Educate Yourself 

Constitution of the United States

Article I, Section 8, Clause 5: “[The Congress shall have Power…] To coin Money, regulate the Value thereof…”

Article I, Section 10, Clause 1: “[No State shall…] coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.”

 

The Constitutional language is clear: Congress has the sole power to create the currency of the United States, and to charter the banks which deliver this money to the nation toward the various economic purposes set forth in the Preamble of the Constitution. No private (or even state) bank can create public money. Congress comprises a group of fellow citizens sworn to represent all the people of the United States, by upholding their shared constitutional beliefs, which were clearly enumerated within this founding document.

 

More than any other shared belief, money has become essential promote the general Welfare and secure the Blessings of Liberty, which is why the Money Powers were clearly established within the main body of the founding document.

 

Shared beliefs serve as the hub through which likeminded people connect. The Preamble of the Constitution is one such hub; it embodies the set of shared beliefs which in many ways are the only current connection Americans have to each other (besides our shared belief in money). Faux Originalists should take heed; laws—and the weapons that legitimize them—are not what bind one person to another; these are the tools of enslavement and coercion, not connection. Liberty—the internal mechanism through which each person exercises choice—existed well before some externally imposed rule bestowed it upon us.

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Follow the Money

[AN ABBREVIATED TIMELINE (for the full article, go here)]

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4500 BCE – 3000 BCE: Everywhere, “egalitarian tribal arrangements” dissolve into “the formation of class society with religion as its unifying force and the dominant class, something of a feudal nobility, extracting economic surplus from the producing majority.”[167] Religious temples also served as banks.[167]  Assyriologists determine that excess crops were traded, often for silver, thus, the “value [of silver] was established by religious institutions, who accepted it as payment of tithes and other forms of taxation… there is some evidence that the overseer of the Treasury bore a religious title… The economic surplus collected in the form of taxes was directed toward the priests…” In the subsequent transition from egalitarian to hierarchal class relationships, it was the semi-divine kings who “levied non-reciprocal obligations (taxes) on the underlying population.”[168]

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1782 AD: In the early days of the United States “the silver dollar was worth five shillings in Georgia, eight shillings in New York, six shillings in the New England states, and thirty-two shillings and sixpence in South Carolina…In consequence, when Alexander Hamilton wrote his report on the establishment of a mint, he declared that ‘that species of coin has never had any settled or standard value according to weight or fineness; but has been permitted to circulate by tale without regard to either.”[167] 

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1781 AD: As the Revolutionary War continued, Alexander Hamilton was pondering how his country was going to pay for it. “Most commercial nations have found it necessary to institute banks”, Hamilton told Robert Morris, and thus began his belief that a central bank was necessary and proper for issuing the credit of the nation.

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1791 AD: United States President George Washington signs the Bank of the United States into law, gives it a twenty-year charter, and appoints Alexander Hamilton as Secretary of the Treasury. “It opened for business in Philadelphia on December 12, 1791…branches opened in Boston, New York, Charleston, and Baltimore in 1792, followed by branches in Norfolk (1800), Savannah (1802), Washington, D.C. (1802), and New Orleans (1805). The bank was overseen by a board of twenty-five directors.” [173]

 

The War for Independence left the confederation of states with a devalued currency, war debt, inflation, and little economic opportunity in commerce or industry. In 1790, Alexander Hamilton submitted a report to Congress outlining his proposal to form a National Public Bank—a central bank that could issue paper money (currency, banknotes), and stabilize the money supply. The Bank was designed to collect tax revenue and distribute credit around the country through a branch network. It could pay the government bills, absorb the debt of the states, and loan money to the government in times of need. It’s first order of business was to take in the debt of all the states. “In addition to its activities on behalf of the government, the Bank of the United States also operated as a commercial bank, which meant it accepted deposits from the public and made loans to private citizens and businesses.” [173]

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Our Disappearing Money Powers: A Disaster in Six Acts

Act I: A Case of Mistaken Liquidity

Aaron Burr disguises the first privately funded bank inside a public water company, kills the competition—Alexander Hamilton—who had founded all of America’s first banks, then kills—through Congress—Hamilton’s U.S. Central Bank, the First Bank of the U.S., which was publicly funded.

 

Creator of America’s original Central Bank, Alexander Hamilton, was challenged to a duel and killed by Aaron Burr. The two pistols used in the duel currently reside at 277 Park Ave. in midtown Manhattan, which happens to be the headquarters of JP Morgan Chase & Co., the world’s largest private bank (as of 2023). So why would the pistols reside there?

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It was 1811; Hamilton’s First Bank of the United States, which had been chartered for the past twenty years, had exceeded every expectation, converting many who were initially skeptical. Now it was up for renewal, but Burr had already killed Hamilton, and Hamilton’s party—the Federalists—were no longer in power. Still, there was something about the Bank that Hamilton had gotten right, and it had large bipartisan support; the recharter vote passed in the Senate, and the vote was deadlocked in the House. This is when Vice President George Clinton of New York went against his own party president (James Madison) and treasury secretary (Albert Gallatin) and put an end to Hamilton’s bank with his tie-breaking vote. So why would George Clinton do that?

