests.         cumvented the bank’s attempt to set off a
speech. Often the Founders were not              Establishment of the First Bank of the         war.
there. Madison was present, for which            United States was on his agenda. That             To summarize: In reality, the monetary
reason the Constitution is often called the      bank was given special privileges. It was      principle always at work is that you can
Madison Constitution.                            allowed to create money in a manner the        have an abstract symbol, paper or token,
    The delegates voted for self-determina-      government was perceived to be blocked         and it can be given value by the govern-
tion, but they left open the door for the        from doing. It issued its own paper notes,     ment accepting it as taxes. Partial gold
money power to assert itself by not ade-         one-third backed by metal. Since the           backing enabled people to believe that
quately defining money and by leaving            financial people had the gold and silver,      First Bank notes could be redeemed.
unanswered the monetary power. As a              the money creation process went by                Full backing was not possible because
group, the delegates did not really under-       default to the bankers, not the govern-        Great Britain and Holland had the gold. It
stand the Adam Smith dismissal of the            ment. The bank notes were accepted             would have to be borrowed to make good
money subject that later emerged in The          because the government accepted them as        such a promise.
Wealth of Nations. Hamilton understood           payment of taxes. Also, there was little          The First Bank expired in 1811. If you
the subject quite well. The merchant             else circulating as money at the time.         smell a war coming up, be sure to read on.
Morris also understood money and money               There is a big difference between theo-
power.                                           ry and experience. Too many economists                  WHAT ABOUT GOLD?
    This is no criticism. Confusion is the       rely on reasoning alone and ignore histo-          Gold is money, according to the
money creator’s greatest asset. Is money a       ry. History is most important, because         Austrian School. Well, so is wheat and so
commodity or a social invention? If it is a      often it takes a generation for blunders to    is corn in a manner of speaking. But gold
legal social invention, then it should have      become apparent.                               is not and will not be the currency of uni-
been well defined in the Constitution.               The blunder uncorked during the            versally developed societies.
How should the money be supplied, and            Wilson administration has now exacerbat-
how should its value be regulated?               ed every other problem, led us to the edge
                                                                                                               Reprinted from
    It has been and remains the position of      of a military junta ruling the nation, and
Unforgiven that the value of money can be        closed the circle initiated with the Farm
regulated only by maintaining structural         Act of 1948.
balance in the economy. It appears to be                                                               Nov 2003-Feb 20004 • Vol. 33/34
   If you are living in the Confederacy,           Temporarily, the state bulls closed              In this case, the original sin was the
and General Robert E. Lee has just lost         down the national bank, albeit not without      failure of the Founding Fathers to set up a
the Battle of Gettysburg, then a shift to       consequences. By so doing, the smaller          Department of Money. The consequences
gold as insurance is a valid exercise. As an    banks pointed out something that should         of that “money failure” of the U.S.
individual lifeboat, gold may be money          be at once apparent today. The money cre-       Constitution has haunted economic stabil-
for someone on the run from a Soviet-           ators are really a fourth branch of govern-     ity ever since. Moreover, the transfer of
style dictator or an iron-pants junta.          ment, more powerful than the Executive,         the money-creation power to a private oli-
   But it is not likely that U.S. currency      the Legislative or the Judiciary. It is oper-   gopoly has made government a partner in
will go under in the classic style of Rome,     ated for the interest of what Thorstein         crime and threatens to annihilate the civi-
Russia (three times in one lifetime) or the     Veblen called the leisure class. Indeed, the    lization over which it presides.
paper of Brazil. Gold holds value for an        Fed is operated quite well for the benefit          Looking back, it is easy to see why
individual to the extent it is monetized        of the banks and their interest mill.           prices were cut out from under agriculture
somewhere in the world. But the prospect           The second lesson was that the surplus       in the 1948 law. It opened agriculture up
of paying off a whopping debt with a few        should be nationalized rather than taken        for loans, debt, consumption of farm sup-
coins is speculation and does not fall          up into state banks or made into a private      plies, finally total imbalance for the entire
within the purview of this essay.               fiefdom for the super-rich.                     economy and even more profits for the
   For readers who would like to pursue            Law has been effective in running            engines of credit.
this topic in depth, we would recommend         money systems throughout history. State             Debt is like a hungry behemoth. It
a reading of Eustace Mullins’ The Secrets       and federal governments have never              seeks to devour ever more, and this calls
of the Federal Reserve and Stephen              issued money beyond what was allowed            for war. It is no accident that between
Zarlenga’s The Lost Science of Money.           by state legislatures.                          Pearl Harbor and the present, American
                                                   At one time the government had               troops have struck the first blow not once
      THE NAME OF THE GAME                      accounts in 94 banks, four accounts in          but over a hundred times.
    I have recounted a few details of the       each bank, these to clear investments from          Historians Charles and Mary Beard
great experiment called the American            banks not speaking to each other. The           have characterized the era as perpetual
Nation, and how the money power was             government took a whipping from spe-            war for perpetual peace. Korea, Vietnam,
usurped. I have also hinted as to how that      cious banknotes, forgeries, etc.                Panama, Iraq, Haiti, Somalia, all are well
power disrupts the economy’s structural            Around 1812, the government issued           known. But how many people know the
balance in order to serve the money cre-        Treasury notes with the characteristics of      names of operations that took American
ators and their clientele.                      money. They were not bearer instruments.        troops into foreign countries as invaders,
    Debt and war is the name of the game.       These notes presented a crisis when the         neo-empire builders, shock troops for so-
This has been illustrated of late by the        Trust Bank was liquidated. By 1815 these        called American interests, meaning corpo-
announcement that Halliburton was fortu-        notes were made bearer, real money              rations with American addresses?
nate in getting $1.7 billion contract in        because the government accepted them
Iraq, courtesy of the administration, Dick      for payment of taxes, fees, etc.                       MONEY POWER POLICY
Cheney, vice president. The code name is           The real issue always has been interest.         Almost everyone knows there is a
Iraqi Freedom. There are other contracts        In our own time (1968) silver certificates      problem, but few have identified it. There
worth billions, according to the public         were withdrawn because they circulated          is a reason for this. Once the money power
record. The entire debt constructed for         interest-free. Federal Reserve Notes            is established, it converts newspapers and
war purposes bears interest. Auditors now       replaced them, and they always required         the intellectual advisers of the community
state that fully 33 percent of the cost of      interest. An interest-paying public tends       to its service. The most effective tool in
Iraq goes to for-profit business institutions   to be an impoverished public.                   this endeavor is to keep the nature of
harvesting their bite of the pie. War is           In the first post-1811 case, $60.5 mil-      money from being understood. Support
essential when agriculture has been debil-      lion was authorized between 1812 and            for what is being said here can be found in
itated to a point of insolvency. War alone      1818. Only $36.7 million was actually           Carroll Quigley’s book Tragedy and
can take material quickly into consump-         issued. The experiments and groping of          Hope, pages 50-60.
tion, obsolescence or destruction, much         the new country was for a money system              Between 1811 and 1817, the number of
like food consumed three times a day.           that leans on gold but recognizes the           state banks expanded from under 90 to
                                                impossibility of having exchange curren-        over 200, pretending to have assets that
          THE EXPERIMENT                        cy sufficient to facilitate commerce with-      doubled over that timeframe. The word
   When the First Bank of the United            out the correct expansion of money in           pretending is used purposely. The only
States’ charter expired, about 100 state        terms of population growth and com-             reason any of these banknotes were
banks sprang up like fungus. When the           merce.                                          accepted by anyone was because the gov-
First Bank was liquidated, it was discov-                                                       ernment accepted them for tax payments.
ered that of the 2,500 shares, 1,800 were                    ORIGINAL SIN
                                                                                                               Reprinted from
owned by aliens, chiefly Dutch and                 There was a time when churchmen
English. In other words, control of the         defined “original sin” as a transgression
monetary power of the United States had         that polluted the stream of moral life for
been sold to foreigners.                        generations.                                           Nov 2003-Feb 20004 • Vol. 33/34
This, even more than a legal tender decla-       followed. Circulating currency was cut        know how, either. They were afraid such
ration, gave currency status.                    from $10 million to $3.5 million in 1820.     an institution would make political loans.
    This is the Austrian School free bank-       A wave of bankruptcies spread across the      In fact, a central bank’s job would be to
ing system that some Libertarians hold up        country. Choice properties were sold for      control the money supply. Others would
as a norm.                                       next to nothing. Anyone with debt lost        make loans.
