How did it evolve and what is their place in our economy?
To understand why there is a push to end the US Federal Reserve in the Occupy Wall Street movement we must understand the history behind the Central Banks.
Yesterday we presented The History of Central Banks - Part 1 (48 B.C. - 1791 A.D.)
In this installment, Part 2, we look at the period from 1791 (when the first Central Bank was established in the United States) to 1865 when President Lincoln was assassinated (and Silver was demonetized).
But first, let's pick up from where we were ending yesterday...
Morris was a wealthy man who had grown wealthier during the revolution by trading in war materials.
This first central bank in America was called the Bank of North America, which was set up with a four year charter, and was closely modeled after the Bank of England. It was allowed to practice the fraudulent system of fractional reserve banking, so it could create money it didn't have, then charge interest on it.
The bank's charter called for private investors to put up $400,000 of initial capital, which Morris found himself unable to raise. Nevertheless he unashamedly used his political influence to have gold deposited in the bank, which had been loaned to America by France. Morris then loaned the money he needed to buy this bank from this deposit of gold that belonged to the government, or rather the American people.
Despite the promises of Robert Morris that his privately owned Bank of North America would solve the problem with the money supply, of course the economy continued to plummet, forcing the Continental Congress not to renew the bank's charter.
The leader of the effort to kill this bank was William Findlay of Pennsylvania, who stated,
"This institution, having no principle but that of avarice, will never be varied in its objective...to engross all the wealth, power and influence of the state."
Colonial leaders assemble in Philadelphia to replace the Articles of Confederation with the Constitution.
Governor Morris headed the final draft of the Constitution and he knew the motivation of the bankers well as he had once worked for them. Governor Morris along with his former boss Robert Morris, and Alexander Hamilton had presented the original plan for the Bank of North America to the Continental Congress, in the final year of the Revolution.
Fortunately Governor Morris by this time had discovered his conscience, defected from Robert Morris, and in a letter to James Madison dated July 2nd of this year he stated,
"The rich will strive to establish their dominion and enslave the rest. They always did. They always will...They will have the same effect here as elsewhere, if we do not, by the power of government, keep them in their proper spheres."
James Madison was opposed to a privately owned central bank after seeing the exploitation of the people by the Bank of England. Thomas Jefferson was also against it, and Jefferson later made the following statement,
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
Sadly the words of wisdom of Governor Morris and Thomas Jefferson fell on deaf ears. Alexander Hamilton, Robert Morris and Thomas Wyling, convinced the the bulk of the delegates to this Constitutional convention, not to give Congress the power to issue paper money.
They were aware that most of these delegates were still reeling from the wild inflation of the paper money during the revolution.
These delegates also had short memories and didn't remember how well Colonial Scrip had worked before the war, or Benjamin Franklin's words of wisdom in 1764.
As a result the Constitution was silent on the issue of paper money by the Government for the citizens, leaving a wide open door for money changers in the future.
Less than 3 years after the Constitution had been signed, the newly appointed First Secretary of the Treasury, Alexander Hamilton, proposed a bill to the Congress calling for a new privately owned central bank.
Interestingly, Alexander Hamilton's first job after graduating from law school in 1782 was as an aide to Robert Morris, a man who he had written to in 1781 stating, "a national debt if it is not excessive will be to us a national blessing."
The three main players behind the Bank Of North America were: Robert Morris; Alexander Hamilton; and the Bank's President, Thomas Willing.
These men did not give up and Alexander Hamilton, now Secretary of the Treasury, a man who described Robert Morris as his, "mentor," managed to get a new privately owned central bank through the new Congress.
This new bank was called the, "First Bank of the United States," and was exactly the same as the Bank of North America. Robert Morris controlled it, Thomas Willing was the Bank's President, only the name had changed.
This bank came into being after a year of intense debate and was given a 20 year charter. It was given a monopoly on printing United States currency even though 80% of it's stock was held by private investors. The other 20% was purchased by the United States government, but this was not to give it a piece if the action, but to provide the capital for the private investors to purchase the other 80%.
As with the Bank of England and the old Bank of North America, these private investors never paid the full agreed amount for their shares. What happened was through the fraudulent system of fractional reserve banking, the government's 20% stake which was $2,000,000 in cash, was used to make loans to its private investors to purchase the other 80% stake, £8,000,000, for this risk free investment.