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It was 1791; Hamilton’s National Public Bank had just been signed into law when New York governor George Clinton began his profitable association with prominent New York lawyer, Aaron Burr. To secure Burr’s loyalty, Clinton appointed him New York State Attorney General, then backed him for U.S. Senator from New York, which Burr held from 1791-1797.  Burr quickly returned the favor; when apparent voter fraud in three different counties marred the New York gubernatorial race in 1792, Burr was brought in—as state Senator and former State Attorney General—to rule on the controversy. Burr convinced the legislature to re-elect Clinton despite suspicions about the election process.

1799: former New York Senator (1791-1797) and soon-to-be vice president (1801-1805) Aaron Burr—a democratic republican—hatched a plan to wrest political control from the Federalist party, which had overseen the country since its founding. The democratic-republicans needed their own private source of money, which was problematic because only two banks existed in New York at that time—the National Public bank and the Bank of New York—and both were founded by Alexander Hamilton, who was a Federalist.

 

Burr decided to sidestep the laws currently in place (a practice he would often repeat) and elicited Hamilton’s help in establishing a water company called the Manhattan Company, under the pretense that the city was in desperate need of clean water. Once Burr got Hamilton to help secure its legal incorporation, he quietly amended the company charter to A) expand its capitalization, B) expand its board members, and C) expand the latitude of the board members to use this capitalization in broad unnamed ways. The amendments passed through undetected, ironically due to Hamilton’s endorsement.

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Burr then proceeded to add George Clinton and other republican party members onto the water company’s board of directors, opened an office of “discount and deposit”—a bank—and began funding democratic-republican affairs, the first one being the election of Thomas Jefferson in 1800; Jefferson knew about the entire plot (correspondence has been found between Jefferson and prominent republican Edward Livingston). Democratic republicans credit this ploy with unseating the Federalists from office; in the bigger picture, though, this was the pivotal moment in U.S. economic history, where the Federalist agenda, to connect the people of the United States politically, socially, and economically, was unceremoniously discarded for a paradigm of pure rational self-interest; thus began the slow erosion of the People’s Federal Money Powers, along with their liberty.

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When the Manhattan Company suddenly switched from selling water to selling money, only five months after Hamilton helped incorporate it, Hamilton quickly severed ties with Burr. Like George Washington and Thomas Jefferson, Hamilton never trusted Aaron Burr, but after being duped by Burr into creating the first private bank and partisan political action machine (the original PAC) Hamilton made it his personal mission to keep Burr from gaining any further political control.

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Hamilton used his clout to secure Jefferson’s nomination over Burr in 1801, then stopped Burr’s bid for the New York governorship in 1804. This second snub was too much for Burr, who subsequently challenged Hamilton to a duel and killed him. Although dueling and murder were both illegal at the time, Burr never went to trial. In 1807, Burr was charged with treason, for his attempt to gather and train an armed militia, apparently looking for an opportunity to fight the Spanish and annex his own piece of Florida prior to the U.S. peacefully purchasing it; Burr admitted to as much, and had elicited Andrew Jackson’s help if Burr could provoke Spain to fight (in 1818, Jackson went rogue and utilized the same plan; it instead turned into a killing spree of his favorite three targets: Native Americans, runaway slaves, and British citizens; the Spanish basically gave Florida away to the United States after Jackson’s homicidal rampage, which incited $5 million in damages across the territory—over $1 billion by today’s standards). 

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Ultimately, it was Jefferson who tried to have Burr indicted for the highest crime possible; Burr left for Europe soon after. The Federalist party faded after Hamilton’s death. Clinton, who sat on the Manhattan Company board, predictably killed the First Bank of the United States with his tie-breaking vote in 1811, which effectively eliminated The Manhattan Company’s main competition. Hamilton, Federalism, and National Public Banks became collateral damage in America’s decisive turn toward hierarchal oppression. 

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Meanwhile, The Bank of the Manhattan Company grew strong; they purchased those dueling pistols in 1930; Chase National Bank, established in 1877, merged with the Bank of Manhattan Company to form Chase Manhattan Bank in 1955. In 1996, Chase Manhattan Bank merged with Chemical Bank Corporation, who then merged with JP Morgan & Co. in 2000. When Wall Street collapsed again in 2007, JP Morgan Chase & Co. picked up Washington Mutual and Bear Stearns. Oddly, Hamilton is the father of both public banking and private banking; it is only fitting that the instrument used to kill Hamilton would reside in the institution that killed his public bank. Although this is likely lost on JP Morgan Chase & Co. employees today, whoever purchased those pistols did so not to celebrate Hamilton’s legacy, but the demise of it.

 

Soon after the War of 1812, the United States was financially crippled again; Clinton had died of a heart attack and Jefferson was no longer in power. Politics was set aside, and the Second Bank of the United States received another 20-year charter in 1816.

 

Federalism espoused connection and men like Washington, Hamilton, and John Adams were true to this ideology; the National Public Bank was a natural extension of this ideology, but those who sought hierarchy knew that connection eroded the ability for one group to subjugate another, so that fortunes could be made.

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As Federalism slowly eroded along with connection, one Federalist still stood guard, attempting to fight off the seemingly inevitable shattering of what those Federalist founders had achieved; first Supreme Court Justice John Marshall continued to preach from his pulpit to the deaf choir of opportunists about the difference between power and control.