    Clearly, the great experiment had run        everything. Often, they moved West.               The banks tried to oil Jackson’s sore
its course by the time of the Madison               The uproar shook the nation. Then it       opinion by naming Jackson supporters to
administration. James Madison wanted to          was revealed that 40 congressmen were         bank posts, but this didn’t work. The old
set up a new federal bank with the provi-        shareholders, and with this revelation        man remained hostile. Next, hostility
sion that this time the government would         panic set in. The South was hit hard. Some    exploded like a volcano. There was a
own 40 percent, not the 20 percent of the        historians pick this moment in time for the   Baring Brothers loan that was not paid,
earlier version. This was blocked by             buildup to civil war. In 1820 a commis-       costing the government. Yes, this was the
Congress. Madison finally had to settle          sion condemned the bank. The bank took        same Baring Brothers that went down in
for another bank, 20 percent government          the assault by diverting rampaging energy     flames in Singapore due to derivative
owned, which was not enough to exercise          into the hard money versus soft money         trade that went sour. Next, a check from
the sovereign power required. The Second         debate.                                       the French government bounced. The
Bank of the United States began opera-              The debate between hard money and          bank tried to collect an obscene fee from
tions in April 1817. The 20/40-percent           inflation survives to this day. It ignores    the U.S. government for this, and Jackson
division gave both a cut and control to for-     imbalance between sectors as an engine of     exploded. He believed the bank would be
eign capital.                                                                                                       able to buy enough
    Always, control is                                                                                              congressmen to over-
the key. It decides                                                                                                 ride his veto of a new
how the society will         Debt is like a hungry behemoth. It seeks to devour                                     bank charter up for
function,      whether                                                                                              renewal.
people will have           ever more, and this calls for war.                                                          Jackson ordered
employment, whether                                                                                                 U.S. funds withdrawn
farmers will remain                                                                                                 from the Second
solvent, whether fac-                                                                                               Bank and deposited
tories will migrate, whether wealth will         credit, fuel for the interest mill and oli-   in state banks. Secretary of the Treasury
have broad-spectrum distribution or              gopolistic greed, with war as a diversion     McLane refused. Jackson fired him. The
become the property of a few. Then as            and an even more powerful harvest for         next treasury secretary also refused.
now, congressmen could be enlisted,              greed. In fact, the debate should have been   Jackson fired him. Jackson then appointed
influenced the usual way, and given a            over the money system itself. Should it be    a former attorney general to the post. With
token interest. One vote really counts if it     in the hands of absconders, or in the hands   that, the bank was off and running.
makes the difference. It was another case        of the people’s representatives?                  The bank’s big game was bribery. One
of being sold down the river by Congress.            Historians wrap all this up in one        of Nicholas Biddle’s people even wrote a
                                                 whiplash line: “The bank was poorly run       letter that has survived. In it he said, “All
          THE SECOND BANK                        in its early years.” Actually, it was well    hope is now in bribery.” There are records
    The Second Bank was illegal because          run for the 40 congressmen who held           of various loans made to well-circulated
it failed the legal test of taking subscrip-     stock. Nicholas Biddle became bank pres-      newspapers, the kind of loans that fall
tions in gold only for its shares. Instead, it   ident. He ran the bank more carefully.        between the cracks and somehow disap-
took bank paper from many banks. This            Even so, he ran into a confrontation with     pear off the books. I mention this to illus-
explains why there was no opposition by          Andrew Jackson in 1828. Jackson called        trate that our own era is not alone in
the 200-plus. This took the state banks off      the bankers a nest of vipers, and “by the     embracing mendacity. The editors
the hook for often worthless paper. By           Almighty,” he vowed to wipe them out.         involved, hostile to the bank one day,
July 1817, there were 11 branch offices,         Martin Van Buren was in Jackson’s camp,       adjusted their attitudes accordingly.
and $52 million in debt had been mone-           as was the son of Alexander Hamilton and      Daniel Webster accepted his bribe, a loan.
tized. About $9 million in circulating cur-      the economist Friedrich List, whose           An attempt to assassinate Jackson failed.
rency was printed, all based on gold and         National System of Political Economy is       Jackson simply caned the gunman, whose
silver reserves of $2.5 million.                 still a classic answer to Adam Smith’s        weapons misfired.
    It seems that gold backing has always        Wealth of Nations.                                In the end, Congress would not over-
been taken for granted, a comfortable fic-           Jackson wanted a Treasury Department      ride Jackson’s veto. The bank in
tion banks liked to promote because the          bank, but he didn’t know how to accom-        Pennsylvania was wiped out in a cotton
lie was so delicious.                            plish it. The commission he set up didn’t     scandal. Biddle was charged with fraud
    In this instance, expansion of the                                                         but not convicted.
                                                                Reprinted from
money supply caused a speculative boom.                                                            Jackson was incorruptible, but mere
In late 1818, the Second Bank started a                                                        honesty was not enough. He needed a bit
contraction. Outstanding loans were cut                                                        more education. There was this business
from $52 million to $12 million. Panic                  Nov 2003-Feb 20004 • Vol. 33/34        of Adam Smith declaring only gold and
silver money even though the Bank of              Students of raw materials economics        powers-that-be today are so much in favor
England he supported had been issuing          hold that new wealth entering the system      of the global plantation concept and inter-
abstract money for 80 years. Smith glori-      should be monetized. Farm crops are the       national free trade, even though neither
fied the Bank of England as a great engine     largest component of this category, and       are appropriate for the nation in which the
of state when it was actually a private        these pass quickly into consumption,          internationalists have corporate addresses.
engine of credit. Smith lionized banks as      paving the way for a replacement crop            Amsterdam forbade private banking.
the only necessary corporations. So much       season after season.                          The bank vaults were located in city hall.
for hard money!                                   Hardware such as war implements also       The bank was not for profit. It was a
    It was Friedrich List who pointed out      passes quickly into consumption, but          deposit bank, not a bank of issue. It was
that England was selling Adam Smith’s          these commodities are created on the          not supposed to create money, either by
ideas abroad, but spurning them herself.       basis of debt, for which reason perpetual     printing press or by making loans. It vio-
His free trade concepts were English pub-      war for perpetual peace destroys the          lated its own rules, however, and indeed
lic policy. England was importing raw          nation that makes this kind of policy dom-    made loans to the Dutch East India
materials and exporting finished goods to      inant.                                        Company. Also, it did not stick strictly to
which mechanical engineering and power            As the nation groped for answers to a      the deposit function. It was liquidated in
had been applied. Transported to our era,      seemingly insoluble problem, the              1817, replaced by a bank of issue.
this approach has given us NAFTA and           episodes of American history took form,          A full recitation of how Amsterdam
WTO. List wryly pointed out that the           gathered speed, and moved ahead.              powered what has happened in America
British Prime Minister always had                                                            can be found in Stephen Zarlenga’s mas-
Smith’s Wealth of Nations under his arm.                    BACKGROUND                       terpiece, The Lost Science of Money.
    The point here is that Jackson’s team         The private Bank of England was
wasn’t buying into Adam Smith at all.          attacked first by Thomas Paine. In 1797                 BANK OF ENGLAND
They rejected free trade but became mes-       he showed how it warmongered as an                The Bank of England was formed in
merized by his definition of money.            institution. Today, Tom Paine would have      1694 by people from Holland, by Jews,
    People with good common sense react-       gotten no press because the banker’s press    Christians and Huguenots. As mentioned
ed with the Red Skelton line, “This just       would have dubbed him a kook.                 above, the Bank of England was a bank of
doesn’t sound right,” in evaluating Smith.        The second person to attack the Bank       issue. This means it had the power to cre-
They had help — James K. Maitland, Earl        of England concept was one of the bank’s      ate money out of thin air. It was conceived
of Lauderdale. In An Inquiry into the          founders, William Paterson. He tried to       in iniquity as a rider on a supply bill. This
Nature and Origin of Public Wealth             dismantle its national debt mechanism as      ability to monetize debt meant war, of
(1804), he wrote that Adam Smith’s error       far back as 1750.                             course, and the resulting war debt lasted
in defining national policy in terms of a         The third critic was David Ricardo, a      over 100 years.
household was an oversimplification. The       stockbroker and economist whose writ-             It was Thomas Paine who wrote a
government is not a business or a house-       ings are still studied, if not learned. Few   definitive book that made the connection
hold. The government has a legitimate          of these insights made it to America, and     between the debt engine and perpetual
monetary power. The Earl noted that you        Jackson made the mistake of closing           war. Each war escalated the debt to a pri-
cannot save your way to prosperity as a        down a financial bordello without having      vate bank, something akin to our own
nation. Parsimony will not advance a           in mind a replacement for its function.       sacred national debt. When a Bank of
nation. He revealed that production was           President Martin Van Buren, Jackson’s      England founding member wrote a book
necessary and price was necessary.             successor, looked at two models. One was      exposing the scam, it was burned at the
    The first objective of economic life is    the Amsterdam model, and the second           London stock exchange in a public cere-
people and a satisfactory way of life for      was the Bank of England. Amsterdam had        mony.
