Chapter Six ABRAHAM LINCOLN: LAST PRESIDENT TO FIGHT THE MONEY POWER Abraham Lincoln was the last of several populist presidents to fight against the money monopoly. Lincoln from the very beginning of his Administration faced a heavy burden of financing the Civil War with a monetary system under private control. During the Civil War the Union government was hardpressed to raise sufficient funds to pay troops, there was a shortage of coin and the private banking system was unwilling to meet the needs of the Union Army without personal gain. Lincoln was in the Jeffersonian-Jacksonian tradition. This tradition reserved the right to issue currency to the Federal Government and argued that this right could not lawfully be transferred to a private monopoly. In 1862 Lincoln presented to Congress a bill to make United States notes full legal tender and so enable the Federal Government to print sufficient paper money to finance the Civil War. Presumably while Lincoln did not envisage the inflationary potential in expanding the government's spending power there is little question that his financial program was intended as a means of paying off debts and 49 The Federal Reserve Conspiracy government expense without allowing the private money monopoly to profit from the public purse. Unfortunately, Lincoln's Secretary of the Treasury, Samuel Portland Chase, was an ally of the banking interests. During the Civil War Chase supported Lincoln's monetary policy but later presented legislation to Congress favorable to the banking interests. Similarly Senator John Sherman, responsible for Senate passage of financial legislation, added even more financial power to that already granted the money monopoly in the form of National Bank legislation. Lincoln's legal tender bill was reported on February 25, 1862. This was to issue $150 million of legal tender United States notes. At that time Secretary Chase commented: I have a greater aversion to making anything but coin a legal tender in payment of debt;. ..it is however at present impossible in consequence of the large expenditure entailed by the war to procure sufficient coin for disbursements: And it has therefore become indispensably necessary that we should resort to the issue of United States notes. (1> In similar manner Senator John Sherman of Ohio advocated the measure on the grounds, "in no other way could the payment of the troops and the satisfaction of other just demands be so economically or so well provided for." However this program of a national currency was opposed by the New York banking interests and Senator John Sherman's advocation did not, as we shall see later, reflect his true intent. (To be repeated in 1913 by Senator Owen and Congressman Glass who misrepresented their true positions to the public on the Federal Reserve Act.) The idea of a national currency was opposed by banking interests, the money power, because it would obviously remove from bankers the privilege of issuing an effective 50 Abraham Lincoln: Last President to Fight the Money Power substitute for money (defined in the Constitution as gold and silver). What bankers wanted the government to undertake was transfer the right to issue money to banking interests, i.e., to allow bankers to act as agents of the Federal Government. The U.S. Government would then be a perpetual borrower required to borrow funds at interest from a private money monopoly - which had obtained the monopoly power from the government itself. Given the restrictions of the Constitution, banking interests had to tread carefully. The Clinton Roosevelt (Bank of New York) proposal was to remove the Constitution, shadowed in the late 20th century by the Trilateral Commission pleas that the Constitution is outdated. Moreover the public itself, apart from Constitutional limits, would hardly agree to a private money monopoly if the truth were to be widely known. So we find from the time of Jefferson to the 1990s that any discussion of a private money monopoly is quickly and thoroughly suppressed. Nothing is more dangerous to the power of the elite than the public discovery and understanding of the private control of money supply. What the bankers wanted in the 1860s was for the government to issue interest-bearing bonds. These bonds were to be used as the basis of bank credit. While Lincoln pushed his legal tender act the bankers met to draft what became the National Bank Act of 1863. The purpose of the National Bank Act was to give control of the money issue to bankers. This monopoly could be used for profit and with the Civil War, profits would be substantial. The difference between Lincoln and the money power was essentially whether the medium of exchange (convertible bank notes and inconvertible bank credit transferred by check) was to be created and issued by 51 The Federal Reserve Conspiracy _ private monopoly or government monopoly. In other words, whether the power of government is subordinate to a banking elite or bankers subject to the power of government which, if Congress did its job honestly, also means subordinate to the power of the people. An extraordinary letter from Senator John Sherman to Rothschild Brothers in London dated June 25, 1863 (and leaked on Wall Street in 1863) demonstrates the