Chapter Two THOMAS JEFFERSON AND THE MONEY POWER It is fashionable in our contemporary academic world to ignore the powerful arguments of the Founding Fathers: the arguments of Presidents Thomas Jefferson, James Madison, and Andrew Jackson in particular. These arguments are that the Republic and the Constitution are always in danger from the so- called "money power," a group of autocrats, an elite we would call them today, who have manipulated the political power of the state to gain a monopoly over money issue. Our modern academics even ignore Thomas Jefferson's chief reason for remaining in politics, i.e., to save the newly born United States from those elitists Jefferson called "monocrats" and "monopolists." It was the banking monopoly that Jefferson considered to be the greatest danger to the survival of the Republic. The Jeffersonian ideal, one that contemporary elitists and Marxists sneer at, was a Republic comprising small property owning citizens (Marx would later call them bourgeoisie and Nelson Rockefeller used to call them "peasants") with a sense of civic awareness and a regard for the rights of their neighbors. The best government for Jefferson was the least government, where individual The Federal Reserve Conspiracy citizens take it upon themselves to protect the rights of neighbors. While Jefferson rejected socialist ideas he equally rejected the monopoly power of banking interests and feared what elitist banking power would do to American liberties. Said Jefferson: If the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions are more dangerous to liberty than standing armies. (1) The First Private Banking Monopoly The Founding Fathers' discussion of banks and the money power reflect the clash of political philosophies among early Americans with Alexander Hamilton on one side and Jefferson, Madison and Franklin on the Jeffersonian side. Hamilton represented the autocratic tradition prominent in Europe that figured on winning through a banking monopoly what could not be won politically. It was Hamilton who introduced a bill in December, 1790 into the House of Representatives to grant a charter for the privately owned Bank of the United States, thus creating the first private money monopoly in the U.S., a predecessor to the privately owned Federal Reserve System. And it was Alexander Hamilton who just a few years before wrote the charter for the Bank of New York, the first bank in New York City. Isaac Roosevelt, great-great-grandfather Thomas Jefferson and the Money Power of Franklin Delano Roosevelt, was its second president, from 1796- 1791. The Hamiltonian proposal for a national bank was a charter for private monopoly, a Congressional grant for a privileged few. The Bank of the U.S. had the sole right to issue currency, it was exempt from taxation, and the U.S. government was ultimately responsible for its actions and debts. As described by George Bancroft: Hamilton recommended a National Bank with a capital of ten or fifteen million dollars, to be paid one-third in hard money and the other two-thirds in European funds or landed security. It was to be erected into a legal corporation for thirty years, during which no other bank, public or private, was to be permitted. Its capital and deposits were to be exempt from taxation, and the United States, collectively and particularly, were to become conjointly responsible for all its transactions. Its sources of profit were to be the sole right of issuing a currency for the United States equal in amount to the whole capital stock of the bank. (2) Public reaction to Congressional grant of a private banking monopoly for a group of private citizens was caustic. Declared James Madison: In case of a universal circulation of the notes of the proposed bank, the profits will be so great that the government ought to receive a very considerable sum for granting the charter. There are other defects. ..and the right to establish subordinate banks ought not to be delegated to any set of men under Heaven. (3) In the Senate, William McClay made a strong denunciation: The Federal Reserve Conspiracy Jan. 17 (1790) Monday. I told them plainly that I was no advocate of the banking system; that I considered them machines for promoting the profits of unproductive Men;. ..that the whole profit of the bank ought to belong to the public, provided it was possible to advance the whole stock on her account. But I must remark that the public was grossly imposed upon in the present instances. While she (Ed: the public,) advanced all specie; individuals (Ed: the bank organizers) advanced three- fourths in certificates, which were of no more value in the support of the bank than so much stubble. Besides, the certificates were all under interest already, and it was highly unjust that other paper (money) should be issued on their credit which bore a premium and operated as a further tax on the country. (4) Hamilton's proposal was referred to a Senate Committee. But this Committee included Philip Schyler (Hamilton's father-in-law) and all its members shared Hamilton's political views. In