people. As population grows, so must the       a bank of deposits; England had a bank of         David Ricardo put his finger on the
money supply, in tune with economic            issue. The city owned the Bank of             problem with our own Federal Reserve
activity. The genius of the Rothschilds        Amsterdam. It came into being when the        Bank system: “It is evident therefore that
says this is best accomplished by tying        spice trade shifted from Venice to the        if the government itself were to be the sole
money to debt, debt being the engine of        North Sea. This was in 1607. The purpose      issuer of paper money instead of borrow-
progress. Bill Greider in his Secrets of the   was to handle exchange. The Cape of           ing it from the bank, the only difference
Temple bought into this concept hook, line     Good Hope route figured — before that,        would be with respect to the interest. The
and sinker, ignoring the buildup of interest   trade went through Venice, then through       bank would no longer receive interest [on
that transferred the wealth of the nation      the Arab states.                              the public debt], the government would no
into the hands of a few and made sham-            It was an era that saw the Fuggers         longer pay it.” Ricardo was dead at age 51
bles of stability. He described the process    banking house send an ambassador to the       after making this proposal.
as having faith in the future.                 Vatican to get a ruling that interest could       Martin Van Buren saw through Adam
                                               be charged on loans. R.H. Tawney, writing     Smith and through the Bank of England,
               Reprinted from
                                               in Religion and the Rise of Capitalism,       but he did not see through Smith’s false
                                               called the ruling an inspired truth, one      concept of money — that it had to be gold
                                               purchased by the traders because it was so    or silver. This suggested the Bank of
       Nov 2003-Feb 20004 • Vol. 33/34         profitable. That trip illustrates why the     Amsterdam model, which pretended to be
no more than a deposit bank for gold and       destined to be artifacts like Confederate      to bumper-to-bumper Hondas circling the
silver.                                        currency.                                      planet two times.
    Stephen Zarlenga believes Van Buren            We can all agree that the Earth orbits         Farmers should understand the deficit
should have combined the ownership part        the sun and that without sunlight the plan-    because they understand seed corn. My
of the Bank of Amsterdam with the issue        et goes dead. OK, scientists might be able     father always saved back seed wheat,
aspect of the Bank of England.                 to mine coal and extract oil and come up       sometimes seed corn. Each winter (wheat)
    Van Buren was of Dutch descent. He         with enough energy to last a while, but        and spring (corn) was plentiful, drawing
selected the Bank of Amsterdam model,          without energy from the sun, it’s curtains.    on that inventory of grain. In late summer
and the next phase of monetary life in the         The agency that converts sunlight to a     or fall came harvest. Seed was saved for
United States was a tryst with metal           usable form is the green dye in plant life,    the next year. Grain not needed for seed
money — gold and silver — Lincoln’s            chlorophyl. It takes sunlight and turns it     was sold or consumed.
money excepted.                                into corn, rice, wheat, soybeans — into            Seed saved back was Dad’s capital, the
    How the United States was maneu-           hundreds of crops — and supplies man,          key to next year’s crop and an insurance
vered into the Federal Reserve trap is a       microbes, animals, fish and fowl with the      policy against hunger.
story that brings on acute nausea. It also     wherewithal to stay alive. I think we can          Now consider what would have hap-
explains our generation of perpetual war       all agree on that.                             pened without that save-back of seed
for perpetual peace, national bankruptcy,          Can we agree that chlorophyl handles       corn.
and an economy ready to be drowned by a        the light that accounts for 70 percent of          We’ve become sophisticated since
sea of debt and war.                           the raw materials used to operate the          then. Savings are stashed away as money.
    Without correction of the money-           economy? I think we can all agree to that.     It is mobilized via the agency of stocks,
creation process, the United States will       The old Raw Materials National Council         bonds, CDs. The system that cycles these
probably go into receivership, to be gov-      proved that beyond the shadow of a doubt       savings to business and the banking indus-
erned by a military junta, an eclipse of our   before and during World War II. This one       try has license to enlarge deposits a little
political and institutional arrangements.      fact makes agriculture the flywheel and        over $13,000 for every $100 of deposits,
    The economic news is what it is, a         balance wheel of the economy.                  this calculation according to Franklin
steady accumulation of data that tell of           Production times price equals income.      Sanders of The Money Changer. The flow
unemployment, the wasting away of              That makes prices placed on chlorophyl-        of money enables the creation of tools,
American resources, the futile effort to       based raw materials the big divide             products, services. Now tools and build-
have perpetual war as a substitute for a       between the arrival of revenue from the        ing become the seed corn or wheat.
structurally balanced economy, mendacity       sun and the buzzing confusion we call the      Behold, jobs are created.
in high office and a bevy of lessers run-      clanging mart. It also leads us into an area       The point here is that the process has
ning for president, hardly any having          forbidden to academia by common con-           not changed all that much since my
exhibited the mental acuity to vote against    sent, namely, an analysis of money.            father’s time. It all tracks back to that
an Iraq adventure based on specious                                                           solar revenue and civilization’s ability to
grounds.                                                    FOREGROUND                        keep books, flow money, and, not least,
    Let the pot simmer. Let us pause here         If you call NASA and ask the question,      understand the money system.
to plumb the real reasons for our malaise.     “Driving a clunker at 55 m.p.h., how long          When the National Banking Act of
    When great rivers of money arrived in      would it take to reach the moon?,” the         1863 was passed, a poignant letter went
the tax coffers due to the tech bubble of      answer would be, “About 10 centuries.”         into the record. It was written by one of
the 1990s, the bean counters convinced            The really bright people in Washington      the Rothschild brothers, who predicted,
themselves that the river of cash was inex-    have bested the above theoretical venture.     “The few who can understand the system
haustible. The agencies of government          The federal deficit last year was nearly       (created by the National Banking Act)
expanded themselves and even added new         $500 billion. It rolls off the tongue quite    will either be so interested in its profits, or
programs. This bubble has burst, money         easily, but really how much is that? If        so dependent on its favors, that there will
has dried up, and all governments spend        $1,000 bills were neatly stacked, the pile     be no opposition from that class, while on
more than they take in. Hence war, the         would be about four miles high. A cool         the other hand, the great body of the peo-
creation of new debt, new money. What          million would be 330 feet high, as high as     ple mentally incapable of comprehending
does it all mean?                              a 33-story building. Can you see the orbit     the tremendous advantage that capital
                                               of this money, a hazard to satellites? The     derives from the system, will bear its bur-
           CAN WE AGREE?                       fiscal debt accumulated chiefly since          dens without complaint, and perhaps
   “Is there nothing you economists can        1948 would reach past the moon, besting        without even suspecting that the system is
agree upon?”                                   that 55 m.p.h. jalopy trip. One newsletter     inimical to their interests.”
   That statement came to the fore during      writer figured last year’s deficit was equal       I believe Acres U.S.A. readers have the
a recent coffee klatch, and it got me think-                                                  mental acuity to comprehend the system,
ing. I believe we can agree on a lot of                                                       for which reason I attempt this exposition
                                                              Reprinted from
things if we let the thinking results flow                                                    and analysis of money.
logically from the facts. Never mind
whether the stock market is going up or
down or whether California bonds are                  Nov 2003-Feb 20004 • Vol. 33/34
               CURRENCY                        old timer eats his seed corn, his capital?        least as significant as Keynes and
    “If we have to use force, it is because    The picture is clear enough.                      Galbraith are today. The book shocked a
we are America. We are the indispensable          In the 21st century, savings are kept in       naive people who for the first time learned
nation. We stand tall. We see further into     institutions. They are mobilized via the          how banks were founded, how they oper-
the future.” So said Clinton’s Secretary of    agency of stocks, bonds, CDs. These sav-          ate, how they capitalized not with coin,
State, Madelyn Albright. The world heard       ings are funneled to businesses, multiplied       but with promissory notes, which were
and said, “Really?” Richard Maybury’s          of course by debt money created from thin         tantamount to creating currency out of
Early Warning Report later summarized:         air in a process designed to confuse the          absolutely nothing other than printer’s ink
“Hubris run amok!”                             layperson. The metaphor of an industrial          and paper.