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Justice Marshall, like Hamilton, had the spirit of the law within him, so naturally trusted simple language, that could be interpreted as needed to serve future generations when making policy or legislative choices. For them, the Constitution served as a ‘living’ guideline for trustworthy leaders to promote the general welfare or provide for the common defense in whatever ways were necessary and proper at that time. Those disdainful of rules and of trust wanted the constraints upon them enumerated, so that they may either find ways around them, or cite them to legitimize some act of violence for which the law was never intended. The letter of the law is, and always has been, the perfect tool for oppression: strong enough to legitimize violence, yet permeable enough to step through or around on the way toward one’s rational self-interest.

 

Private bankers in Maryland did not like the competition the Second Public Bank had brought to their area; naturally, there was a feeding frenzy of private self-interest after the death of the First Bank in 1811, so the constitutionality of the Second Bank was bound to be challenged again, as it had 25 years before. In McCulloch versus Maryland (1819), Chief Justice Marshall again asserted that the National Public Bank was doing everything ‘necessary and proper’ for government to do toward promoting the General Welfare, and nothing else. Further, Marshall let it be known that the United States was a country, and not a loose Confederation of principalities, and thus federal law took precedence of state laws, should any other ‘conflict’ arise.

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This did not bode well for state sovereignty and the slavery upon which it was founded. As in ancient Sumerian times, those who would be oppressors needed someone just insane enough to be their spokesperson; enter Andrew Jackson.

 

Act II: Better to Reign in Hell

Andrew Jackson has never gotten the credit he deserved: he was a psychopathic mass murderer who spread the disease of hierarchal violence (aka oppression) across the American plains, “like a wildfire in a high wind;” the damage still resonates nearly 200 years later. Someday, he will be finally by recognized as the catalyst for the American Civil War and all the damage done since that time. 

 

When James Monroe departed the White House in 1824, the fifty-year reign of the “founding fathers” was over, and the next generation of leaders would have to carry the country forward. The people were reasonably uncertain about their future; no promising candidates stood out. In those days, presidential candidates benefited from the fact that campaigning for themselves was considered “uncouth.” Thus, Jackson’s loyal coalition of military officers and fellow slaveholders were able to do the campaigning for him; their strategy inadvertently established populism as a method for securing the common man’s vote. New voting rights, expanded even further during the 1828 election, allowed non-property-holding white males to finally vote. Jackson, although wealthy from slaveholding, still came from poverty and personally harbored dislike for anyone who was wealthy and white or poor and nonwhite. This resonated quite well with poor white people, so when they were allowed to vote, it was certain they would seek their revenge through this instrument. Thus, Jackson became the “man of the people.”

 

But Jackson was not a man for very many people. He proceeded to forcibly displace nearly 50,000 Native Americans from the South, which freed millions of acres that he and his loyalists utilized to expand slavery even further. He continued pushing the Mexican people out and began a campaign for the eventual annexation of Texas and California. He vetoed attempts for Congress to stop the expansion of slavery to the new western states Jackson was helping to secure. Jackson’s vision was clearly to build an economics based on slavery, and he had followers willing to help him do it. Sam Houston. James Gadsden. James K. Polk. These were Jackson’s early coalition and the names synonymous with finishing what Jackson had started: to clear the land and establish the property rights now known as the United States.

 

To say Jackson had a great plan for the country would be giving him credit he does not deserve. Jackson was merely the vessel through which to communicate one message: violence, or the language of disconnection. He ruled by veto, effectively disconnecting everyone else’s voice but his own. He severed three different cultures at the root and set them adrift. He legitimized violence through war, human trafficking, coercion, bribery, intimidation, grand larceny, and murder. It is important for History to give Jackson his proper due: Jackson and his coalition laid the groundwork for the Mexican American War and forced the U.S. into a Civil War to stop his bid to expand slavery further. Jackson, therefore, achieved his life purpose: he not only recommunicated the violence passed onto him, he amplified this positive feedback loop into a wave so large it propelled the United States into a theology of violence that we still preach today.

 

Violence is not what we preach, it is how we preach it. Our religious crusades—perpetrated in the name of Democracy, Capitalism, or Christianity—are a hierarchal method of communication so natural to us now, we do not even notice the violence we perpetuate. Jackson’s fellow slaveholders understood his message, however, and briefly immortalized his efforts when they placed his likeness on their Confederate $1,000 bill. His face suffered a serious downgrade by the time it appeared again in 1928, this time on the ‘Union’ $20 bill, but if Jackson had been alive to see it, he surely would have shot the person who dared to put his face on any paper money.

 

First Treasury Secretary Alexander Hamilton had fought for and established the First Bank of the U.S.; even though Clinton’s tie-breaking vote shut the First Bank down, The War of 1812 came along and suddenly everyone realized how effective the National Bank had been in maintaining balance within the economy, especially during times of war. Once the War of 1812 ended, the Second Bank of the U.S. was chartered for another twenty years, from 1816 until 1836, where it again had to be reinstated by Congress; unfortunately, Jackson was president at the time of its renewal, and had decided early on that he would never let the National Bank have a third run. Knowing this, Congress attempted to have the National Bank rechartered early, in 1832, and the recharter passed in both houses of Congress, before Jackson vetoed it. Jackson stated that as president, he had the right to declare the National Bank unconstitutional independent of any rulings on the matter by Congress or the Supreme Court, which, of course, is incorrect.

