-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- http://www.skyenet.net/~gerryr/fbus.htm The First Bank of the United States ©1997 by Gerry Rough When Alexander Hamilton entered office in 1789 as our first Secretary of the Treasury, Congress asked him to prepare a report on the state of the finances. As part of this report, Hamilton proposed a national bank, with the Federal Government owning one fifth of the stock. He suggested the bank on the grounds that (1) it would provide needed paper currency, (2) it would be a safe-haven for public funds, (3) it would provide banking facilities for commercial transactions, (4) it would provide for the sale of government bonds. The proposed bank would have enormous fiscal power and virtually dictate federal fiscal policy. [1] The Bank was chartered in 1791 after the bill passed both Houses of Congress and President Washington signed it into law. The charter was to last 20 years with a beginning capital of $10,000,000. $8 million was to be subscribed by private investors, with the Federal Government owning the rest. Economic historians are almost universal in their positive assessment of the Bank. Harold Faulkner summarizes: The first Bank of the United States was nevertheless a salutary influence in the financial operations of the early republic, fulfilling amply the expectations of its advocates. Aided by the credit of the government, it was able to do business in a conservative fashion and acted as an efficient agent of the Treasury Department. During its twenty years it loaned the federal government $13,500,000 and when the government sold its stock it realized a profit of $700,000. But beyond all that it provided a safe paper currency. As a creditor of many state banks and by its policy of refusing the notes of non-specie-paying banks, it drove out fiat money and kept the paper at par [face value]. [2] Not so the conspiracy theorists. A central bank to a New World Order conspiracy theorist is the equivalent of a cross to a vampire. The mere mention of our own Federal Reserve System elicits the now familiar gnashing of teeth, the proverbial finger print of a true New World Order conspiracy theorist. The same is true for the history of central banking as well. Let’s see what the conspiracy theorists have said about our first attempt at central banking, the first Bank of the United States. Wicliffe B. Vennard, author of the tome, The Federal Reserve Hoax: The Age of Deception, states: The rich money lenders were on the side of Hamilton and all the powerful influence of what might be called the Money Power was exerted to pass the bill. [3] Actually, Vennard’s statement is accurate insofar as the basic facts without the froth are concerned. At the time there were only four banks in existence; the Bank of North America, the Bank of New York, the Bank of Massachusetts, and the Bank of Maryland, which was established in 1791. These were among the supporters of the bill to incorporate the Bank. [4] The real contradiction comes later when the charter renewal bill went before Congress. The Bank was so successful that when the vote to recharter the Bank came up again in Congress twenty years later, many who opposed it were now leading the fight for its recharter, Treasury Secretary Gallatin and President Madison being prime examples. With the exception of the large state banks, the opposition and the supporters of the charter renewal bill had mostly reversed each other. [5] Vennard, then, will have no doubt much to ponder. Namely, who dropped out of the conspiracy and who forgot to pay their dues. John K. Galbraith observes: What the Bank accomplished was precisely what many did not want. [6] Bob Adelmann, in a reprint from "The New American" magazine, states the following: Again, just like the ill-fated Bank of North America, it was granted a monopoly on the creation of irredeemable paper money. Again, just as in the previous instances, prices from 1791 to 1796 rose 72 percent in response to the flood of new paper money that was issued by the bank. [7] Again, Adelmann is found to be grossly lacking in his facts. Elgin Groseclose, author of the classic, Money and Man, destroys the monopoly argument: The bank did not enjoy a monopoly of the note issue, as the various states still chartered banks with this privilege. [8] The issue of "irredeemable paper money" is equally ridiculous just as is blaming the Bank for the rise in prices. Galbraith writes: Both the government and private borrowers took their loans, or some part, in notes of the Bank. These were exchangeable [redeemable] for gold or silver, circulated at par [face value] therewith, and were well regarded by the public. [9] Anyone with even the most basic knowledge of the first Bank of the United States would know that its currency circulated at par (face value). It was the note issues of the state banks that were the cause of the currency and inflationary problems, not that of the central bank. Margaret Myers would later remind us: There were many complaints about the "bank rags" which passed for money at various rates of discount. Many banks issued far more than they could hope to redeem, some of them postdated so that there was not even a promise to redeem them until the more or less distant future. The quality of the bank notes would have been even lower without the influence of the Bank of the United States. Its systematic presentation of their notes for redemption made it a kind of regulator of their issues, a circumstance which was not always appreciated by the country banks. [10] So, on all four of the major points cited, Adelmann has no credibility. The Bank did not enjoy a monopoly of note issue, its note issues were redeemable in gold or silver, it was the state banks that were to blame for the inflationary problems, and none of this was due to the money issued by the Bank. All of this, mind you, in the short span of just two sentences. Adelmann as well has much to ponder. By the way, let’s not forget the short-interval absurdity of J.R. Church, lest you think that Adelmann is alone in such matters. Forthwith the dubious is hereby inscribed: At the conclusion of the Revolutionary War, Alexander Hamilton established his central bank in New York City. It is said that Thomas Jefferson was so furious he resigned Washington’s cabinet.[11] The Bank being discussed is the first Bank of the United States. It may well be confused with the Bank of North America, but the rest of the page and his bibliographical reference source [12] makes the context obvious. First, The Bank was not started at the conclusion of the Revolutionary War, the Bank was started some eight years later, in 1791. [13] Second, the Bank was not based in New York City, it was based in Philadelphia. [14] Third, it is not said that Jefferson resigned in anger. This is a complete fabrication on his part; further attestation to Church’s abilities as a true researcher. Fourth, Thomas Jefferson resigned at the end of Washington’s first term for only one reason; he planned it that way! [15] Pat Robertson, author of The New World Order states on page 120: Except for Alexander Hamilton, all of the founders of this nation and their successors fought any attempt to take the power of money away from the people in order to place it in a privately owned or foreign-dominated central bank. [16] Frankly, it is a national embarrassment that someone so completely ignorant of his own national history should come so close to the Office of the President of the United States. It is even worse that he is so obvious in his attempt to deliberately mislead his reader. Robertson, a Yale educated lawyer, surely would have known that the bill to incorporate the Bank would have to pass both Houses of Congress (largely populated with founding fathers) and have to be signed by President Washington. Anyone with Robertson’s academic credentials could not make this obvious an error without raising serious questions. This scribe can find no rationale for this magnitude an error. Emanuel M. Josephson, author of the tome, The "Federal" Reserve Conspiracy & Rockefellers: Their "Gold Corner," says of the beginnings of the first Bank of the United States: The First Bank Of The U.S. was the first entry of the Federal government into the field of money and banking under the emergency powers granted by the Constitution. [17] The Bank charter was not passed in such a manner, that being the emergency powers granted under the Constitution. While it is true that there was a need for such a bank, its charter was passed just as any other law would have been passed. Josephson’s error in stating that the Bank was created by the emergency powers is not repeated in any other writings; conspiracy or otherwise. Further down the same paragraph, Josephson casts an interesting new light on the Bank: But as the emergency cleared up, the private bankers chafed at honest guidance and control and resented the barrier which it [the first Bank of the United States] set up to looting the public. [18] ‘Tis a trifle curious indeed that one conspiracy writer would break ranks with all others on the subject and even have the audacity to defend a central bank. Upon hearing this, many in the conspiracy camp will no doubt head for the gun closet. 