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: 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.     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