 

On March 28, 1834, Congress did something it had never done before or since—it censured a sitting president. Jackson not only killed the National Bank, but he also proceeded to rob it of all its money, then placed the money in various state banks of his choosing (80 percent of this money came from private investors). To do this, he had to fire the current Treasury Secretary, who had refused to give Jackson the money—on clear constitutional grounds—then subsequently appointed another Treasury Secretary who would give him the money. That man was Roger B. Taney, who had helped Jackson throughout his crusade to get rid of the public bank. Why was Jackson (and Taney) so hellbent on eliminating the Second Bank?

 

When the Second Bank first reestablished business in the various states in 1816, wealthy state bankers attempted to challenge the constitutionality of the Bank, but their plan backfired. In McCulloch v Maryland (1819), the Supreme Court not only declared the National Bank constitutional, but it also reiterated that federal law had supremacy over state law where any of these laws conflicted. This was the real sticking point for the slaveholding states, who never wanted a ‘United’ States, but a loose ‘Confederation’ of states, each with their own agenda; this agenda centered around the violent hierarchal oppression of other peoples, which needed guns, money, limited federal government interference, and a bundle of entitlements referred to as ‘states’ rights.’

 

Thomas Jefferson was an early advocate of states’ rights. Jefferson and Jackson were men of similar nature; both claimed to loathe the potential abuse of power, yet both were among the most abusive of power in U.S. history, once they had control of it. Both side-stepped Congress and the Supreme Court more than once, wielding executive power less like presidents and more like monarchs.

Although the National Bank was initially opposed by Thomas Jefferson, so-called Jeffersonians began to see its usefulness in developing the country and maintaining a financial balance. It was only the state banks that really wanted the public banks gone, because public banks were stable and state banks were not. State banks always lent out more than they could afford to risk, which made depositors jumpy and created panics and bank runs in every decade where the states had control of money creation.

 

The Aftermath

“Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”—Chief Justice John Marshall, in McCulloch v Maryland (1819)

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In 1830, Chief Justice John Marshall was not much longer for the Earth, but continued to fight for his originalist position that the United States was one entity, and thus the liberty of all Americans was under the equal protection of the federal government. The money powers were essential to the protection of this liberty and so remained a focus of Marshall until his death in 1835.

 

“No State shall… coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;” nevertheless, states like Missouri were issuing their own paper money and loaning it out to its citizens. One Hiram Craig of Missouri, a farmer, defaulted on his loan, and the Missouri Supreme Court ruled that Craig must pay it back.

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The U.S. Supreme Court decided to weigh in; Marshall overturned the state court’s ruling, citing that money issued by states is unconstitutional, per Article I, Section 10, Clause 1. Therefore, in 1830, federally created currency was deemed constitutional and everything else was deemed unconstitutional (by the way, this has never changed; there has never been a ruling of constitutionality for the private money being used today). Further, this ruling made clear that the federal government was not responsible for the debts incurred by the machinations of the private sector.

 

This ruling was decidedly inconvenient for those individuals who wished to exercise their liberty upon others while still retaining the blanket of security the Federal Government provided. When Kentucky created a state bank in 1820, the Bank of the Commonwealth of Kentucky, a similar situation soon occurred: one John Briscoe took out a loan, received banknotes, then defaulted on the loan, whereupon a Kentucky court ruled he must repay the money. The difference this time was that Andrew Jackson was now aware of this conflict between Marshall’s agenda and his agenda.

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The Supreme Court stalled on hearing the case until Jackson could appoint replacements to the bench; meanwhile, Marshall passed away. By the time the case was heard in 1837, only one justice from the 1830 decision remained: Justice Joseph Story, the last “Statesman of the Old Republic.” Meanwhile, Jackson had appointed his friend Roger B. Taney to the Chief Justice position, to continue their crusade for privately created money.

 

Interestingly, the court ruled that because the bank could be sued separately from the state, it was in fact not connected to the state, thus neither was its money; therefore, the money was not so much unconstitutional as non-constitutional. If this was true, then the state could still not force Briscoe to pay this debt because the state now had no legal connection to this non-constitutional money arbitrarily issued by a private corporation. Further, as established in Craig v Missouri (1830), the state also has no obligation to cover for the arbitrary debts incurred by any such privately owned banks. This is where the whole logic of privately created money falls on its face, yet to this day, the people’s government is somehow burdened with the debts that banks accrue as private corporations issuing money outside the jurisdiction of the Constitution.

 

The Money Powers—now detached from the reality of constitutional backing—began building on this shaky new ground. The wildcat banking era (1837-1865) started when Jackson took all the money from the Second National Bank and put it in the state banks, now chartered without any federal oversight. Briscoe v Bank of Kentucky (1837) no longer allowed states to fund banks, per the ruling of the Supreme Court, so oftentimes private banks issued notes backed by the ‘faith and credit’ of no one in particular. Fifty percent of the banks failed during this period leading up to the Civil War, thanks to Andrew Jackson.

 

Act III: A Time to Tear Down, a Time to Build

The Banking Act of 1864 attempts to fund state banks with national currency (the new dollar bill), which is seen as re-establishing ‘national banks,’ but is not the original model of a central public hub with branches; thus begins the era where ‘the tail wags the dog.’ Federal government now becomes the reactive backstop instead of the facilitator, and ‘Big Government’ is born.