    Wherefrom this power? Someone,             society needs little explanation. Tools,              Singlehanded, Gouge ended so-called
Edison I think, once said that the most        vehicles, medicines, all the paraphernalia        free banking. Suddenly states started
profound invention of mankind was com-         of civilized society are needed. These            requiring banks to have reserves, which
pound interest and the ability to turn debt    things are the seed corn. It is the seed corn     now had to be kept in the form of govern-
into money. With debt money, Bill              that creates the jobs. Production leads to        ment bonds. There was a saying in those
Greider said in Secrets of the Temple:         savings, which leads to more production.          days that the silver and gold reserves were
How the Federal Reserve Runs the               As Lincoln said, labor is the instrument          on the road ahead of the bank inspectors,
Country, the Federal Reserve shows faith       for creating capital, and of course raw           much as digital money now orbits the
in the future. Enterprise no longer needs      materials are ahead of labor.                     earth ahead of the clock.
to capitalize on savings and expand on                                                               The tradition that metal was money
earnings. The anointed ones can give Wal-                        MONEY                           was so strong during Jackson’s term of
Mart a leg up and permit the takeover of           Let’s think of money, then, as seed           office, there was that famous line that
retailing — all of it.                         corn. Let us understand how this require-         public lands be paid for in specie (gold),
    UN estimates now have it that the U.S.     ment that farmers consume their own cap-          the basis for land title, all now repudiated
sanctions on Iraq killed 5,000 Iraqi chil-     ital has led us to our present predicament.       from county to federal governments.
dren each month for 10 years. The total        History explains why politicos are so             From that moment on, depression set in.
killed by Saddam Hussein, Osama bin            tardy in forming a workable public policy.        Bank currency, it turned out, was paper
Laden and Slobodan Milosevic was               And without comprehension of money,               and paper only. The day the government
284,000. Total deaths caused by Bush I,        the tragedy of the last 10 administrations,       ceased accepting banknotes as payment,
Clinton and Bush II — 1,117,000.               not unlike the tragedy of the 12 Caesars,         currency contracted and depression set in.
    “Never think that war, no matter how       will continue.                                    It was during this period that the United
necessary, nor how justified, is not a             Bank of deposit! Bank of issue? How           States really was on a pure gold and silver
crime,” wrote Ernest Hemingway. “Ask           many people who conjure up a genuine              coinage standard.
the infantry. Ask the dead.”                   world money supply know their history,                The lesson is clear. It is the government
    Those million dead in the name of          that sure guide to what will be? The Bank         that determines the official money, by law.
freedom are just a statistic. A $500 billion   of Amsterdam got her deposits alright, a          Without this imprimatur, people have no
federal deficit is equally a statistic. The    river of silver and gold, courtesy of the         faith in currency, whatever it is. This les-
size of the blunders are so awesome, they      indigenous people of the Americas — 10            son also tells us where the money power
baffle the imagination. No one can com-        to 20 million killed for the precious met-        comes from. It is a creation of a society,
prehend a deficit of more than a billion       als even before the Bank of Amsterdam             and the benefits ought to accrue to that
dollars per day. The sheer size of a deficit   opened. Stephen Zarlenga’s book, The              society, not to a private group.
run amok asks us to examine the counting       Lost Science of Money, is probably alone          Historically, it has been this usurpation of
system for this rampant insanity, money.       in connecting those genocidal episodes to         a government function that sets in motion
    Whatever the high ideals of the atten-     deposits.                                         the chain of events that annihilates both
dant flag waving, modern wars were                 President Van Buren probably knew             the usurpers and the society. It is this type
invented to create debt, meaning money,        nothing about this influx of cash. He             of tragedy we bear witness to today. The
and the process ultimately brings down         merely reasoned, as do small businesses           term of this exercise is long. For the short
nations and civilizations.                     today, that capitalization has to be a con-       term, the killing runs beyond the dreams
    Farmers come closest to understand-        sequence of savings, and expansion a              of avarice — and Midas!
ing the deficit because they understand        result of earnings. The idea of creating              In the Van Buren administration, the
seed corn, at least, old farmers do. Each      money out of thin air was repugnant to            government started to issue Treasury
spring the Midwestern farmer would sow         Van Buren and his political mentor,               notes as money. The issue of $10 million
his corn. Harvest took place in the fall.      Andrew Jackson. Banking was held in               that was paid out, then collected back in
Before hybrids intervened so that corn         very low esteem at the time, largely due to       taxes, got the economy moving again in
would grow on worn-out ground, the             a man named William Gouge. In 1833 he             1837 and 1838, fully 60 percent of gov-
farmer saved back the seed he needed for       wrote A Short History of Money and
                                                                                                                Reprinted from
the next crop. The savings — yes, the seed     Banking. Whenever I pull it off my library
corn — was his capital (remember, capi-        shelf I have to reflect that it certainly isn’t
talize on scrips). What happens when the       short, but it is one of the best books on
                                               banking ever written. In its day it was at               Nov 2003-Feb 20004 • Vol. 33/34
ernment revenue was collected in Van           everybody would understand.” Gouge              then it has to be controlled by the people
Buren money. It appeared that there sim-       went on to say that if the superior credit      handling the money.”
ply was not and could not be enough gold       the banks were enjoying had grown out of            Slavery was a moral issue, but the real
and silver for the expanding population        the natural order of things, it would not be    seeds of the Civil War were sown by the
and growing economy.                           a subject of complaint. “But the banks          Second Bank of the United States. When
    Again, history pronounces its verdict.     owe their credit to charters, to special acts   deflation after Jackson occurred, the
Between 1500 and 1900, gold production         of legislation in their favor, and to their     South chafed at the withdrawal of circu-
increased 1.5 percent per annum. The           notes being made receivable in payment          lating media. Also, cotton profits were
increase in population was near 3 percent.     of dues to government.” The public credit       being drained away exactly the way prof-
    These issues continued until 1850, at      supports banks, not the other way around.       its were taken out of American agriculture
which point Congress stopped them              “Profits derived from circulation come          after World War II. Thomas P. Kettell’s
entirely. The year 1849 intervened. Gold       from the community and ought to go to           book Southern Wealth and Northern
was discovered on Sutter’s Creek in            the community to lighten the burden of          Profits demonstrates how cotton produc-
California. The congressional close-down       taxation.”                                      ers were being paid for less wealth than
of issue and the discovery of gold changed        Gouge did more. He likened this ham-         they produced. Also, Queen Victoria’s
a brittle money situation overnight. A         mer over the population to its social con-      government really wanted the United
depression unfolded because one ship           sequences. If you deprive a man of his          States divided in half.
bearing gold was sunk, this in 1851. The       property, you also deprive him of the
loss of one ship created a panic, and          wherewithal to feed and educate his fami-                  LINCOLN MONEY
Congress came to the rescue with a new         ly and thus affect the moral and intellectu-       Lincoln probably did not understand
issue.                                         al character of a people for generations.       the money that took his name, but he went
    The experience of Colonial days, the       We see this today. Interest transfers the       along with wiser heads. The greenbacks
banks,     now      the                                                                                              were authorized by
depression of the                                                                                                    Congress as interest-
1850s, all conspired                                                                                                 free money to be paid
to teach — if reluc-                                                                                                 into circulation for
tantly — a nation          Seed saved back was Dad’s capital, the key to                                             war materials. If they
embroiled in the slav-                                                                                               meant inflation, this
ery question. How
                          next year’s crop and an insurance policy against                                           was a tax that fell
could anyone argue
against gold when
                          hunger.                                                                                    equally on everyone.
                                                                                                                     What is never pointed
gold coins were being                                                                                                out is the fact that the
used in California the                                                                                               banks took in green-
way pennies are used in an arcade? The         wealth of a nation into the hands of a few,     backs and converted them into interest-
same was not true in New Hampshire.            keeping the rest of the community in            bearing instruments via the agency of
    In writing this report, I reread Carl      penury.                                         loans. For every dollar deposited, they
Sandburg’s biography of Lincoln.                  This much stated, it must be pointed         created $1.49 of additional currency, at
Regardless of what revisionists say, it is a   out that Gouge opted for gold and silver        interest, of course. The greenbacks were a
well-balanced biography and reveals that       because he trusted government little,           great success. Instead of borrowing from
all the “correct measures” later writers       banks of issue even less. Gold to him was       the Continent, the States did for them-
saw were in fact considered by Lincoln,        a standard for the actual flow of com-          selves at zero interest what the European
who more than present chief executives         modities, yet today we know commodities         bankers stood ready to do for them at
was required to consult his constituency       cannot have such a standard unless struc-       ruinous interest.
before acting, and was not the dictator that   tural balance is regulated, borders are pro-       The Civil War ended in April 1865. It
writers like William Manchester made           tected, and the farmer is given what he is      was then that a drumbeat started for tak-
him out to be. We now must consider            entitled to — first crack at the American       ing that interest-free money out of circula-
Lincoln’s money.                               market.                                         tion. The idea put forward was that
                                                  Gouge knew the banks cheated. The            Lincoln money had to be paid for in gold.