brief, the Committee was stacked. President Washington then referred the bill to Thomas Jefferson (Secretary of State) and Edmund Randolph (Attorney General). Both found it to be unconstitutional. Jefferson's opinion on the unconstitutionality of the bank included the following powerful argument: I consider the foundation of the Constitution as laid on this ground; That "all powers not delegated to the United States by the Constitution nor prohibited by it to the states, are reserved to the states, or to the people. " Thomas Jefferson and the Money Power To take a single step beyond the boundaries thus specifically drawn around the powers of Congress is to take possession of a boundless field of power no longer susceptible of any definition. The Bill delivers us up bound to the National Bank, who are free to refuse all arrangements, but on their own terms, and the public not free, on such refusal, to employ any other bank. (5) The Bank of New York This was not Alexander Hamilton's first proposal for a self- interested bank charter: five years earlier, in 1784, Hamilton joined with Isaac Roosevelt and others to create the Bank of New York. It is remarkable that academics have not emphasized the association of the Roosevelt family with the Bank of New York, the first bank founded in New York City and New York State and also one of the very first banks founded in the United States. Only the Bank of North America and the Pennsylvania Bank organized during the Revolutionary War preceded the Bank of New York. The initial meeting of the Bank of New York was held March 15, 1784 and the following directors were present: (6) Alexander McDougal (President) Wlliam Maxwell Samuel Franklin Nicholas Low Robert Bowne Daniel McCormick Comfort Sands Isaac Roosevelt Alexander Hamilton John Vanderbilt Joshua Waddington Thomas Randall Thomas B. Stoughton Alexander Hamilton, who as we have seen, staunchly opposed Thomas Jefferson and the Jeff ersonian democratic tradition in American politics, was connected with the Bank of New York from the start. The constitution of the Bank of The Federal Reserve Conspiracy, New York was in fact written by Alexander Hamilton. And as most of the newly elected officers of the bank were not familiar with banking business it was Alexander Hamilton who provided a letter of introduction to the Bank of North America which supplied the necessary information and guidance. The first president of the Bank of New York was Jeremiah Wadsworth. His tenure was brief and in May, 1786 Isaac Roosevelt was elected president, with William Maxwell as vice president. The bank offices were in the old Walton House with the Roosevelt sugar refinery just across the street at number 159 Quinn Street. Conflict of interest is more than obvious on the part of Alexander Hamilton, who became Secretary of the Treasury when the Constitution of the United States went into effect in 1789. While Hamilton did not take a daily active part as director of the Bank of New York, Hamilton advised its cashier William Seaton, and in 1790 the bank of New York was made an agent of the United States government for the sale of 200,000 guilders. Simultaneously Hamilton laid before Congress the idea of the Bank of the United States -a private banking monopoly. Furthermore Hamilton used his cabinet influence to prevent the Bank of the United States from establishing a branch in the City of New York, in competition with the Bank of New York. It also appears that Hamilton tried to make the Bank of New York the exclusive agent of the United States government in New York. In January, 1791 Alexander Hamilton wrote to William Seaton as follows: I shall labor to give what has taken place a turn favorable to another union the propriety of which is to say clearly illustrated by the present state of things. It is my wish that the Bank of New 10 Thomas Jefferson and the Money Power York may by all means continue to receive deposits from the collection in the paper of the Bank of the United States and that they may also receive payment for the Dutch bills in the same paper. ™ Later in the same letter, Hamilton writes as follows: Be confidential with me if you are pressed whatever support may be in my power shall be afforded. I consider the public interest as materially involved in aiding a valuable institution like yours to withstand the attacks of a confederated host of frantic and I fear in too many instances unprincipled gamblers. Alexander Hamilton was also overly protective when in 1791 a rival bank was proposed for New York City. When Hamilton heard of the project he expressed strong disapproval in a letter to William Seaton dated January 18, 1791: I have learned with infinite pain the circumstance of a new bank having started up in your city. Its effects cannot but be in every way pernicious. I sincerely hope that the Bank of New York will listen to no coalition with this newly engendered monster, a better alliance I am strongly persuaded will be brought about for it and the joint force of two solid institutions will without effort or violence remove