 

1893 AD: During the late 1880s and early 1890s, severe weaknesses begin to appear in the economy. By this point, the railroads had naturally become crucial to the U.S. economy (if money was the blood, transportation was the veins and arteries of the system); because government failed to recognize that its best role would be as the facilitator—not the regulator—of economics, it had punted crucial economic infrastructure rights to the private sector, which was climbing all over themselves attempting to ‘own the means of production.’ When one railroad was forced to declare bankruptcy, the people began to panic.

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Panics, if well-orchestrated, are excellent opportunities for the predators to snatch up the weaker prey; as railroad stocks collapsed, the railways fell into the hands of two ‘money trusts;’ in the bigger game, this was a victory. Panics (like wars) are a strategic tool for the wealthy to consolidate more wealth, although they will result in economic ‘downturns’; those at the bottom of the hierarchy are less financially ‘adaptable’ and thus become the collateral damage in these scenarios.  

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1902 AD: With bank panics in every decade since Jackson vetoed National Public Banking out of existence, support started growing for the Fowler Bill, which proposed a Central Public Bank using the U.S. Treasury as the source of tax collection and dispersal of monies. The bill was eventually shot down using political fearmongering about ‘central banks.’ Wall Street could see that the people were getting fed up with panics; if a central bank was inevitable, Wall Street knew it needed to be in control of it.

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January 1906 AD: A Wall Street commission is formed after Wall Street banker Jacob H. Schiff speaks to the New York Chamber of Commerce, urging that plans be drawn up for a privately-run central banking system, warning that locating a Central Bank within the U.S. Treasury would not be good for business. The five-person commission—comprised of JP Morgan advisors and top New York businessmen—drafted the plan,[180] which was then handed over to Senator Nelson Aldrich—head of the Senate Finance Committee (and John D. Rockefeller Jr.’s Father-in-Law) to peddle around Congress.

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January-March 1907 AD: Industrialists are tried and found guilty of monopolistic practices. John D. Rockefeller’s Standard Oil was found guilty of 536 counts of price-fixing, and fined $29 million, which he never paid (the government was forced to pay it for him). [181] Standard Oil, the American Tobacco Co., and E. H. Harriman railroads were all charged with violating the Sherman Antitrust Act. [182] Public sentiment was turning against the robber barons; a change was needed, and J.P. Morgan stepped out of the shadows ever-so-slightly, and took care of business.

 

October 1907 AD: The Panic of 1907 strikes, seemingly out of nowhere. Some bankers got arrested, some killed themselves, and some closed their doors for good; the rest had to deal with JP Morgan, who in the end came away with the Consolidated Steamship Co., the Tennessee Coal & Iron Co., the Hamilton Bank, the Mercantile Trust, the Trust Company of America, and Lincoln Trust, among other acquisitions.

 

May 1908 AD: Nelson Aldrichintroduces the Aldrich–Vreeland Emergency Currency Act, which passed only because republicans had considerable control of both houses (several republicans even voted against it); naturally, Wall Street made a big propaganda push to have the bill passed as well. The emergency funds were never used, because the Act was merely designed to form a National Monetary Committee and put Aldrich in charge of it; this became the vessel through which the Federal Reserve Act was created.

 

November 1910 AD: After nearly two years of peddling their central banking ideas without success, Aldrich and Wall Street heavy-weights meet secretly at JP Morgan’s Jekyll Island Hunt Club in Georgia; for nine days they churn out what was soon to be known as the ‘Aldrich Plan;’ everyone knew that Congress would reject any bill framed by Wall Street bankers, so Aldrich had to claim it as his own.[183]

 

January 1911 AD: The Aldrich ‘Plan hits the Senate floor to overwhelming criticism and is voted down; most people see through it immediately as a bid for Wall Street control of the central banking system. His National Monetary Commission spends a year revising it, and the Aldrich Bill is finally proposed in 1912.

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1911 AD: Congressman Charles Lindberg, Sr., in front of the Rules Committee, puts the pieces together on Wall Street’s plans: in 1907, agriculture and industry had one of their best years, yet somehow Wall Street ruins it by causing a panic yet again. [184] “Wall Street knew the American people were demanding a remedy against the recurrence of such a ridiculous, unnatural condition. Most senators and representatives fell into the Wall Street trap and passed the Aldrich-Vreeland Emergency Currency Bill. But the real purpose was to get a monetary commission, which would frame a proposition for amendments to our currency and banking laws, which would suit the Money Trust. The interests are now busy everywhere, educating the people in favor of the Aldrich plan. It is reported that a large sum of money has been raised for this purpose. Wall Street speculation brought on the Panic of 1907.”[185]

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November 5, 1912 AD: Woodrow Wilson defeats William Howard Taft to win the presidential election. Wilson campaigned against the Aldrich Bill, so in the House, Representative Carter Glass presents a near carbon copy resolution of the Aldrich Plan (though few knew it, because it was kept secret within the House committee); the major difference in the Glass plan was that it called for up to 20 regional banks, to appear to ‘decentralize’ power. In the Senate, Robert L. Owen offered up nearly the same resolution (because he was directed by NMC advisor A. Piatt Andrew,[186] who helped write the Aldrich Bill); the Owen bill lowered the number of regional banks to 12, as well as the capital requirement, so smaller banks might have some representation.[187] Between the 19th—when the bill was presented—and the 23rd—when the bill was suddenly brought to the Senate floor for a vote—any capitulation to smaller banks was removed.

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February 28, 1913 AD: After nine months of hearings, the Pujo Committee on Concentration of Control of Money and Credit submits its findings:

1. 341 officers of J.P. Morgan & Co. sit on the boards of the top 112 high-level corporations, which represent 85% of the value of the New York Stock Exchange ($22.5 billion of the total value of $26.5 billion).

2. A consortium led by J.P Morgan, George F. Baker, and James J. Stillman had control of no less than 18 financial corporations, and “had gained control of major manufacturing, transportation, mining, telecommunications, and financial markets throughout the United States.”[188]

3. Also named in the report were Paul and Felix M. Warburg, Jacob H. Schiff, Frank E. Peabody, William Rockefeller, and Benjamin Strong, Jr. [189]

 

No one went to jail, but no one denied it, either. It also appears that the “great private banking houses” were involved in financing Wall Street activities and that the Comptroller may have also been involved in the cover up of these large transactions.

 

September 8, 1913 AD: the final version of the Glass Bill passes the House with little debate (the Representatives had very little knowledge of banking, so offered no resistance). The Senate debate drags on for months, with many different proposals ranging from total government control to total private control; none of them gain any traction.

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December 19, 1913 AD: with some Senators already gone on holiday, a revised Owen bill comes to the floor for a vote; it represents the Senate’s version of the Federal Reserve bill, which really is the same bill Carter Glass had passed in the House, minus the parts most offensive to Republican Senators; none were ever allowed to see the House bill to comprehend this. Majority Democrats pass the Owen Bill. With business concluded, many leave for Christmas.

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Act IV: When ’tis Done, then ’twere Well It Were Done Quickly

The Federal Reserve Act was a financial coup by Wall Street, who knew a Central Bank would finally have to be re-established but were determined never to let the government have control of it.

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December 23, 1913: The day the final version of the Federal Reserve Act was passed in the Senate, then signed directly afterwards by then-President Woodrow Wilson.

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The Senate had passed the Owen version of the bill four days earlier. The bill was then altered in an unofficial House-Senate committee, where no Republicans were invited; those who had remained behind during the break were then handed the final draft of the bill and instructed to convene on the Senate floor, where a final vote was taken. Only 44 Senators answered the initial roll call, though the vice president indicated for the record that 48 had answered, and “a quorum was present.” A quorum generally requires at least 51 Senators to be present; 19 more Democrats filtered in before the final vote was taken, so presumably the vice president knew they were standing by and thus officially indicated the presence of a quorum for the record.

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1917 AD: Charles A Lindberg, Sr. brings articles of impeachment against members of the Federal Reserve Board of Governors, including Paul Warburg and William P. G. Harding, charging that they were involved “… in a conspiracy to violate the Constitution and laws of the United States …”[191] further charging that the Federal Reserve Bill constituted “The worst legislative crime of the ages.”[192]

 

April 5, 1918 AD: The War Finance Corporation was created to fund important sections of the country while WWI was being fought. Comprised of the Secretary of the Treasury and four other members, this public corporation was also aided by a seven-member Capital Issues Committee appointed by the President (which included some Federal Reserve Board Members), that served in an advisory capacity. In effect, the corporation operated as a public bank that helped loan money to industries such as agriculture, livestock, canning, the railroads, etc.; overall, this public financing corporation loaned out $700 million.[193] It set the precedent for government-created financial institutions, necessary because the private banking industry was not accountable to provide for the equal protection of all citizens.

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Act V: Till Death Do Us Part

The McFadden Act of 1927 did something that Public Banks were never allowed to do: it removed the twenty-year charter from the Federal Reserve Banks so that they now exist in perpetuity—or until a two-thirds vote from Congress relinquishes Fed control over the people’s Money Powers. It also loosened restrictions on how banks could gamble with their money, as well as allowed them the right to branch out in any state that allowed state banks the same right, “in the spirit of fairness.” Three years later, the country was in shambles. Laughably, the reason the Act was initiated was because “bankers, businessmen, and politicians concurred” that the Federal Reserve was a success with bankers, businessmen, and politicians. 

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January 22, 1932 AD: The Reconstruction Finance Corporation Act established a corporation, along the same lines as the War Finance Corporation, that was owned by the federal government “to aid in financing agriculture, commerce, and industry…” It acted as a public bank that ran through the Treasury, and with additional amendments (June 1932 and July 1933), the RFC could loan its funds to state and municipal governments, as well as help recapitalize smaller banks.

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Overall, around $57 billion dollars was injected into the RFC, where it funded projects that could be repaid through self-liquidating loans (loans for essential infrastructure that are naturally paid back during usage, like utility bills on water and electricity, or tolls on bridges and tunnels). The loans helped build roads, bridges, dams, houses, schools, post offices and farms, all of which ultimately paid for itself with interest.

“The RFC funded the San Francisco Bay Bridge, the California Aqueduct, the Pennsylvania turnpike, and 3 bridges over the Mississippi river” [when private investors funded the Oakland Bay Bridge in 1996, the price tag rose to $12 billion, which will not be paid off until 2049).[194] The public bank worked so well, it again was forced to a halt, along with other New Deal measures deemed outside the reach of federal authority.

 

While the private sector deemed the promotion of General Welfare outside the purview of federal government, it wholeheartedly supported all demands for the Common Defense. War was just plain good for business, so the RFC was brought back to cover our World War II expenses. The precedent was now solidly entrenched: Public Banks were excellent for funding wars, but much too excellent for everything else. 

 

For the record: the Federal Reserve caused the economic crash of the country, and when it seemed incapable of solving this problem, the RFC—a National Public Bank--was brought in to save the country from ruin.

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February 27, 1932 AD: Five years after glorifying the Fed, The Banking Act of 1932 (AKA the Glass-Stegall Act of 1932) created the Federal Open Market Committee (FOMC) and solidified its modern role controlling the money supply. In the manner of quantitative easing, the Fed purchased over $1 billion in government securities in three months, halting deflation; fear of inflation had them dial back on the money expansion; the system collapsed again less than a year later.

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May 27, 1933 AD: The Securities Exchange Act of 1933 was the first federal securities law passed to rein in Wall Street; it focused on “insider trading, the sale of fraudulent securities…manipulative attempts to drive up share prices,” etc., that were rampant among traders and institutions leading up to the depression, which naturally hurt the amateur investor the most.

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June 13, 1933 AD: the Home Owners' Loan Corporation (HOLC) was yet another National Public Bank established by Congress to refinance the many home mortgages in default during that period, upon which private banks were about to foreclose; importantly, in the Financial Crisis of 2007-2008, Congress failed to follow the precedent it set in 1933—to keep Americans in their homes during economic collapse—which allowed the Federal Reserve to transfer $17 in wealth to Wall Street investors.

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June 16, 1933 AD: Plan B, and the passing of the second Glass-Steagall Act, or National Banking Act 1933. In this version, the FDIC (deposit insurance) was instituted; this was the same deposit insurance that Republicans fought to keep in the Federal Reserve Act of 1913, but the Democrats yanked from the bill in secret committee. Crucially, it separated commercial banking from investment banking, to stop Wall Street from speculating with their customer’s deposit money. It also did not allow the Federal Reserve Board any FOMC voting rights. Finally, Regulation Q forbid banks rewarding customers with interest on their checking accounts, to gain their deposits; this competition led banks toward risky behavior trying to recoup all the interest money they were doling out. Though this bill would systematically be dismantled through the years, it proved to be insightful regulatory legislation.

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1934 AD: The Securities Exchange Act of 1934 established the Security Exchange Commission (SEC) to oversee stock, bonds, and securities, as well as the financial professionals who sell them (brokers, dealers, advisors). Everyone listed on the New York Stock Exchange must answer to the SEC and submit financial disclosure reports.

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Act VI: Don’t Call Us, We’ll Call You​

August 23, 1935 AD: The National Banking Act 1935 reorganized and centralized the Federal Reserve system; it forced all the regional Fed banks to act as one unit by handing discretionary monetary policy directly to a Federal Board of Governors; they alone could set reserve requirements, discount rates, and interest rates for deposits, or engage in open market operations. They removed themselves from the offices of the U.S. treasury, then removed the Treasury Secretary and the Comptroller of the Currency from their seats on the board. They were no longer part of the federal government, they only let the BEP know how much ‘money to print.’

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Interestingly, the initial bill attempted to keep the Treasury Secretary and Comptroller on the Board and give the President a voice in policy decisions, but all the Wall Street players who initially helped the Federal Reserve Act passed came out of the woodwork and testified on the House and Senate floor to kill any government involvement in their Central Bank. Winthrop Aldrich (chairman of Chase National Bank), James Warburg (son of Paul Warburg and vice chairman of the Bank of the Manhattan Company), Edwin Kemmerer, who was on the original National Monetary Commission, and Henry Parker Willis, who had originally served on the Federal Reserve Board. This push was as big as the one that got the Federal Reserve Act passed.

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1938 AD: Congress establishes the Federal National Mortgage Association (“Fannie Mae”), a government-sponsored enterprise (GSE) designed “to buy and securitize FHA-insured mortgages,” which provided a secondary market for banks to offload their mortgage debt. This New Deal provision came about after 25% of Americans had their homes foreclosed by private banks after the Great Depression hit; it was meant to keep people in their homes by backing up their debt with local banks, meanwhile helping the construction of more affordable housing options. Later, as Wall Street began packaging up the debt in many risky ways, it received the distinction of being ‘the world’s biggest hedge fund’ for the “privatization of profits (for shareholders and executives) in good times but the socialization of downside risk (for the taxpayer).” Freddie Mac (the Federal Home Loan Mortgage Corporation (FHLMC) came along in 1970.

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All GSEs are ‘enterprises’ that provide ‘financial services’ but are deemed different from government-sponsored financial institutions like the War Finance Corporation or the Reconstruction Finance Corporation, which loan money directly toward projects. It is important to note that these government-sponsored financial institutions did, on many occasions, recapitalize private banks so that they might continue to provide services to all Americans; all these government institutions are basically taking on the original role of public banking, that the Federal Reserve System is incapable of providing: to establish Justice, ensure domestic Tranquility, provide for the common defense, and (especially) to promote the general Welfare.

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1956 AD: The Bank Holding Company Act is passed, which extends the 1933 restrictions on banks by including bank holding companies (that own two or more banks), similarly restricting them from non-banking activities, and preventing them from purchasing banks in multiple states.

 

1975 AD: Congressman Wright Patman (Texas) audits the Federal Reserve. Patman had called for the Federal Reserve to be nationalized since the 1960s (to make the U.S. Central Bank ‘public’ again, bringing the borrowed Money Powers back to Congress); Patman’s persistence forced the Fed to relinquish some of the profits it gains when taxing the American citizen to enact its money creating operations.

 

December 1986 AD: Banks are already working around the Glass-Steagall Act, but efforts ramp up to repeal the legislation; there is a risk-taking element in banking that does not want to simply provide a service, and it has become accepted as part of “the business of banking.” The government concern is that the gambling is purely to enrich the savvy gambler at the expense of the novice investor, who is simply looking for somewhere to park excess cash.

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The Federal Reserve is not part of government, however, and the Board decides to “reinterpret” Section 20 of the Glass-Steagall Act, which bars commercial banks from being “engaged principally” in the securities business, and instead allows banks to allot up to 5 percent of their gross revenues toward underwriting services. Bankers Trust, a commercial bank, serves as the first choice of the Fed board to engage in certain commercial paper (“unsecured, short-term credit”) transactions. In its decision, the Board concludes that to be “engaged principally” in an action means to be “mostly” engaged in it, and thus the erosion of Section 20 (which was already occurring quietly) becomes official.

 

1987 AD: The Federal Reserve Board overrides Chairman Paul Volcker after proposals from Citicorp, J.P. Morgan and Bankers Trust similarly ask for the “loosening of Glass-Steagall restrictions” on them as well, and suddenly banks officially take on underwriting commercial paper, municipal revenue bonds, and mortgage-backed securities, among other businesses. The Fed subsequently approves an application by Chase Manhattan, too. When questioned on this, the Fed Board indicates its plans to raise the limit from 5 percent up to 10 percent “at some point in the future.” By August, former director of J.P. Morgan Alan Greenspan takes over as chairman of the Fed board, eager to deregulate Wall Street so that government is only needed as a financial backstop and nothing more.

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January 1989 AD: The Fed Board approves the expansion of the Glass-Steagall Section 20 loophole to include dealing in debt and equity securities; J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp engage much more of their revenue toward underwriting. By the end of the year, the Fed Board officially raises the limit to 10 percent of revenues, as promised. J.P. Morgan is the first to ramp up its underwriting business to this new level. Throughout this time, Wall Street is attempting to push through legislation to repeal Glass-Steagall, but always fall short on the votes. Failure is attributed to A) squabbles between insurance companies, securities firms, and both large and small banks over the spoils of a legislative victory, and B) the continuing battle over who should regulate Wall Street—the Federal Reserve or the Government.

 

December 1996 AD: Alan Greenspan asserts that bank holding companies can own investment banks on the side, and those ‘affiliates’ can gamble up to 25% of their money in “securities underwriting.” This effectively eviscerates the 1933 Act, as the Fed says these risks have proven to be “manageable;” although the Glass-Steagall Act has been incapacitated, the legislation still exists, so a push is made to kill it dead.

 

1998 AD: Traveler’s Insurance Group and Citicorp force the issue and announce the largest corporate merger in history, creating a prototype financial conglomerate, complete with commercial banking, securities underwriting and insurance coverage. In the proceeding showdown, Wall Street ultimately must pay off politicians to the tune of $350 million to secure their votes (the FIRE sector—Finance, Insurance, Real estate, and Election cycle industries—target the Banking Committee members, as well as other financial committees attempting to influence legislation; it pays off in the end).

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1999 AD: The Gramm-Leach-Bliley Act of 1999 was the culmination of 25 years of hammering on the Glass-Steagall Act of 1933, which was put in place to keep banks and securities firms separated. The GLBA, also known as the Financial Services Modernization Act, allowed banks to use customer deposits to invest in derivatives. Bank lobbyists said they could not compete with foreign firms without these provisions and promised to protect their customers. In the scheme of hierarchal economics, financial intermediaries now lined up to safely drain value out of every possible risky investment imaginable; commercial banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges are designed for people with too much money and nothing tangible to do with it; now investors could access personal debt in a collective way, and tap into the automatic interest attached to all debt instruments; even small banks could “originate” loans simply to “distribute” them to the larger underwriters. When risk is diffused, it no longer feels as risky, precipitating more and more risky behavior.

 

2000 AD: The Commodity Futures Modernization Act of 2000 amended both the Securities Exchange Act of 1933 and the Securities Exchange Act of 1934, so that no restrictions previously placed on Wall Street existed anymore. Credit default swaps and other derivatives were now free from regulation; Congressional legislation always takes precedence over state regulations, so even though many states prohibited instruments like energy derivatives, for example, this legislation nullified its authority.

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An interesting array of people were connected to the passage of these Acts: The wife of Senator Phil Gramm (who pushed the bill through Congress) was former Chairwoman of the Commodities Future Trading Commission and an Enron board member (Enron was naturally a major contributor to Senator Gramm’s campaign). Alan Greenspan and former Treasury Secretary Larry Summers lobbied openly for the bill’s passage. Legal experts voiced their concerns to President Clinton, then-Treasury Secretary Rob Rubin, and Fed Chairman Alan Greenspan about leaving the derivative market unregulated; Brooksley Born, chairwoman of the Commodity Futures Trading Commission, had even drawn up a proposal for how to safely manage this emerging ‘market,’ but all of them shot it down and shelved it for what would become the Commodity Futures Modernization Act, which they buried in a 10,000-page authorization bill and moved through Congress virtually unchallenged. Importantly, this was the financial model Wall Street had always wanted: to disperse risk in derivative form and sell it all over the world, to hedge against any ‘downturns.’