Miracle on Main Street: A Sudden Sense of Prosperity and Tranquility/Weavers of the American Dream

 

Miracle on Main Street: A Sudden Sense of Prosperity and Tranquility/Weavers of the American Dream

 

 

 

 

A SUDDEN SENSE OF

PROSPERITY AND TRANQUILLITY

 

 

 

 

 

 

 

 

 

 

j I. took a little more than four months to write the U.S.

 

Constitution, and almost a year for the states to ratify it.

Then another year for the government to be set up. The

most immediate relief brought about by the Constitution

was economic. The cause of this economic relief was Arti-

cle I Section 10, which prohibited the states from enforcing

| payment in anything but gold and silver coin. If people

| wanted to, they could make deals using for exchange cat-

 

tle, paper money, real estate, tobacco, chickens, peanuts —

anything they could agree on. But when it came to the

. state’s participation in anyone’s economic life, such as en-

; forcing fines, taxes, judgments, etc., the terms were

4 spelled out quite clearly and absolutely i in Article I Section

10. Nothing but gold and silver coin. NOTHING.

 

Did putting America on a sound money basis hurt any-

_or.e? Did it cause a disastrous economic upheaval? Did it

; throw bankers into bankruptcy, businessmen out of busi-

ness, government employees out into the cold? The best

»source of information on this should be none other than

George Washington, who was a businessman, bureaucrat,

farmer, banker, legislator, and military man, among other

 

 

 

 

 

 

 

 

 

 

things. This excerpt is from a letter he wrote to his go

friend, the Marquis de LaFayette, dated June 3, 1790, less

than a year after the ratification of the Constitution. It

shows quite dramatically what happens when an economy

goes from paper money to gold and silver coin:

You have doubtless been informed, from time to time, of the

happy progress of our affairs. The principal difficulties seem in a

great measure to have been surmounted. Our revenues have been

 

 

considerably more productive than it was imagined they would be. |

mention this to show the spirit of enterprise that prevails.

 

 

How about that! Revenues “more productive than it was

imagined they would be.” Couldn’t we use some “con-

siderably more productive revenues” and some “‘spirit of

enterprise’ these days? All it takes is gold and silver coin.

 

The public record is filled with jubilant reports of the

effects of the Constitution’s monetary system. The De-

cember 16, 1789 edition of the The Pennsylvania Gazette ex-

claimed:

 

Since the federal constitution has removed all danger of our

having a paper tender, our trade is advanced fifty percent. Our

monied people can trust their cash abroad’, and have brought

their coin into circulation.

 

Again Washington wrote to LaFayette. It’s March 19,

1791:

 

 

Our country, my dear sir, is fast progressing in its political

importance and social happiness.

 

 

On July 19, 1791, in a letter to Catherine Macaulay

Graham, Washington wrote:

 

 

The United States enjoys a sense of prosperity and tranquillity

under the new government that could hardly have been hoped

for.

 

 

And finally, on July 20, 1791, Washington wrote with

 

 

 

 

 

1. The word “abroad” here means “‘in circulation.” Before Article I Section 10, the

government had been renegging on its promise to redeem its obligations in gold or

silver. Rather than spend this paper currency at a fraction of its face value, many

people saved it in the expectation that it would someday be redeemable at par. Their

patience was rewarded, for the Constitution established a government that could be

trusted.

 

 

A SUDDEN SENSE 37

 

 

glowing exuberance to David Humphreys:

 

 

Tranquillity reigns among the people with that disposition to-

wards the general government which is likely to preserve it. Our

public credit stands on that high ground which three years ago it

would have been considered as a species of madness to have

foretold.

 

 

In other words, Washington was saying “If anyone had

predicted that our economic and societal problems could

have been solved by simply making nothing but gold and

silver coin our money, he would have been called crazy.”

 

Like so many people today, Washington had originally

felt that the “anarchy and confusion” was being caused by

a great host of demons, paper money being just one of

them. What he didn’t realize until after the ratification was

that irredeemable paper money had been the sole creator of

those demons. When it vanished, the demons vanished.