the excrescence just appeared. I express myself in these strong terms to you confidentially not that I have any objection to my opinion in being known as to the natural tendency of the thing. (8) According to Myers' History of the Great American Fortunes^ the Bank of New York "injected itself virulently into politics and fought the spread of democratic ideas with sordid but effective weapons." It is Myers' contention that the bank and its founders in the Hamiltonian tradition fully 11 The Federal Reserve Conspiracy understood the danger to their financial interests in the Jeffersonian principle. Even in 1930 the Bank of New York contained a representative of the Roosevelt interests - W. Emlen Roosevelt was on the 1930 board as was Cleveland Dodge, the backer of Woodrow Wilson for president (see below), and Allen Wardwell, the J. P. Morgan partner influential in the Bolshevik Revolution of 1917. (10) The Second Bank of the United States On March 4, 1809 James Madison, a quiet, unassuming man, entered the office of President. In 1776 Madison was a member of the Virginia Convention and served on the committee which framed the Constitution and the Bill of Rights. In 1787 Madison became a member of the Virginia delegation to the Philadelphia Convention and made specific constitutional suggestions, assembled in the so-called 'Virginia Plan." In many ways Madison can be termed the "master builder of the Constitution." Consequently Madison's views on the constitutionality of private banking monopolies are fundamental. The charter of the First Bank expired in 1811 and Congress refused to grant a new charter on the grounds of unconstitutionality. President Madison's message repeated the argument on the unconstitutionality of the bank and made the following comment: On the whole it is considered that the proposed establishments will: 1. enjoy a monopoly of the profits of a National Bank for a period of twenty years; 2. that the monopolized profits will be continually growing with the progress of the national population and wealth; 3. and that the nation will, during the same period, be dependent on the notes of the bank for the 12 Thomas Jefferson and the Money Power species of circulating medium whenever the precious metals may be wanted; and 4. at all times (will the nation be dependent on the notes of the bank) for so much thereof as may be an eligible substitute for a specie medium; and 5. that the extensive employment of the notes (bank) in the collection of the augmented taxes will, moreover, enable the banks greatly to extend its profitable issues of them (bank notes) without the expense of specie capital to support their circulation; It is as reasonable as it is requisite that the government, in return for these extraordinary concessions to the bank, should have a greater security for attaining the public objects of the institution than is presented in this Bill.... (11) The War of 1812 presented bank supporters with a new argument - financial distress brought about by the war required financial relief in the form of a new national bank. Under these pressing circumstances the House and Senate passed a bill creating the Second Bank of the United States. James Madison signed the bill into law April 10, 1816. 13 The Federal Reserve Conspiracy The Money Trust Honors Woodrow Wilson Federal Reserve Notes have a curious matchup of denominations with Presidents. The highest value Federal Reserve Note of $100,000 bears the portrait of Woodrow Wilson, a real friend of the money trust. The next highest value of $10,000 bears the portrait of Samuel Chase, Lincoln's Treasury Secretary who pushed through the National Bank bill for the money interest. Ben Franklin gets the $100 bill and Abe Lincoln the $5.00 bill. The only note in the 1934 Series that bears the inscription "payable in gold" is the $100,000 note which is only used for transfers between the various Federal Reserve regional banks. B ^m to "im» yEE 14 Thomas Jefferson and the Money Power Endnotes to Chapter Two (1) The Writings of Jefferson, vol. 7 (Autobiography, Correspondence, Reports, Messages, Addresses and other Writings) (Committee of Congress: Washington, D.C., 1861) p. 685. (2) The History of the Constitution of the United States, (D. Appleton & Co., New York, 1893) p. 31. (3) Gaillard Hunt, Writings of James Madison, (Geo. P. Putnam's Sons, New York) vol. 6, p. 371. (4) Journal ofWm. McClay, United States Senator from Pennsylvania, 1789. Edited by Edgar S. McClay, (D. Appleton & Co., New York, 1890) p. 371. (5) The Writings of Jefferson, vol. 7, Joint Committee of Congress, op cit. (6) Henry W. Dommett, Bank of New York 1784-1884, (Putnam's Sons, New York, 1884) p. 9. (7) H. W. Dommett, op. cit, p. 41. (8) Ibid., p. 43. (9) Ibid., p. 125. (10) Antony Sutton, Wall Street and the Bolshevik Revolution, (New York, Arlington House, 1974). (11) Gaillard Hunt, The Life and Writings of James Madison, (New York, Putnam's Sons, 1908), vol. 8, p. 327. 15 Chapter Three: ANDREW JACKSON: THE LAST ANTI- ELITIST PRESIDENT
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