    THE AUTHORITY OF MONEY                     authority of money was less understood.         There is one rule as definite as the law of
    Before we do, let this quotation from         I put the question to Zarlenga — where       gravity. When it is necessary to save the
Gouge stand: “Over the periodical press,       does control rest? “There have been times       bankers, the money creators step aside
the banks have great power. Few journal-       when gold and silver might have gone            and let the government create the money
ists can venture to expose the money cor-      against the interests of the establishment,     system. Once some stability has been
poration systems in such plain terms as        but in general gold and silver are self-        restored, the bankers move in and take
                                               defeating because if there is no proper         over again.
               Reprinted from
                                               concept of money, then it is not under-            All of a sudden, preachers, professors,
                                               stood that it has to be in the law and con-     intellectual advisers of every stripe — edi-
                                               trolled by society via the laws and election    tors included — discovered a divine truth.
       Nov 2003-Feb 20004 • Vol. 33/34         processes. If it is not controlled that way,    Bonds purchased with greenbacks were to
be paid off in gold. Also, sound econom-          We are not required to speculate about        Before William Jennings Bryan cap-
ics demanded that interest-free green-        what happened. The finest monetary his-       tured the issue in three unsuccessful runs
backs be removed from circulation and         torian of all time, Alexander Delmar, was     for the presidency, there were people who
exchanged into gold, and that circulating     there and wrote it down in Monetary           really understood money creation, debt
media be replaced with banknotes based        Crimes.                                       and the interest scam. One was General
on debt — interest-bearing notes, that is.        There was also a Democratic newspa-       Benjamin Franklin Butler, who ran for
The example of interest-free money was        per called The World, a newspaper Bible if    president on the Greenback ticket. He had
immoral, all these sin-killers concluded in   ever there was one. It denounced              been in charge of armed forces in New
unison. Allowed to continue, this could       Seymour. An 1868 article savaged the          Orleans during the Civil War. He suggest-
undermine the greatest scam since the         party’s own candidate, and Belmont            ed a permanent greenback system while in
Tulip Mania, the South Sea Bubble and         remained incognito during the storm that      the House in 1869. He said currency
the proposition that interest was a moral     followed, not one syllable of defense         should be sound, cheap, stable and plenti-
imperative.                                   forthcoming.                                  ful. His objective was to avoid panics aris-
    To call into question this imperative         The Democrats lost the election. U.S.     ing from the pretense that currency was
that money must be loaned into circula-       Grant’s first act on March 3, 1869, was to    convertible to gold or silver. The United
tion has become a peer-pressure crime,        ratify the measure Johnson had vetoed.        States had rid itself of bondage and des-
one that gets an academic economist               Recall that some 600,000 soldiers died    potism in every area save one — the
drummed out of the corp, figuratively shot    in the Civil War. Now the bondholders had     bondage of the private money creators.
on sight, turned into a crank, an intellec-   to have gold. The government did not              Were the greenbacks unfair to credi-
tual hippie. Picture the scorn piled on       have the gold to make good this redemp-       tors? No, because what was loaned was
Representative Charles A. Lindbergh for       tion. It had to borrow the gold from the      credit, not gold. The fiction that currency
his opposition to the Federal Reserve.        Rothschilds of Paris and England and          — other than a token amount — was con-
    Students may want to find a copy of       Holland. The gold had to be paid back —       vertible to gold hangs on and remains
Irwin Unger’s The Greenback Era. How          with interest. When resumption finally        something to be wished on grounds that
what follows was arranged is a mystery.       came, some $132,000 worth of notes were       the physical supply closes down a govern-
“From the very first, the ministers and       redeemable. About $400,000 in gold was        ment’s wildfire spending.
religious editors were active partisans       deposited “for more convenient bank               The Greenback Party was attacked as
who identified hard money with virtue.        paper.”                                       communist, this in the late 1860s.
The Calvinist denominations took the lead                                                   Socialists attacked greenbacks. In the
in the religious attack on heretical finan-               THE POPULISTS                     final analysis, the bankers won. They
cial ideas.” The greenbacks were charac-          Myths die hard. The myth that curren-     were to make secure their victory once
terized as immoral. This was hammered         cy could be turned in for gold was kept       and for all time when in the Wilson
from the pulpit and in print. “The reli-      alive well into the Lyndon Johnson            administration debt-based money was
gious press has almost without exception      administration. The successor to that ear-    made secure in the Federal Reserve.
been the ally of the bondholders and          lier Johnson had seen to it that the              The way had been shown by the
bankers in their endless schemes to fleece    Democratic Party collapsed as splinter        National Banking Act of 1863. It allowed
the public.”                                  parties took over — Free Silver, Populists,   banks to be chartered nationally. At one
    Usury, once a well-greased skid to        Greenbackers, Mary Elizabeth Lease            time there was a 10 percent tax on state
damnation, was now holy virtue! The           telling farmers to raise less corn and more   bank issues. This put to death local bank
arguments of the clergy were furbished        hell, splinters always assailing the money    currency. Clearly, debt money was in the
and refurbished by academic economists.       creators’ perpetual power. Some of these      saddle except for the interlude of Lincoln
It must be remembered that almost all col-    folks understood money creation; some         money and mandated coinage during the
leges in those days were church schools,      did not. Even the great William Jennings      silver era. When Bryan — “You shall not
and lecturers of economics were profes-       Bryan did not fully comprehend the fact       press down upon the brow of labor this
sors of moral philosophy. Out of this bat-    that it was the government imprimatur         crown of thorns. You shall not crucify
tle came the Populists.                       that could make money out of sticks,          mankind upon a cross of gold” — yes,
    In any case, there was a measure in       paper or cowry shells.                        when Bryan failed to capture the presi-
Congress shortly after Lincoln’s death to         When the silverists succeeded in man-     dency three times — not to emerge again
get rid of greenbacks, to pay them off in     dating coinage, sometimes unlimited,          until an old man, as Wilson’s Secretary of
gold. President Andrew Johnson vetoed it.     even the Comstock Lode did not suffice.       State — the fire was gone.
By the 1868 election, the nation had set-     Silver, recently demonetized in England,
tled into its two-party rut. The initial      had to be borrowed and then returned with                  FINAL TOUCH
home of the greenbacks was the                interest in order to comply with coinage          The anatomy of production and sav-
Democratic Party. The chairman of the         law.                                          ings and growth has changed less than
National Democratic Convention was                                                          DNA over the years. Production came
                                                             Reprinted from
August Belmont, a banker and a represen-                                                    first. The solar revenue on which we live
tative of the Rothschilds. He used his                                                      has been downgraded, while fancy foot-
gavel quite well, undercutting the party’s                                                  work assumes as a given the revenue upon
candidate, Horatio Seymour.                          Nov 2003-Feb 20004 • Vol. 33/34        which all else depends. The measure of a
society’s maturity is how well the seed            U.S. companies owe a record $4.7 tril-                THE FEDERAL RESERVE
corn is distributed. This business of bor-      lion. This debt is growing three times               “Born in iniquity” is a mild way of
rowing the seed corn (funds in the capital      faster than the gross domestic product.           opening a paragraph on the Federal
market) and consuming it leaves unan-           Morton Weiss, who traces companies,               Reserve. Josiah Stamp was speaking as
swered the exponential growth of debt and       says 660 big companies, including Ford,           the second richest man in the British
the parting of the ways between mathe-          Horizon, Maytag, Allied Waste and                 Empire when he spoke the words repro-
matical ambition and physical possibility.      Kellogg’s, are bleeding so badly their very       duced in the collection of quotations that
When spending exceeds income, then              survival is in question.                          closes this article. He was talking about
upkeep becomes the downfall of the econ-           Added to the above is a pension fund           the blueprint for the system that now has
omy.                                            crisis. Fully 95 percent of those corporate       us all in thrall and makes possible a seem-
   The government has borrowed the seed         pension plans are in the red.                     ingly robust economy while annihilating
corn (capital) to the hilt. This is tanta-         When the first line of this report was set     agriculture.
mount to consuming tools. Every $50,000         down, there was a $48 billion tab for Iraq           The banker’s penchant for gold ruined
the government consumes is one job              for one year. By the time the paragraph           China and Mexico and brought ruin to
uncredited. The Bush administration             was finished, the debt had doubled, just          much of the American West. The
request for Iraq equals about 4.5 million       under $80 billion. Add another $80 billion        Populists had succeeded. They named
jobs lost, canceled out.                        as the prescription drug measure goes             congressmen, captured governorships,
   Wall Street Journal, Barron’s, The New       through. Stay tuned, by the time you finish       and raised hell with railroads. The illusion
York Times, etc., can’t seem to see much        reading this, you may have to use power           of gold banking won the day, and when
beyond the day after tomorrow.                  figures to compute the debt.                      Theodore Roosevelt split the vote with his
                                                                                                  Bull Moose party, the man my parents
                   DEBT                                       BACKGROUND                          called “The Evil Wilson” moved in.