Again like the Bank of England and the old Bank of North America, the name, "First Bank of the United States," was deliberately chosen to hide from the common people the fact that it was privately owned. The names of the investors in this bank were never revealed, although it is now widely believed that the Rothschilds were behind it.
Interestingly in 1790 when Alexander Hamilton proposed this bank in Congress, Mayer Amschel Rothschild made the following statement from his bank in Frankfurt, Germany,
"Let me issue and control a nation's money and I care not who writes the laws."
The First Bank of the United States had been controlling the American money supply for 5 years.
During this time the American Government has borrowed $8,200,000 from this Central Bank, and prices in the country have increased by 72%. In relation to this, Thomas Jefferson, then Secretary of State stated:
- "I wish it were possible to obtain a single amendment to our constitution taking from the Federal Government their power of borrowing."
Mayer Amschel Rothschild sends his son, Nathan, at the age of 21, to England with a sum of money equivalent to £20,000, to set up a money changers there.
In France, the Bank of France was set up.
However Napoleon decided France had to break free of the debt and he therefore never trusted this bank. He declared that when a government is dependent on bankers for money, it is the bankers and not the government leaders that are in control.
- "The hand that gives is among the hand that takes. Money has no motherland, financiers are without patriotism and without decency, their sole object is gain."
Thomas Jefferson was now US President and President Jefferson struck a deal with Napoleon in France.
The United States would give Napoleon $3,000,000 of gold in exchange for a huge chunk of territory west of the Mississippi River. This was called the Louisiana purchase.
Napoleon used this gold to put together an army. He then used this army to set off across Europe where he began to conquer everything in his path.
The Bank of England quickly rose to oppose Napoleon and financed every nation in his path, profiteering from the war.
Prussia, Austria, and then finally Russia all went heavily into debt in a futile attempt to stop Napoleon.
30 year old Nathan Rothschild, head of the English branch of the family in London, personally takes charge of a plan to smuggle a much needed shipment of gold through France to Spain to finance an attack by the Duke Of Wellington on Napoleon.
A bill was put before Congress to renew the charter of the First Bank of the United States.
The legislatures of both Pennsylvania and Virginia pass resolutions asking Congress to kill the bank. The national press openly attack the bank calling it: a great swindle; a vulture; a viper; and a cobra.
Nathan Rothschild gets in on the act and makes the following revealing statement as to who was really behind the First Bank of the United States:
- “Either the application for renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.”
When the smoke had cleared the renewal bill was cleared by a single vote in the house and was deadlocked in the Senate.
At this point America's fourth President, President James Madison was in the White House. He was a staunch opponent of the bank and he sent his Vice-President, George Clinton, to break a tie in the Senate which killed the bank.
As promised by Nathan Rothschild, because the charter for the First Bank of the United States was not renewed, the British attack America.
However, as the British are still busy fighting Napoleon, they are unable to mount much of an assault and the war ends in 1814.
Wellington's attacks from the South and other defeats eventually forced Napoleon to abdicate and Louis XVIII is crowned King.
Napoleon is exiled to the tiny island of Elba, off the coast of Italy.
Napoleon escapes his exile and returns to Paris. French troops are sent to capture him, but he uses his charisma to convince these soldiers to rally round him, and they subsequently hail him as their emperor once again.
In March, Napoleon assembles an army which England's Duke of Wellington defeated less than 90 days later at Waterloo.
Even though the outcome is predetermined, Nathan Rothschild sent a trusted courier named Rothworth to Waterloo where he stayed on the edge of the battlefield. Once the battle was decided, Rothworth took off for the Channel, and delivered the news of Wellington's victory to Nathan Rothschild a full 24 hours before Wellington's own courier.
Nathan Rothschild hurried to the London Stock market and stood in his usual position. All eyes were on him as Rothschild had a legendary communications network. Rothschild stood there looking forlorn and suddenly started selling. The other traders believed that this meant he had heard that Napoleon had won so they all started selling frantically.
The market subsequently plummeted, soon everyone was selling their consuls (British Government Bonds), but then Rothschild secretly started buying them all up through his agents on the floor, for a fraction of what they were worth only hours before.
A lot of these consuls were able to be converted to Bank of England stock, which is how Rothschild took over the control of the Bank of England and therefore the British money supply.
Interestingly, 100 years later, the New York Times ran a story stating that Nathan Rothschild's grandson had attempted to secure a court order to suppress a book on this story. The Rothschild family claimed the story was untrue and libelous, but the court denied the Rothschilds request and ordered the family to pay all court costs.