double dealing of even "prominent" and "well regarded" politicians. Sherman saw a chance to curry favor with the preeminent world bankers of the time and personally brought the possibilities of the proposed National Banking Act to the attention of international bankers. On the following pages we reproduce a letter from Rothschild Brothers (London) to Ikleheimer, Morton and Vandergould (Wall Street, New York) acknowledging receipt of a Sherman letter and relaying its contents. These bankers reply to Rothschild Brothers on July 6, 1863, with details of the National Banking Act and some insights into the character of Senator John Sherman. London, June 25, 1863; Messrs. Ikleheimer, Morton and Vandergould No. 3, Wall St., New York, U.S.A. Dear Sirs: A Mr. John Sherman has written us from a town in Ohio, U.S.A., as to the profit that may be made in the National Banking business, under a recent act of your Congress; a copy of this act accompanies this letter. Apparently this act has been drawn up on the plan formulated here by the British Bankers Association, and by that Association recommended 52 Abraham Lincoln: Last President to Fight the Money Power to our American friends, as one that if enacted into law, would prove highly profitable to the banking fraternity throughout the world. Mr. Sherman declares that there has never been such an opportunity for capitalists to accumulate money as that presented by this act. It gives the National Bank almost complete control of the National finance. "The few who understand the system," he says, "will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantages that Capital derives from the system, will bear its burden without complaint, and perhaps without even suspecting that the system is inimical to their interests.... Your respectful servants Rothschild Brothers New York City July 6, 1863 Messrs. Rothschild Brothers, London, England. Dear Sirs: We beg to acknowledge receipt of your letter of June 25, in which you refer to a communication received of Honorable John Sherman of Ohio, with reference to the advantages and profits of an American investment under the provisions of the National Banking Act. Mr. Sherman possesses in a marked degree the distinguishing characteristics of a successful 53 The Federal Reserve Conspiracy financier. His temperament is such that whatever his feelings may be they never cause him to lose sight of the main chance. He is young, shrewd and ambitious. He has fixed his eyes upon the Presidency of the United States and is already a member of Congress (he has financial ambitions, too). He rightfully thinks that he has everything to gain by being friendly with men and institutions having large financial resources, and which at times are not too particular in their methods, either of obtaining government aid, or protecting themselves against unfriendly legislation. As to the organization of the National Bank here and the nature and profits of such investment we beg leave to refer to our printed circulars enclosed herein, vis: "Any number of persons not less than five may organize a National Banking Corporation. "Except in cities having 6000 inhabitants or less, a National Bank cannot have less than $1,000,000 capital. "They are private corporations organized for private gain, and select their own officers and employees. "They are not subject to control of State Laws, except as Congress may from time to time provide. "They may receive deposits and loan the same for their own benefit. They can buy and sell bonds and discount paper and do a general banking business. 54 Abraham Lincoln: Last President to Fight the Money Power "To start a National Bank on the scale of $1,000,000 will require purchase of that amount (par value) of U. S. Government Bonds. "U. S. Government Bonds can now be purchased at 50% discount, so that a bank of $1,000,000 capital can be started at this time for only $500,000. "These bonds must be deposited in the U.$. Treasury at Washington as security for the National Bank currency, that will be furnished by the government to the bank. "The United $tates Government will pay 6% interest on the bonds in gold, the interest being paid semi-annually. It will be seen that at the present price of bonds the interest paid by the government itself is 12% in gold on all money invested. "The U.$. Government on having the bonds aforesaid deposited with the Treasurer, on the strength of such security will furnish National currency to the bank depositing the bonds, at an annual interest of only one per cent per annum. "The currency is printed by the U.