Chapter Six ABRAHAM LINCOLN: LAST PRESIDENT TO FIGHT THE MONEY POWER: The Federal Reserve Conspiracy by Antony C. Sutton from archive.org

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 



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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 



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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 



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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 



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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 



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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. 



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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- 



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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 



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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. 



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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. 



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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. 



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Chapter Seven: 
THE MONEY TRUST CREATES THE FED