    Banks ended 2003 with indecent prof-            When the nationally chartered banks              Wilson’s administration did more to
its, but by then the die had been cast.         issued their notes (printed by the govern-        dismantle the Constitution than any pred-
Consumers are now being forced to put a         ment), they found superb acceptance. All          ecessors. An income tax became law,
hold on borrowing. Loans are due, and           the silver coinage stayed on, finally to dis-     fraudulently but with the blessings of
even credit cards are taking a hit, meaning     appear into the albums of collectors or to        William Jennings Bryan. A foundations
fewer card buys. As unemployment con-           be melted back into bullion.                      law was passed to preserve the wealth of
tinues to idle workers, mortgages are fire          The fiction of conversion was kept alive      the super-rich. The Senate was no longer
closed, bonds crash, banks find them-           even to our own time. Some interest-free          elected by state legislatures, but at large,
selves in a squeeze. They’ve loaded up          currency survived until after the Kennedy         this so that heavy contributors could more
with bonds of every stripe on the one           administration. There were the silver cer-        easily name the officeholders and relieve
hand, and they have clients that can’t col-     tificates. As the engines of inflation picked     the senators of the clear necessity of
lateralize borrowings.                          up steam after the Eisenhower administra-         answering to the people as represented in
    As interest rates rise, debt instruments    tion, some few citizens asked for silver          state legislatures. Parenthetically, it must
of the government sink in value. The real       when presenting silver certificates to the        be noted that the income tax made it pos-
whammy lurks in the form of a real estate       bank. They were met with a “huh?’ and             sible to reduce tariffs and put in motion
bust. Figure wranglers tell us mortgage         always walked away empty-handed. Within           the world trade idea that dominates eco-
applications have plunged in excess of 11       a year, silver certificates were withdrawn        nomics today.
percent recently, down more than 33 per-        from circulation, replaced by Federal                It must be remembered that Germany
cent since last year. Foreclosures surge        Reserve Notes. The same hunk of silver            demonetized gold in 1857. Bankers rou-
monthly. Bad loans tend to become evi-          had kept the silver certificates in circulation   tinely discussed demonetizing gold when
dent as interest rates climb.                   since after the Civil War, all interest free.     discoveries in California and Alaska
    Personal bankruptcies set a new record      Much the same was true of U.S. Notes,             delivered too much of the stuff to the mar-
last year, and a new round of corporate         interest free. They also were withdrawn.          kets. The point here is that control is the
bankruptcies waits in the wings.                Unforgiven is full of information and             name of the game. It is bondage the
    The money game — too complicated            quotes that put into focus the nature of the      lenders want, not sound currency. Now
for most people because they have never         money scam, the new divine right of kings.        does it come clear why Alan Greenspan
paid out the price of an effort to under-           Looking back, it seems the money              becomes antsy when unemployment fades
stand it — has razzle-dazzled itself into a     creditors had a simple objective. The             away? He detests the idea of full employ-
cul-de-sac.                                     Populists splintered and did what third           ment.
    The business of enlarging the money         parties always do, usher in minority pres-           The real issue — yesterday, today,
supply to pump the economy and float the        idents.                                           tomorrow — always has been and remains
stock market has a downside ever-evident            In 1873 silver was demonetized by             control of the money supply.
in the annals of history. Many wise people      congressional sleight of hand. England
                                                                                                                 Reprinted from
have seen the fallacies, as ever-timely         demonetized silver, and the United States
quotations will illustrate at the end of this   followed suit. This had the world scram-
article.                                        bling. The Federal Reserve came into
                                                being.                                                   Nov 2003-Feb 20004 • Vol. 33/34
   It may have been a runaway Congress               If the titanic struggles over free silver   penury for his brash opposition to the
when in 1890 the Sherman Silver Act was         and/or Lincoln’s greenbacks haunted              money powers.
passed. It required 4.5 million ounces of       memory, the fight over the Federal                  It was Section 16 that delegated unlim-
coinage each month. There wasn’t that           Reserve was equally emotional. Why the           ited power to issue currency to the Fed.
much silver in the world — so back to bor-      abstractions involved were so difficult for
rowing it from England, and back to paying      most members of Congress to handle                          GOLD INFLATION
interest. The 17 million ounces from            remains a mystery. Secretary of State                Between 1914 and 1917, a great gold
Europe depressed American bankers, who          William Jennings Bryan was hornswog-             inflation settled in. The money stock of
came up fighting from their chairs. The         gled into supporting the measure. Clearly,       the United States went up 46 percent.
sellers of silver wanted gold, gold had to be   he did not comprehend what was happen-           Wholesale prices increased 65 percent.
borrowed — interest!                            ing. The press installed the usual confu-        War in Europe and finally America’s par-
   Mendacity and the unclear vision that        sion. Bankers pretended to be against the        ticipation for 165 days gave the bankers a
Theodore Roosevelt and William Jennings         Glass Bill, but this was Trojan Horse stuff.     windfall. As usual, the public took it on
Bryan and even Woodrow Wilson had of            The public, ignorant of the nature of coin       the chin and then endured a 55 percent
coin and money allowed the greatest polit-      and money, was simply duped, much as is          drop in the value of gold. The reason: the
ical swindle in history to rise to the sur-     the case when the public is duped into           arrival of gold to pay for war supplies.
face and sour the landscape. The swings         going to war.                                    Gold, it turned out, was not an effective
of the economy created an outcry for                 Minnesota Representative Charles            governor of the money supply.
monetary reform. When people fill the           Augustus Lindbergh, the father of the                The first six years of Federal Reserve
streets and hammer Congress, the law-           famous aviator, led the opposition and later     management of inflation saw a 75 percent
makers pause to listen. The disasters in the    made a matter of record his arguments            increase in prices. The 1920 collapse deliv-
countryside brought on the National             against “the greatest trust in the history of    ered a Sunday punch to farmers, as if to
Monetary Commission in 1908. This fox-          mankind” in a small book that still circu-       prepare them for the Depression of the
in-the-henhouse exercise brought together       lates. Senator Eli Root of New York              1930s and then the post-Truman years of
establishment figures. The usual junkets to     opposed the Federal Reserve in what              ever-sinking farm prices. The inflation fac-
Europe to see how the really wise people        became one of the most famous American           tor under Fed management, in cumulative
did it followed — all at taxpayers’ expense,    speeches of all time, three hours in length.     terms between passage of the law and the
of course. The last act in the drama came       President Wilson, the academic president,        present, is a bit over 1,000 percent, this
off as a meeting at Jekyll Island, Georgia,     supported the measure.                           under a private Federal Reserve banking
with J.P. Morgan as host. The Rothschilds’           The abstractions involved escaped           system.
people were there. It was later reported that   Wilson. Even the bill’s spin expert, J.L.            There was a lesson in this. The value of
fully one-sixth of the wealth of the world      Laughlin, a University of Chicago econo-         gold is as dependent on government as is
was in attendance. Sen. Nelson Aldrich          mist, allowed that Wilson was no mone-           the value of paper money. It is the impri-
was there. It is enough to point out that       tary expert. The schoolman held his              matur of the government that confers
Nelson A. Aldrich gave his first name to        ground for a time, then caved in, albeit not     value of either when monetized.
maternal grandson Nelson A. Rockefeller.        without regrets.                                     Who benefits when the money supply
Paul Warburg, a German banker, was also              Wilson gave his rationale to Congress       collapses, as when England went back on
there.                                          on June 23, 1913. He expected control of         a gold standard at the prewar price?