$. Government in a form so like greenbacks, that the people do not detect the difference although the currency is but a promise of the bank to pay. "The demand for money is so great that this money can be readily loaned to the people across the counter of the bank at a discount at the rate of 10% at thirty to sixty days time, making it about 12% interest on the currency. "The interest on the bonds, plus the interest on the currency which the bonds secure, plus inciden- 55 The Federal Reserve Conspiracy tals of the business, ought to make the gross earnings of the bank amount to from 28% to 33-1/3%. "National Banks are privileged to increase and contract their currency at will and, of course, can grant or withhold loans as they may see fit. As the banks have a National organization and can easily act together in withholding loans or extending them, it follows that they can by united action in refusing to make loans cause a stringency in the money market, and in a single week or even a single day cause a decline in all products of the country. "National Banks pay no taxes on their bonds, nor on their capital, nor on their deposits. " Requesting that you will regard this as strictly confidential.... Most respectfully yours, Ikelheimer, Morton and Vandergould (3) It was particularly important to international bankers that they succeed with Lincoln. If Lincoln implemented public control of finance in the United States then other nations would pluck up courage to strip financial power from their bankers. European bankers, especially those in England, organized against Abraham Lincoln and used commercial banking channels to pressure bankers in the U.S. for support. The Legal Tender Bill wanted by Lincoln was subjected to intense lobbying in Washington and so loaded with amendments as to become useless. One amendment required that interest on bonds and notes - mere pieces of paper - was to be paid twice a year in gold coin. Suffocation by ridiculous amendments was successful. Defeat of the Legal Tender Bill was followed in 1862 by a bill to allow banks to issue private bank notes less than $5.00 within the 56 Abraham Lincoln: Last President to Fight the Money Power pistrict of Columbia, a first step towards a privately controlled fiat money supply. On July 23, 1862 Lincoln vetoed the Private Bank Note Bill on grounds that it was the responsibility of the Federal Government to provide a circulating medium and that United States notes could equally fulfill the function of small private notes. This veto was Lincoln's challenge to the banking interests. Lincoln was a caustic critic of bankers. A delegation of New York bankers came to Washington to lobby in favor of the Legal Tender Bill. The Secretary of the Treasury introduced the delegation as follows: These gentlemen from New York have come to see the Secretary of the Treasury about our new loan. As bankers they are obliged to hold our national securities. I can vouch for their patriotism and loyalty, for, as the Good Book says, "for where the treasure is, there will the heart be also. " Lincoln replied: There is another test that I might apply, "Wherever the carcass is, there will the eagles be gathered together."^; Lincoln's national currency scheme was in direct opposition to the international bankers who at that time planned to extend the Bank of England gold standard private money to the United States. Later in the 20th century bankers went for fiat money not backed by gold but in the mid- 19th century the gold-silver system offered more opportunities for personal gain. Lincoln was proposing that instead of the Federal Government borrowing paper or created money from the bankers that the bankers borrow coin or gold from the Treasury. In this way the banking interest would be unable to create fictional wealth from the printing press. 57 The Federal Reserve Conspiracy The National Bank Act was presented to the United States as a device to raise money to run the Civil War and achieve financial stability. Under the Act any five persons could form a bank with a capital of $50,000 or more. After deposit in the United States Treasury of interest-bearing bonds equal to one- third of the paid-in capital, the Government would print National Bank certificates on behalf of the bank to the amount of 90 percent of the part value of the bonds printed. These National Bank certificates could then be used by the bank to carry on banking business and receive full profit on them as though they were the bank's own notes. Furthermore the bank received from the Federal Government interest payments in gold coin on bonds deposited in the Treasury. In other words the bankers had a double profit. First, interest on government guaranteed money issues and second, interest paid on bonds in gold. The National Banking Act was a guaranteed profit making machine for anyone who wanted to get into banking. Once again the Jeffersonian-Jacksonian tradition raised its voice. It claimed that the National banking system would create an even greater centralization of the money power than the Bank of the United States - which Andrew Jackson had vetoed. This time around the money power was much more organized. The National Banking Bill was in the Senate only three or four days and in the House only two days before it was rushed through at a particularly critical time in the Civil War. The Bill was signed into law by President Lincoln on February 25, 1863. 58 Abraham Lincoln: Last President to Fight the Money Power Endnotes to Chapter Six (1) Letter from Secretary of the Treasury Chase to Elbridge, G. Spaulding, January 29, 1862. Quoted in American Nation History Series, 1861-1863 by Hosmer, vol. 20, pg. 169. (2) John R. Elsom, Lightning Over the Treasury Building (or an expose of our banking and currency monstrosity, Americas most reprehensible and un-American racket), (Boston: Meador Publishing Co., 1941), pp. 51-52. (3) Op. cit. pp. 53-55. (4) Ibid.