Nathan Rothschild was quoted as openly bragging that in his 17 years in England he had increased his initial £20,000 stake given to him by his father, 2500 times to £50,000,000.
It was during this time that the Central Bankers earned the reputation for funding wars from both sides of a dispute.
During the period between the founding of the Bank of England in 1694 and Napoleon's defeat at Waterloo this year, England had been at war for 56 years, with much of the remaining time spent preparing for war.
And during that entire time, Central Bankers profited mightily from it.
The American Congress passes a bill permitting yet another privately owned central bank. This bank was called the, "Second Bank of the United States," and it's charter was a carbon copy of that of its predecessor, the First Bank of the United States.
The United States government would once again supposedly own 20% of the shares of the bank.
Their share was again paid up front into the bank and thanks to fractional reserve lending, this was transformed into loans to the private investors who once again purchased the remaining 80% of the shares.
Just as before the names of these investors was kept a secret.
The talley stick is taken out of circulation in England.
After 12 years during which the Second Bank of the United State ruthlessly manipulated the American economy to the detriment of the people but to the benefit of their own money grabbing ends, the American people had unsurprisingly had enough.
Opponents of this bank nominated Senator Andrew Jackson of Tennessee to run for President.
To the dismay of the money changers, Jackson won the Presidency and made it quite clear he intended to kill this bank at his first opportunity.
He started out during his first term in office, to root out the banks many minions from government service. To illustrate how deep this cancer was rooted in government, he fired 2,000 of the 11,000 employees of the Federal Government.
The Second Bank of the United States asked Congress to pass a renewal of the bank's charter, four years early.
Congress complied and sent the bill to President Jackson for signing.
President Jackson vetoed this bill and in his veto message he stated the following:
- "It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of the Bank are held by foreigners...Is there no danger to out liberty and independence in a bank that in its nature has so little to bind it to our country?"
"Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence... would be more formidable and dangerous than a military power of the enemy. If government would confine itself to equal protection, and, as Heaven does its rains, shower the favor alike on the high and the low, the rich and the poor, it would be an unqualified blessing."
"In the act before me there seems to be wide and unnecessary departure from these just principles."
In July, Congress was unable to override President Jackson's veto.
President Jackson then stood for re-election and for the first time in American history he took his argument directly to the people by taking his re-election campaign on the road. His campaign slogan was, "Jackson And No Bank!"
Even though the bankers poured over $3,000,000 into President Jackson's opponent, the Republican, Senator Henry Clays' campaign, President Jackson was re-elected by a landslide in November.
President Jackson knew the battle was only beginning however, and following his victory he stated:
- "The hydra of corruption is only scotched, not dead!"
President Jackson appoints Roger B. Taney as Secretary of State for the Treasury, with instructions to start removing the government's deposits from the Second Bank of the United States.
President Jackson's previous two Secretaries of State for the Treasury, William J. Duane and Louis McLane had both refused to comply with President Jackson's request and were fired as a result.
The head of the Second Bank of the United States, Nicholas Biddle, starts to use his influence to get the Senate to reject Roger B. Taney's nomination and even threatened to cause a depression if the Bank was not re-chartered. Biddle stated:
- "This worthy President thinks that because he has scalped Indians and imprisoned judges, he is to have his way with the Bank. He is mistaken."
Biddle then went on to brazenly admit that the bank was intending to make money scarce in order to force the hand of Congress into re-chartering the bank. He stated:
- "Nothing but widespread suffering will produce any effect on Congress...Our only safety is pursuing a steady course of firm restriction - and I have no doubt that such a course will ultimately lead to restoration of the currency and re-charter of the Bank."
What Biddle has done with that statement is prove to the world what central banks were really about.
He made good on his word and the Second Bank of the United States sharply contracted the money supply by calling in old loans and refusing to issue new ones. Naturally a financial panic ensued, followed by America being plunged into a deep depression.
Biddle then unashamedly blamed President Jackson for the crash, claiming that it was Jackson's withdrawal of federal funds that had caused it.
This crash plunged wages and prices, unemployment soared along with business bankruptcies. The United States was in uproar and newspaper editors blasted the President in editorials.
Congress assembled what was called the, "Panic Session," and on March 27 President Jackson was officially censured by Congress for withdrawing funds from the Second Bank of the United States, in a vote which passed the Senate by 26 to 20.
It was the first time a President had ever been censured by Congress and Jackson stated of the Bank:
- "You are a den of thieves vipers, and I intend to rout you out, and by the Eternal God, I will rout you out."
Pennsylvania Governor, George Wolf, came out in support of President Jackson and strongly criticized the Bank. This, coupled with the fact that Nicholas Biddle had been caught boasting in public about the bank's plan to crash the American economy caused a shift in opinion of President Jackson's action.
In a complete about turn on April 4, the House of Representatives voted 134 to 82 against re-chartering the bank. This was followed by another strong vote which established a special committee to investigate whether the Bank had caused the crash.
When the investigating committee arrived at the bank's door in Philadelphia with a subpoena authorizing them to inspect the books, Nicholas Biddle refused to give them up, or allow inspection of correspondence with Congressmen relating to their personal loans and advancements he had made to them. He also refused to testify before the committee back in Washington.
The Charter for the Second Bank of the United States expired and the Bank ceased functioning as America's central bank. Nicholas Biddle was later arrested and charged with fraud. He was tried and acquitted but died in 1844 still battling civil suits.
On January 8th President Jackson pays off the final installment of the national debt, which had been necessitated by allowing the banks to issue currency for government bonds rather than simply issuing treasury notes without such debt.
He was the only President to ever pay off the debt.
On January 30th an assassin called Richard Lawrence tried to shoot President Jackson, but both pistols misfired. Lawrence was later found not guilty by reason of insanity. However, after his release he openly bragged that powerful people in Europe had put him up to the task and promised to protect him if he were caught.
When asked what his most important accomplishment had been in life, President Jackson stated without hesitation:
- "I killed the Bank!"
Jacob (James) Rothschild in France is said to be worth 600 million francs, which at the time was 150 million francs more than all the other bankers in France put together.
Future British Prime Minister, William Gladstone, stated the following about when he became Chancellor of the Exchequer this year:
- "From the time I took office as Chancellor of the Exchequer, I began to learn that the State held, in the face of the Bank and the City, an essentially false position as to finance. The Government itself was not to be a substantive power, but was to leave the Money Power supreme and unquestioned."
One month after the inauguration of President Abraham Lincoln, the American Civil War got underway at Fort Sumter, South Carolina, after South Carolina left the Union.
Slavery has always been cited as the cause of the war but this was simply not the case.
The real reason for the war is that the Southern States were in an a dire economic situation due to the actions of the Northern States. Northern industrialists had used trade tariffs to prevent the Southern States from buying cheaper European goods. Europe subsequently retaliated by stopping cotton imports from the South. Thus the South were being forced to pay more for goods whilst having their income slashed.
As President Lincoln himself stated:
- "I have no purpose directly or indirectly to interfere with the institution of slavery in the state where it now exists. I believe I have no lawful right to do so, and I have no inclination to do so...My paramount objective is to save the Union and it is not either to save or destroy slavery. If I could save the Union without freeing any slave, I would do it."
This is when the money changers saw the opportunity to divide and conquer America by plunging it into Civil War.
This is confirmed by Otto Von Bismarck when he was Chancellor of Germany (1871 - 1890), who stated:
- "The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe, these bankers were afraid that the United States if they remained as one block and as one nation, would attain economic and financial independence which would upset their financial domination over the world."
Only months after these first shots in South Carolina, the Central bankers loaned, Napoleon III of France (the Napoleon of the battle of Waterloo's nephew), 210 million francs to seize Mexico and then station troops along the Southern border of the United States. By taking advantage of the American Civil War, they hoped to return Mexico to colonial rule.
This act was in violation of the "Monroe Doctrine," which was issued by President James Monroe during his seventh annual State of the Union address to Congress in 1823.
This doctrine proclaimed the United States' opinion that European powers should no longer colonize the Americas or interfere with the affairs of sovereign nations located in the Americas, such as the United States, Mexico, and others.
In return, the United States planned to stay neutral in wars between European powers and in wars between a European power and its colonies.
If a breach of this protocol were to occur in the Americas, the U.S. would view such action as hostile toward itself.
Whilst the French were breaching the, Monroe Doctrine in Mexico, the British followed suit by moving 11,000 troops into Canada and positioning them along America's Northern border.
President Lincoln knew he was in trouble, so he went with his Secretary To The Treasury, Salomon P. Chase, to New York to apply for the loans necessary to fund America's defense.
The money changers had engineered the war to make the Union fail, and were not about to save it now, so they offered loans at 24% to 36% interest.
President Lincoln declined this as they knew he would and returned to Washington, where he sent for Colonel Dick Taylor of Chicago, who he put in charge of the problem of how he should finance the war.
During one meeting President Lincoln asked Colonel Taylor what proposals he had come up with to finance the war. Colonel Taylor stated:
- "Why Lincoln, that is easy, just get Congress to pass a bill authorizing the printing of full legal tender treasury notes...and pay your soldiers with them and go ahead and win your war with them also."
President Lincoln asked Colonel Taylor if the people of the United States would accept the notes, Colonel Taylor said:
- "The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money, as Congress is given that express right by the Constitution."
President Lincoln began the printing of $450,000,000 worth of new bills. These bills were printed in green ink on the reverse side, in order to distinguish them from other bills in circulation, and were called, "Greenbacks." These were printed at no interest to the Federal Government and were used to pay the troops and purchase their supplies.
President Lincoln would be the last President to issue debt free United States notes, and on this subject he stated:
- "The Government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is in the Government's greatest creative opportunity. By the adoption of these principles...the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity."
In response to this statement, The Times of London publishes a propaganda piece obviously put out by the bankers, containing the following statement:
- "If that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce."
"It will become prosperous beyond precedent in the history of civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe."
The bankers struck back. With President Lincoln needing further congressional authority to issue more Greenbacks, Lincoln was forced into allowing the bankers to push their, "National Banking Act," through Congress.
The most important part of this Act was that from now on, the entire United States money supply would be created out of debt by the National Banks buying United States Government Bonds and issuing them for reserves for banknotes. On top of this monopoly, the National Banks were allowed to operate under a virtual tax free status. This banking scam is best explained by historian, John Kenneth Galbraith, who stated:
- "In numerous years following the war, the Federal Government ran a heavy surplus. It could not however pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply."
Later this year, Tsar Alexander II gave President Lincoln some unexpected help. The Tsar issued orders that if either England or France actively intervened in the American Civil War, and help the South, Russia would consider such action a declaration of war. To show that he wasn't messing about, he sent part of his Pacific Fleet to port in San Francisco.
This wasn't because the Tsar was benevolent towards America, instead he was very clever. He, like Otto Von Bismarck in Germany, could clearly see what the money changers were up to, indeed he had already refused to let them set up a Central Bank in Russia. He understood if America was to come under the control of Britain or France, then America would be under the control of Central Bankers once again, and such an expansion of the bankers empire, would mean they would eventually threaten Russia.
President Lincoln is re-elected on November 8th and on November 21 he wrote a friend the following:
- "The money power preys upon the nations in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy."
Salomon P Chase, now President Lincoln's Former Secretary To The Treasury, stated:
- "My agency in promoting the passage of the National Banking Act was the greatest financial mistake in my life. It has built up a monopoly which affects every interest in the country."
On April 14th, 41 days after his second inauguration, and just 5 days after General Lee surrendered to General Grant at Appomattox, President Lincoln is shot by John Wilkes Booth, at Ford's Theater. He would later die of his injuries.
Subsequent allegations that international bankers were responsible for President Lincoln's assassination, would be made in the Canadian House of Commons, nearly 70 years later in 1934.
The person who revealed this was a Canadian Attorney, Gerald G. McGeer. He had obtained evidence deleted from the public record provided to him by Secret Service Agents at the trial of John Wilkes Booth, after Booth's death.
McGeer stated that it showed that John Wilkes Booth was a mercenary working for the international bankers. His speech would be reported in an article in the Vancouver Sun, dated, 2nd May 1934, which stated:
- "Abraham Lincoln, the murdered emancipator of the slaves, was assassinated through the machinations of a group representative of the International Bankers, who feared the United States President's National Credit ambitions. There was only one group in the world at that time who had any reason to desire the death of Lincoln. They were the men opposed to his national currency program and who had fought him throughout the whole Civil War on his policy of Greenback currency."
The Vancouver Sun article also quoted Gerald G. McGeer with the following statement:
- "They were the men interested in the establishment of the Gold Standard and the right of the bankers to manage the currency and credit of every nation in the world. With Lincoln out of the way they were able to proceed with that plan and did proceed with it in the United States. Within 8 years after Lincoln's assassination, silver was demonetized and the Gold Standard system set up in the United States."
This control of Gold and any proposed Gold Standard is why many believe a return to a Gold Standard is not the solution needed for our current economic woes in 2011.
Next up will be Part 3 (1865 - 1913) which will detail the establishment of the US Federal Reserve.
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