   The place was so secret even the wait-       the system of issue to be in the hands of        Answer: the debtor.
ers were required to be cleared. Why? The       government, not the bankers. Banks were              An incestuous relationship developed
Federal Reserve Act was being crafted,          not to be the masters of government.             between continental and U.S. bankers, the
with Paul Warburg doing the crafting.                Congressman Lindbergh argued: “This         objective being gold transfer due to inter-
   When presented to Congress, it was           act establishes the most gigantic trust on       est manipulation. The stock market
called the Aldrich Bill. The measure went       Earth, such as the Sherman Antitrust Act         achieved bubble status in 1929, and the
down in flames in 1911, but the fire was        would dissolve if Congress did not by this       rest you know. Banks increased their
soon put out. President Taft had his doubts     act expressly create what that act prohibit-     loans on stocks by 121 percent and
and threatened a veto. Just how the break       ed. When the President signs this act, the       increased real estate loans 178 percent.
between Taft and Theodore Roosevelt was         invisible government by the money power              Debt created money big time to fight
engineered is a question even TR’s biog-        . . . will be legalized. The greatest crime of   World War II, and for a time the corn was
raphers haven’t answered fully. Just the        Congress is its currency system.”                returned to the seed stock — figuratively
same, Roosevelt emerged from the jun-                Wilson finally signed the bill, and         speaking — not only for agriculture, but
gles of Africa to form the Bull Moose           Congressman Lindbergh was defeated at            also for industry. The income sectors of
party. This split the vote and gave             the next election and finally reduced to         the economy — corporations, rentals,
Woodrow Wilson a squeaker of a victory.                                                          small business and agriculture — earned
The old Aldrich Bill was repackaged and                                                          331/3 percent of national income. The cost
                                                                Reprinted from
presented anew as the Carter Glass Bill,                                                         side of the equation earned 66 2/3 percent
taking its name from the chairman of the                                                         of national income. The balance was per-
House Banking and Currency Committee.                                                            fect for full employment and a balanced
                                                        Nov 2003-Feb 20004 • Vol. 33/34          budget.
    However, this equation made banking                      A LIVE ISSUE                      ters had it not been that England took
unprofitable. Therefore, those in control          The college economists say the money        away from the Colonies [the right to
started the drumbeat for free trade and the    issue is a dead issue, resolved once and        issue] their money, which created unem-
importation of commodities in order to         for all by the enactment of the Federal         ployment and dissatisfaction.”
lower farm prices and open up agriculture      Reserve. In fact, quite the reverse is true.                         — Benjamin Franklin
to loan expansion. Farmers have been con-          Slavery is a dead issue — that is, chat-                          •
suming the corn (capital) ever since.          tel slavery. These other issues perceived to       “They saw that here was a nation that
    The Glass-Steagall Act separated           be resolved — tariffs and trade, the bank-      was ready to be exploited; here was a
banks from brokerage. Now the earlier          ing system — they are alive and ready to        nation that had been setting up an exam-
status has returned. In the 1920s the free     rise from the basement and bankruptcy           ple that they could issue their own money
market ideologues had their way. The           because they made the foundation of the         in place of the money coming through the
same is true today.                            economy, agriculture, their first victim.       banks. So the Rothschild Bank caused a
    In terms of gold, the 1948 farm act                                                        bill to be introduced in the English
lowered farm prices to be in line with $35-        PREMISES & CONCLUSIONS                      Parliament which provided that no colony
an-ounce gold instead of raising gold to          In concluding this four-part series of       of England could issue their own money.
farm parity.                                   Acres U.S.A. “Newsletter,” we would like        They had to use English money.
    Eustace Mullins has in print Secrets of    to add a collection of classic quotations       Consequently, the Colonies were com-
the Federal Reserve, the best book on the      that in effect tell the entire story and his-   pelled to discard their script and mortgage
Fed ever written. Stephen Zarlenga has         tory of money in America. These were            themselves to the Bank of England in
available The Lost                                                                                                  order to get money.
Science of Money.                                                                                                   For the first time in
Both tell how banks                                                                                                 the history of the
create the problem,         The real issue — yesterday, today, tomorrow —                                           United States our
and how it is up to the                                                                                             money began to be
government to eat the     always has been and remains control of the money                                          based on debt.
bank’s mistakes. In                                                                                                     Benjamin Franklin
April 1932 the Fed        supply.                                                                                   stated that in one year
monetized $1 billion                                                                                                from that date the
of federal debt. It is                                                                                              streets of the Colonies
hard to supply money                                                                                                were filled with
when people are too scared to borrow.          assembled by Rich Koltanz, writing in an        unemployed.” — Sen. Robert Owen, first
That is why the government had to step in.     unpublished manuscript, “Middle East            chairman of the Senate Committee on
                                               War and the Rest of the American                Banking and Currency
                THE FED                        Revolution.”                                                          •
    Should the Fed be taken over by the                                                           “The skirmishes at Lexington and
U.S. government? Yes! Double yes! It              “This business of borrowing money            Concord are considered the start of the
should be a bank of issue. Other banks         into circulation, then withholding more         Revolt, but the point of no return was
should be banks of deposit. Why? Look at       money creation to make payment and debt         probably May 10, 1775, when the
the Great Depression.                          service impossible, haunted Persia, cursed      Continental Congress assumed the power
    Recovery was taking form by 1935,          Greece and Rome, annihilated the defense        of sovereignty by issuing its own money.”
1936. In 1937 the Fed delivered one last       of Carthage, and presided over death and                               — Stephen Zarlenga
blow to the solar plexus. It doubled           wars between Deuteronomy and the eve                                  •
reserve requirements of the banking sys-       of the 1948 presidential election.”                “The Central Bank is an institution of
tem in time to cut short the recovery. The            — Charles Walters in Acres U.S.A.        the most deadly hostility existing against
imbalance triggered by the collapse of                               •                         the principles and form of our
farm prices was offset to some extent by          “The Bank hath benefit of interest on        Constitution. . . .
Roosevelt administration programs which        money which it hath created out of noth-           I believe that banking institutions are
all together were insufficient to repair the   ing.”                                           more dangerous to our liberties than
damage.                                                               — William Patterson      standing armies. Already they have raised
    Since World War II, the banking sys-                             •                         up a monied aristocracy that has set the
tem has created plenty of money, usually          “I care not what puppet is placed upon       Government at defiance. The issuing
for purposes that debilitate the country.      the throne of England. . . . The man that       power should be taken from the banks and
Wal-Mart is a good bad example. The mil-       controls Britain’s money supply controls        restored to the people to whom it proper-
itary-industrial complex is another.           the British Empire, and I control the           ly belongs.
Perpetual war for perpetual peace is still     British money supply.”
                                                                                                              Reprinted from
another. Roads, houses, infrastructure, all                  — Nathan Mayer Rothschild
have suffered.                                                       •
                                                  “The Colonies would gladly have
                                               borne the little tax on tea and other mat-             Nov 2003-Feb 20004 • Vol. 33/34
    If the American people ever allow the      spending power of the Government and              the country. It should be repealed, but
banks to control the issuance of their cur-    the buying power of consumers. The priv-          before that can be accomplished, the peo-
rency, first by inflation and then by defla-   ilege of creating and issuing money is not        ple will be arrayed on one side and the
tion, the banks and corporations that will     only the supreme prerogative of Govern-           banks on the other, in a contest such as we
grow up around them will deprive the           ment, but it is the Government’s greatest         have never seen before in this country.”
people of all property until their children    creative opportunity.                                 — Salmon P. Chase, Secretary of State
will wake up homeless on the continent             The taxpayers will be saved immense              and Chief Justice of the Supreme Court
their fathers occupied.”                       sums in interest. . . . Money will cease to                            •
                          — Thomas Jefferson   be master and become the servant of                   “While boasting of our noble deeds,
                        •                      humanity. Democracy will rise superior to         we are careful to conceal the ugly fact that
    “Banking was conceived in iniquity         the money power.”                                 by our iniquitous money system we have
and born in sin. . . . Bankers own the                                  — Abraham Lincoln        nationalized a system of oppression,
world. Take it away from them, but leave                              •                          which, though more refined, is not less
them the power to create money . . . and           “If that mischievous financial policy,        cruel than the old system of chattel slav-
with the flick of the pen, they will create    which had its origin in the North                 ery.”                    — Horace Greeley
enough money to buy it back again . . .        American Republic (the public issue of                                 •
Take this power away from bankers, and         usury-free currency) should become                    “The money power preys upon the
all great fortunes like mine will disappear,   indurated down to a fixture, then that            nation in times of peace and conspires
and they ought to disappear, because this      Government will furnish its own money             against it in times of adversity. It is more
would then be a better and a happier world     without cost. It will pay off debts and           despotic than monarchy, more insolent
to live in . . . But if you want to continue   without a debt. It will have all the money        than autocracy, more selfish than bureau-
to be the slaves of bankers, and pay the       necessary to carry on its commerce. It will       cracy. I see in the near future a crisis
cost of your slavery, let them continue to     become prosperous beyond precedent in             approaching that unnerves me and causes
create money.” — Josiah Stamp, former          history of the civilized governments of the       me to tremble for the safety of my coun-
President of the Bank of England               world. The brains and wealth of all coun-         try. Corporations have been enthroned, an
                        •                      tries will go to North America. That gov-         era of corruption in high places will fol-
    “If all bank loans were paid, no one       ernment must be destroyed or it will              low, and the money-power of the country
would have a bank deposit, and there           destroy every monarchy on the globe.”             will endeavor to prolong its reign by
would not be a dollar of currency or coin                              — Otto von Bismark        working upon the prejudices of the people
in circulation. This is a staggering                                  •                          until the wealth is aggregated in a few
thought. We are completely dependent on            “I have two great enemies, the southern       hands and the Republic is destroyed.”