 

Since paper money requires no labor to exist, it rewards

people who perform no labor. Non-working people who

receive rewards have an exaggerated sense of their worth.

“Non-work” includes vacuum work. “Vacuum-work” is

work performed in an area there’s no real demand for, like

 

 

_ dumb projects (Jefferson called them “unexplained proj-

 

 

- ects’). Government rewards vacuum-work highly, either

 

 

directly or through tax advantages to persons who sub-

sidize vacuum-work.

When non-working people receive rewards for non-

 

 

| work, it turns working people against their own jobs. Re-

 

 

ward for non-work makes working people consider the

advantages of not working. Non-work is a failure to dem-

onstrate one’s capabilities as a human being. Since non-

work is a statement that one is not willing directly to assist

humanity, you can be sure that the rewards from non-

work will be spent on things that belittle and harm human-

ity. Instead of contributing to humanity, the rewarded

non-worker commits himself to the source of his reward,

that incorporation of humanity called government.

 

With such allegiance from rewarded non-workers and

 

 

 

 

 

 

 

 

38 THE MIRACLE ON MAIN STREET

 

 

workers doing things for which there is no real demand, a

government elected by the people can construct an entire

block of non-workers and vacuum-workers to grant it un-

limited power over real workers. A rewarded non-worker is a

self-declared enemy of his fellow man, conspiring with his

government to create chaos, bloodshed, injustice, corrup-

tion, hardship, and heartbreak. It was so in Washington’s

day and it is so in ours. It’s always been so.

 

Inflation turns people into weightless balloons, all hol-

low inside. The solid substance has been removed. We

“float,” just like our money. Our skins are blown all out of

proportion, and we have nothing to offer but appearance.

Appearance and hype are everything, just like the money.

Our inner selves are just air. Our outer selves are what we

are: shells, skins. This must have been the condition T.S.

Eliot was describing with his image of “hollow men.” In

every inflation that has ever occurred, the people develop

an obsession for external things: sports, violence, pornog-

raphy, and especially fashion and gesture. These are the

ornaments of tyranny.

 

No historian can show you a tyranny founded on a free-

flowing money base of gold and silver coin, because tyranny

and economic freedom are opposites. Conversely, every tyranny

in history has resulted from the debasement (de-base =

removing the basic value) of the people’s gold and silver

money.

 

With a sense of forgiveness, I must mention here that

the actual legislators of money debasement, in ours and

other countries, are typically persons operating in good

faith who simply don’t know what they’re doing. We allow

them to debase our money because we don’t know what

we're doing. Remember, inflation is like pain: it can’t be

known until it’s experienced. This is why deadly inflations

are almost always spaced with a couple of generations in

between.

 

All the horrors of the managed paper economy were

snuffed out in 1789 by Article I Section 10, right before

 

 

 

 

 

A SUDDEN SENSE 39

 

 

George Washington’s astonished eyes. It put non-workers

to work and gave them value, infused them with “a spirit

of enterprise.” Painlessly, miraculously, it restored sanity

and purpose to a badly shaken population. The wonderful

thing about gold and silver is that it lets you know precisely

what your worth is. It enables you to plan ahead, to feel

proud of yourself and your work. Bad neurotic habits just

break themselves when you know how valuable you are.

Gold and silver stops politicians from creating floods of

money to spend on programs that encourage non- and

vacuum-work, it stops banks from creating loans out of

thin air to underwrite dumb projects, it... here I am in

the middle of a sales pitch. Why should I be selling you on

gold and silver coin? Why should I ask anyone to please

let’s start using gold and silver coin for money? Begging

people to return to a gold and silver monetary base in the

United States of America is as stupid as begging Congress

to give women the right to vote. Women already have the

right to vote, and WE ALREADY HAVE A GOLD AND

SILVER MONETARY BASE IN THE UNITED STATES!

Judge Roger Sherman, God bless his soul, saw to that on

August 28, 1787, in a law that has never been repealed,

rescinded, or amended in any way whatsoever!

 

 

NO STATE SHALL MAKE ANY THING BUT

GOLD AND SILVER COIN A TENDER

IN PAYMENT OF DEBTS.

