Chapter Two THOMAS JEFFERSON AND THE MONEY POWER: The Federal Reserve Conspiracy by Antony C. Sutton from archive.org

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. 



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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. 




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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. 



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Chapter Three: 

ANDREW JACKSON: THE LAST ANTI- 
ELITIST PRESIDENT