00 buckshot will no doubt be the ammo of choice. William T. Still, author of, New World Order: The Ancient Plan of Secret Societies, laments one of the most celebrated quotes in conspiracy theory writing: Rothschild interests owned such a substantial share that they were said to be "the power in the old Bank of the United States." [19] G. Edward Griffin cites the more often quoted longer version: Under the surface, the Rothschilds long had a powerful influence in dictating American financial laws. The law records show that they were the power in the old Bank of the United States. [20] Griffin now continues, enunciating what every other conspiracy writer who cites the above says of the Rothschilds: The Rothschilds, therefore, were not merely investors nor just an important power. They were the power behind the Bank of the United States! [21] In so citing this, Griffin and Still have continued to propagate a bald faced fraud in order to prove their absurd New World Order conspiracy theory. Here is the real truth. The citation is from Gustavus Myers’ History of the Great American Fortunes. The actual quote is as follows: Under the surface, the Rothschilds long had a powerful influence in dictating American financial laws. The law records show that they were powers in the old Bank of the United States. [22] Did you catch the difference? The Rothschilds were not the power (singular), they were powers (plural-one of many powers). A blatant fraud propagated by almost every conspiracy writer* who cites this, for one simple reason; it helps to prove their case that the Rothschild family is part of the conspiracy. Without it, of course, the theory’s credibility is seriously damaged. Dare you think that, so far, this ridiculous affair damages the credibility of Griffin and Still, there is still the matter of context. Let’ s cite Gustavus Myers again, adding the next sentence for context: Under the surface, the Rothschilds long had a powerful influence in dictating American financial laws. The law records show that they were powers in the old Bank of the United States. August Belmont and Company were their American representatives. [23] With the introduction of August Belmont, there is now another dimension to the quote. We now have time and place. According to Eustace Mullins, yet another conspiracy writer, August Belmont did not arrive in the United States until 1837. [24] Myers, then, is not talking about the first Bank of the United States, since its charter ran out in 1811. Myers is talking about the second Bank of the United States, chartered in 1816 and declared bankrupt after it suspended payments in 1839. In other words, Griffin and Still not only falsely quote Gustavus Myers, they assign the Rothschild quote to the wrong bank!! Ignorance is indeed bliss. G. Edward Griffin states of the charter: The charter specified that the Bank was required at all times to redeem its notes in gold or silver specie upon demand by the depositor. That was an admirable provision but, since the Bank was not also required to keep specie in its vaults in the full amount of its note obligations, it was a mathematical impossibility to uphold. [25] As is so often the case in conspiracy writing, Griffin is only half correct. Margaret Myers again reveals Griffin’s obvious error: There was no requirement for specie redemption of its notes, or for a specie reserve against deposits. [26] Is there nothing sacred? Griffin’s gross ignorance of the truth even reaches into the trivial. Frankly, there is no excuse for such obvious errors. Even the basics are easily refuted if there is no initial research to begin with. It’s nice to talk about conspiracy, but where Griffin’s research is concerned, there is no there there. Griffin continues with yet another obvious error: Reminiscent of the Morris scheme in capitalizing the Bank of North America, this federal "investment" was essentially a means whereby federal funds could be used to make up the short-fall of the private investors. The Bank was able to open its doors with less than nine percent of the private capital required by its charter. The total capitalization was specified at $10 million, which means that $8 million was to come from private stockholders. However, as John Kenneth Galbraith wryly observed: "Numerous thrifty participants confined themselves to a modest down payment, and the bank began operations on around $675,000 in hard cash." [27] The transparent fraud in this citation is beyond imagination. A short-fall of private investors ? Myers writes again: When the books were opened for subscription to the stock of the Bank in July 1791, such was the demand that the whole four-fifths of the public capital was oversubscribed within an hour. [28] It is simply not possible for Griffin to come to this conclusion without complete fabrication on his part. If he did any research at all on the subject, this is what he found. If he didn’t, then why did he imply that he did by writing it? Let’s not forget the implication that the Bank opened its doors with less cash than it was supposed to, either. The absolute minimum requirements of the charter would calculate to $625,000 in cash, $50,000 less than the figures cited by Galbraith. [29] Further, Bray Hammond, author of the classic, Banks and Politics in America, would later observe: Though the authorized capital of the Bank was $10,000,000, of which $2,000,000 was to be paid in specie, the Bank was permitted to organize as soon as $400,000 had been received from the subscribers. [30] No conspiracy here, either. Griffin is again wanting on the issue of minimum requirements. All legal and no hanky panky. It is sad indeed that this passes for scholarship in New World Order conspiracy circles. Lest there be any doubt about the credibility of Griffin and fellow conspiracy buff Pat Robertson, the following should suffice. Robertson writes: History records that shortly after the establishment of the United States, the Rothschild interests attempted to saddle the country with a private central bank. [31] Griffin is slightly more prolific in his ignorance: Who were these private investors? Their names do not appear in the published literature, but we can be certain they included the Congressmen and Senators and their associates who engineered the charter. But there is an interesting line in Galbraith’s text that hints at another dimension to the composition of this group. On page 72 of Money: Whence It Came, Where It Went, he states matter-of-factly: "Foreigners could own shares but not vote them." What a story is hidden behind that innocuous statement. The blunt reality is that the Rothschild banking dynasty in Europe was the dominant force, both financially and politically, in the formation of the Bank of the United States. [32] So, without even so much as a hint of any basic research, Griffin and Robertson casually mislead their readers into thinking that the Rothschild family was the "dominant force" behind the Bank. Like water off a duck’s back, Griffin is even audacious enough to admit, "their names do not appear in the public literature," yet still concludes a "blunt reality." Incredible!! Where neither has done any research to find the real facts on the issue, enter Margaret Myers and one of her probable sources, Bray Hammond. Myers writes: Among the subscribers were the state of New York, the Bank of Massachusetts, Harvard College, thirty members of congress, merchants, and professional men. [33] Is it not outright fraud to state a fact without any supporting data? Is there no shame to these who would so casually use the printed word to propagate a theory that has not a shred of evidence in support of it? This scribe certainly thinks so. We have found again that the New World Order conspiracy theory is riddled with fraud, blatant deception, and factual errors that are frankly insulting to those who have done any serious research on the issue. So, the beginnings of central banking in the U.S. are not so frightening as the New World Order types would have us believe. Funny thing this stuff we call history. * Gary Allen and Larry Abraham, authors of None Dare Call It Conspiracy, are the only conspiracy writers that I am aware of that correctly cite the passage. References 1) Harold Underwood Faulkner, American Economic History (New York: Harper & Row Publishers, Inc. 1960) 155 2) Faulkner, p. 156 3) Wickliffe B. Vennard, The Federal Reserve Hoax: The Age of Deception (Palmdale, CA:Omni Publications) 62 4) Margaret G. Myers, A Financial History Of The United States (New York: Columbia University Press, 1970) 68 5) Bray Hammond, Banks and Politics in America (Princeton: Princeton University Press, 1957) 197-226 6) John Kenneth Galbraith, Money: Whence It Came, Where It Went (Boston: Houghton Mifflin Company, 1975) 73 7) Bulletin: Committee To Restore The Constitution, February, 1989 P.O. Box 986, Ft. Collins, CO 80522 8) Elgin Groseclose, Money and Man (Oklahoma: University of Oklahoma Press, 1976) 183. See also Richard Hildreth, The History of Banks (Boston: Hilliard, Gray & Company, 1837; reprinted August M. Kelley, Publishers, 1968) 54 9) Galbraith, p. 72 10) Myers, p. 70 11) J.R. Church, Guardians of the Grail (Oklahoma City: Prophecy Publications, 1989) 178 12) "Bank of the United States," The World Book Encyclopedia, volume 2, 1973, p. 60 (as cited by church) 13) Groseclose, p. 182 14) Myers, p. 68 15) Noble E. Cunningham, Jr., In Pursuit of Reason (Baton Rouge: Louisiana State University Press, 1987)178 16) Pat Robertson, The New World Order (Dallas: Word Publishing, 1991) 120 17) Emanuel M. Josephson, The "Federal" Reserve Conspiracy & Rockefellers: Their "Gold Corner" (New York: Chedney Press, 1968)15 18) Josephson, p. 15 19) William T. Still, New World Order: The Ancient Plan of Secret Societies (Lafayette: Huntington House Publishers, 1990) 147 20) G. Edward Griffin, The Creature from Jekyll Island (Appleton: American Opinion Publishing, Inc., 1995) 331 21) Griffin, p. 331 22) Gustavus Myers, History of the Great American Fortunes (New York: Random House, 1936) 556 23) Gustavus Myers, p. 556 24) Eustace Mullins, Secrets of the Federal Reserve: The London Connection (Staunton: Bankers Research Institute,1993) 53 25) Griffin, p. 330 26) Myers, p. 68 27) Griffin, p. 330 28) Myers, p. 68 29) M. St. Clair Clarke and D.A. Hall, Legislative and Documentary History of the Bank of the United States (Washington: Gales & Seaton, 1832; reprinted August M. Kelley, Publishers, 1967) 31 30) Hammond, p. 123 31) Robertson, p. 123 32) Griffin, p. 331 33) Myers, p. 68 <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are not allowed. Substance—not soap-boxing! 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