 

 

If we already have a gold and silver monetary base, why

then do we not have gold and silver coinage in circulation?

What has happened to the law? Are we being governed by

 

 

' a bunch of criminals?

 

 

“Those who create and issue money and credit direct the

policies of government and hold in the hollow of their hands the

destiny of the people.”

 

—Rt. Hon. Reginald McKenna,

Midland Bank of England,

Secretary of the Exchequer, 1920

 

 

qT n the United States today we have in effect two governments

 

... We have the duly constituted Government ... Then we

 

have an independent, uncontrolled and uncoordinated govern-

 

ment in the Federal Reserve System, operating the money powers

 

which are reserved to Congress by the Constitution.”

 

—Congressman Wright Patman,

 

Chairman, House Banking

Committee

 

 

A pro-International Monetary Fund Seminar of eminent

economists couldn't agree on what ‘money’ is or how banks create

it. mt

 

—The Wall Street Journal

September 24, 1971

 

 

40 .

 

 

 

 

 

6

WEAVERS OF

“THE AMERICAN DREAM”:

THE FRIENDS OF PAPER MONEY

 

 

Me

 

 

Irs a matter of history that in 1913, the Friends of Paper

Money gained a real, stronghold on the American economic

system through the Federal Reserve Act. In the passage of

that Act, a small group of world bankers with a long and

carefully-guarded, very private history of manipulating the

affairs of rulers “got into the Legislature,” just as Roger

Sherman feared they would, and obtained “‘licence’’ to

print money.

 

There’s nothing in the Constitution to prevent Congress

from contracting with a private corporation for the man-

agement of a popular currency. The Federal Reserve, a private

corporation? Yes. Super-private. Its voting stockholders are

kept in secret; they’re known to no one, not even the Pres-

ident of the United States. The Federal Reserve System is

not part of the U.S. Government, and has never been

audited by the General Accounting Office or any govern-

ment agency. Of course, it seems to be an official depart-

ment, with the President appointing some directors and

such, but the Federal Reserve is completely autonomous.

Asked “Do you approve of the latest credit-tightening

moves?” Treasury Secretary David M. Kennedy answered

 

41

 

 

 

 

 

 

 

 

42 THE MIRACLE ON MAIN STREET

 

 

in U.S. News & World Report May 5, 1969, “It’s not my job to

approve or disapprove. It is the action of the Federal Re-

serve.”

 

The chief architect of the Federal Reserve System was a

world banker of extraordinary ability, Paul Moritz War-

burg, who had come to this country from Germany in 1902.

He was born a rich baby, an heir to the powerful Frankfurt

banking house of M. N. Warburg & Company. Reading

Paul Warburg’s speeches on money feels like dipping your

hand into a bucket of diamonds: his words are winningly

precise, hard, correct. I admire him without reservation. It

would take nothing less than a man of Mr. Warburg's bril-

liance to sell the concept of central banking to the discern-

ing American people. Here’s a sample of his salesmanship,

from an address he gave at Columbia University in 1907:

 

_ In order to conserve the interests of the public, banks should

be permitted, within certain limitations with respect to capital, to

issue circulating notes. They should be redeemable (for gold and

silver coin) over a bank’s counter, at the United States Treasury,

and at convenient points throughout the country, thereby main-

taining the notes at par throughout the country.

 

While I believe that such a currency can be successfully

applied to the sixty-five hundred banks now in existence, yet

judged from an historical and scientific standpoint, the currency

system of a country can best be administered through the instru-

mentality of a central bank of issue.

 

With a pronounced trend in favor of centralization, with the

popular and growing demand that all corporations, national in

their scope and character, be regulated by the national govern-

ment, is it not logical and fair to assume that public sentiment will

presently demand that the government's receipts and disburse-

ments shall be made through a central bank??

 

 

If I’d been present at that lecture, I probably would have

cheered Mr. Warburg on. His words plainly make sense.

Who could have foreseen that between 1923 and 1929, the

Federal Reserve would print up a 62 per cent inflation and

then suddenly stop, whiplashing the country into the

~ crash of ’29, followed by a numbing depression that lasted

 

 

 

 

 

1. The Currency Problem, Columbia University Press, 1908, p. 50 ff:

 

 

“THE AMERICAN DREAM” 43

 

 

more than a decade? Who could have foreseen all the stops

and starts which have plagued our economy since the crea-

tion of the Federal Reserve? Who could have predicted the

wars, the hardships, the moral decay, the internal division?

Who could have predicted that the national debt would

have risen from one billion dollars in 1913 to trillions in the

1980’s? And who pays off that debt? You and your kids.

 

Well, is the Federal Reserve a giant, sinister conspiracy

out to destroy and/or enslave us, a menacing foe against

which we are powerless? Of course not. Federal Reserve

people are nice folks, good members of their communities.

They go to church, play golf, contribute to worthwhile

charities just as you may do. And like most people in busi-

ness, they have a product to sell. To sell this product, they

have to overcome customer resistance.

 

Like McDonald’s or “The 10 O’Clock News” or Coca-

Cola or the Avon lady, the Federal Reserve operates by

staking a claim on your imagination. They've done everything

within the law to get you to believe in their product. The

Federal Reserve exists because you let it exist. You pat-

ronize its nationwide franchises, the friendly banks open-

ing onto Main Street. You believe in the Federal Reserve

just as you believe in Coca-Cola and your insurance man,

and that’s why irredeemable paper notes have become the

money you use, the money you're finding ever more dif-

ficult to keep track of.

 

Since the Federal Reserve, like a dream, exists because

you believe in it, it can cease to exist as soon as you stop

believing in it. That’s the way the ideasphere works. The 10

O’Clock News surrenders its claim on you the instant you

turn off your TV. Moreover, most of the people at the top of

the Federal Reserve know that they owe their livelihood to

your credence in them, and that once you decide that their

product is not what it’s cracked up to be, you can make

them improve it. (In passing, isn’t it strange how silent

Ralph Nader is about our faulty Federal Reserve money?)

 

But as long as you are willing to reduce your circum-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44 THE MIRACLE ON MAIN STREET

 

 

stances in order to make room for greater floods of paper

and digital “money supply,” the people at the Federal Re-

serve and their member banks really see no need to improve

their product.

 

As long as you're willing to believe that the cause of

inflation is government spending or OPEC oil or the

“Crisis in Iran” or wherever, as long as you're willing to get

out and politick for the candidate whom you think will

stop inflation (has any candidate ever licked inflation upon

election?), as long as you think the President’s “Inflation

Fighter” (usually a Federal Reserve director or governor or

intimate) can lick inflation, as long as you're willing to

gripe and complain and bicker with your grocer and the

power companies and your gas-pumper about what

they’re charging you, as long as you're content to howl at the

moon .. . the Friends of Paper Money have no reason to

lift a finger to change things.

 

Except to raise interest rates, which penalizes you more

and enables them to increase their grasp on your purse-

strings several notches while you're trying to figure out

why you got laid off.

 

 

 

 

 

 

 

 

ee A e has combined with others to subject us to a Jurisdic-

tion foreign to our Constitution, and unacknowledged by our

 

 

Laws... .”

—A DECLARATION By the

REPRESENTATIVES of the

UNITED STATES OF

AMERICA, In GENERAL

CONGRESS Assembled, July 4,

1776

 

 

An inefficient, unemployed, disorganized Europe is an ex-

tant example of how much man can suffer and how far society can

decay.

 

“Economic privation proceeds by easy stages, and so long as

men suffer it patiently the outside world cares little. Physical

efficiency and resistance to disease slowly diminish, but life pro-

ceeds somehow, until the limit of human endurance is reached at

last and counsels of despair and madness stir the sufferers from

the lethargy which precedes the crisis. Then man shakes himself

and the bonds of custom are loosed. The power of ideas is

sovereign, and he listens to whatever instruction of hope, illusion,

 

 

or revenge is carried to him on the air.”

—John Maynard Keynes,

The Economic Consequences of The

Peace, 1920