the commercial banks. Someone has to           army in front of me and the financial insti-                             — Abraham Lincoln
borrow every dollar we have in circula-        tutions in the rear. Of the two, the one in                            •
tion, cash or credit . . . We are absolute-    the rear is the greatest enemy.”                      “Whoever controls the volume of
ly without a permanent monetary sys-                                    — Abraham Lincoln        money in any country is absolute master
tem. When one gets a complete grasp upo                               •                          of all industry and commerce. . . . And
n the picture, the tragic absurdity of ourho       “The few who can understand the sys-          when you realize that the entire system is
peless position is almost incredible — but     tem [created by the National Banking Act]         very easily controlled, one way or anoth-
there it is. It (the banking problem) is the   will either be so interested in its profits, or   er, by a few powerful men at the top, you
most important subject intelligent persons     so dependent on its favors, that there will       will not have to be told how periods of
can investigate and reflect upon. It is so     be no opposition from that class, while on        inflation and depression originate.”
important that our present civilization        the other hand, the great body of the peo-                              — James A. Garfield
may collapse unless is widely understood       ple mentally incapable of comprehending                                •
and the defects remedied very soon.”           the tremendous advantage that capital                 “The gold standard has slain its tens of
         — Robert Hemphill, former credit      derives from the system, will bear its bur-       thousands. If they ask us why we do not
  manager of the Federal Reserve Bank of       dens without complaint, and perhaps               embody in our platforms all the things
                                     Atlanta   without even suspecting that the system is        that we believe in, we reply that when we
                        •                      inimical to their interests.”                     have restored the money of the
    “Money is the creature of law and the             — Rothschild Bros. of London, 1863         Constitution, all other necessary reforms
creation of the original issue of money                                                          will be possible; but that until this is done
should be maintained as an exclusive              “My agency in promoting the passage            there is no other reform that can be
monopoly of National Government.               of the National Bank Act was the greatest         accomplished.”
    Government possessing the power to         financial mistake of my life. It has built up                      — William Jennings Bryan
create and issue currency . . . need not and   a monopoly which affects every interest in                             •
should not borrow capital at interest as the                                                         “And the control of the system of bank-
                                                               Reprinted from
means of financing governmental work                                                             ing and of issue which our new laws are to
and public enterprise. The Government                                                            set up must be public, not private, must be
should create, issue, and circulate all the                                                      vested in the Government itself, so that the
currency and credit needed to satisfy the              Nov 2003-Feb 20004 • Vol. 33/34           banks may be the instruments, not the mas-
ters, of-business and of individual enter-                     “That is the one thing in my public         between 1926 and 1929, raised the price
prise and initiative.”                                     career that I regret — my work to secure        of stocks to a fantastic point where they
                  — Woodrow Wilson, 1913                   the enactment of the Federal Reserve            could not possibly earn dividends, and
                       •                                   Law.”              — William Jennings Bryan     when people realized this, they tried to get
    “This act establishes the most gigantic                                        •                       out, resulting in the Crash of October 24,
trust on earth, such as the Sherman                            “The people did not know the                1929.”
Antitrust Act would dissolve if Congress                   Federal-Reserve Banks were organized                                — Sen. Robert L. Owen
did not by this act expressly create what                  for profit-making. They were intended to                               •
by that act it prohibited. When the                        stabilize the credit and currency supply of         “Some people think the Federal Reserve
President signs this act the invisible gov-                the country. That end has not been accom-       Banks are United States Government insti-
ernment by the money power, proven to                      plished. Indeed, there has been the most        tutions. They are not Government institu-
exist by the Money Trust investigation,                    remarkable variation in the purchasing          tions. They are private credit monopolies
will be legalized.                                         power of money since the System went            which prey upon the people of the United
    The greatest crime of Congress is its                  into effect.”                                   States for the benefit of themselves and their
currency system. The schemiest legisla-                                         — Sen. Robert L. Owen      foreign customers; foreign and domestic
tive crime of all the ages is perpetuated by                                       •                       speculators and swindlers and rich and
this new banking and currency bill.”                           “I had never though the Federal             predatory money lenders.”
    — Congressman Charles A. Lindbergh                     Reserve Bank System would prove such a          — Louis McFadden, chairman of the House
                       •                                   failure. The country is in a state of irre-                Banking and Currency Committee
    “I am a most unhappy man. I have                       trievable bankruptcy.”                                                 •
unwittingly ruined my country. A great                                            — Carter Glass, 1938         “The banks — commercial banks and
industrial nation is controlled by its sys-                                        •                       the Federal Reserve — create all the
tem of credit. Our system of credit is con-                    “It is well that the people of the Nation   money of this nation, and its people pay
centrated. The growth of the nation, there-                do not understand our banking and mone-         interest on every dollar of that newly cre-
fore, and all our activities are in the hands              tary system, for if they did, I believe there   ated money. Which means that private
of a few men. We have come to be one of                    would be a revolution before tomorrow           banks       exercise      unconstitutionally,
the worst ruled, one of the most complete-                 morning.”                     — Henry Ford      immorally, and ridiculously the power to
ly controlled and dominated governments                                            •                       tax the people.”
in the civilized world — no longer a gov-                      “If our nation can issue dollar bond, it                 — Congressman Jerry Voorhis
ernment by free opinion, no longer a gov-                  can issue a dollar bill. The element that                              •
ernment by conviction and the vote of the                  makes the bond good makes the bill good,            “The Fed is locked into this continuing
majority, but a government by the opinion                  also. The difference between the bond and       credit expansion. It can’t stop. If ever
and duress of a small group of dominant                    the bill is that the bond lets the money        bank lending slows . . . the game is up,
men.”                                                      broker collect (usury) . . . whereas the cur-   and the scramble for liquidity starts. . . .
                  — Woodrow Wilson, 1916                   rency pays nobody but those who con-            The Fed will be powerless to stop a defla-
                                                           tribute . . . in some useful way.”              tionary collapse once it starts.”
                                                                                   — Thomas A. Edison          — John Exter, Federal Reserve banker
                                                               “I wrote into the bill which was intro-       Recommended reading: Stephen
                                                           duced by me in the Senate on June 26,           Zarlenga’s The Lost Science of Money is
                                                           1913, a provision that the powers of the        available from the American Monetary
  Acres U.S.A. is the national journal of sustainable
 agriculture, standing virtually alone with a real track
                                                           System should be employed to promote a          Institute, P.O. Box 601, Valatie, New York
  record — over 30 years of continuous publication.        stable price level, which meant a dollar of     12184, website <www.mone>.
   Eash issue is packed full of information eco-con-       stable purchasing, debt-paying power. It
   sultants regularly charge top dollar for. You’ll be     was stricken out. The powerful money
 kept up-to-date on all of the news that affects agri-
     culture — regulations, discoveries, research
                                                           interests got control of the Federal
   updates, organic certification issues, and more.        Reserve Board through Mr. Paul Warburg,
                                                           Mr. Albert Strauss and Mr. Adolph C.
               To subscribe, call
                                                           Miller, and they were able to have that
  1-800-355-5313                                           secret meeting of May 18, 1920, and bring
    (toll-free in the U.S. & Canada)                       about a contraction of credit so violent it
  512-892-4400 • fax 512-892-4448                          threw five million people out of employ-
  P.O. Box 91299 • Austin, TX 78709                        ment. In 1920 that Reserve Board deliber-
           info @                             ately caused the Panic of 1921. The same
          Or subscribe online at:                          people, unrestrained in the stock market,
                                                           expanding credit to a great excess

Shared By: