Sunday, January 6, 2008

The History of Money Part Three: Rothschilds vs America

THE ROTHSCHILDS (1743) A goldsmith named Amshall Moses Bower opened a counting house in Frankfurt Germany in 1743. He placed a Roman eagle on a red shield over the door prompting people to call his shop the Red Shield Firm pronounced in German as "Rothschild". His son later changed his name to Rothschild when he inherited the business. Loaning money to individuals was all well and good but he soon found it much more profitable loaning money to governments and Kings. It always involved much bigger amounts, always secured from public taxes. Once he got the hang of things he set his sights much higher by teaching his five sons in the art of money creation, before sending them out to the major financial centers of the world to create and dominate the central banking systems.

J.P. Morgan was thought by many to be the richest man in the world during the Second World War, but upon his death it was discovered he was merely a lieutenant within the Rothschild Empire, personally owning only 19% of the J.P. Morgan Companies. "There is but one power in Europe and that is Rothschild." -19th century French commentator 1 (1. Niall Ferguson, THE HOUSE OF ROTHSCHILD, Money's Prophets, 1798-1848)


By the mid 1700's Britain was at its height of power, but was also heavily in debt. Since the creation of the Bank of England, they had suffered four costly wars and the total debt now stood at £140,000,000. In order to make their interest payments to the bank, the British government set about a program to try to raise revenues from their American colonies, largely through an extensive program of taxation. There was a shortage of material for minting coins in the colonies, so they began to print their own paper money, which they called Colonial Script. This provided a very successful means of exchange and also gave the colonies a sense of identity. Colonial Script was money provided to help the exchange of goods. It was debt free paper money not backed by gold or silver.

During a visit to Britain in 1763, The Bank of England asked Benjamin Franklin how he would account for the new found prosperity in the colonies. Franklin replied. "That is simple. In the colonies we issue our own money. It is called Colonial Script. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one." -Benjamin Franklin 1 1.

They learned that the people's confidence in the currency was all they needed, and they could be free of borrowing. That would mean being free of the Bank of England. In Response the world's most powerful central bank used its influence on the British parliament to press for the passing of the Currency Act of 1764. This act made it illegal for the colonies to print their own money, and forced them to pay all future taxes to Britain in silver or gold.

Here is what Franklin said after that. "In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."- Benjamin Franklin

"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War." -Benjamin Franklin's autobiography

By the time the war began on 19th April 1775 much of the gold and silver had been taken by British taxation. They were left with no other choice but to print money to finance the war. This money was called “The Continental” dollar, but it lost all of its value due to the war. This paper money is all you read about in modern textbooks, because of its failure.What is interesting is that Colonial Script was actually working so well, that it became a threat to the largest and most powerful established economic system of the time. The idea of issuing money as Franklin put it "in proper proportion to the demands of trade and industry" without charging interest was not causing any problems or inflation. This unfortunately was alien to the Bank of England which only issued paper money for the sake of making a profit for its shareholder's.


If you can't beat them, join them, might well have been his argument when arms dealer, Robert Morris suggested he be allowed to set up a Bank of England style central bank in the USA in 1781. Desperate for money, the $400,000 he proposed to deposit, (to allow him to loan out many times that through fractional reserve banking) must have looked really attractive to the impoverished American Confederate Congress. Already spending the money they would be loaned, no one made a fuss when Robert Morris couldn't raise the deposit, and instead suggested he might use some gold, which had been loaned to America from France. Once in, he simply used fractional reserve banking, and with the banks growing fortune he loaned himself, and his friends, the money to buy up all the remaining shares. The bank then began to loan out money multiplied by this new amount to eager politicians, who were probably too drunk with the new 'power cash' to notice or care how it was done.

The scam lasted only five years, until in 1785, when the value of American money dropped like a lead balloon. The banks charter didn't get renewed. The shareholder's walking off with the interest did not go unnoticed by another Morris. "The rich will strive to establish their dominion and enslave the rest. They always did. They always will... They will have the same effect here as elsewhere, if we do not, by (the power of) government, keep them in their proper spheres." -Governor Morris 11.


It worked once, and works in England, why not try again? It's been six years. There are a lot of new hungry politicians. Let's give it a try. And so there it was, in 1791, the First Bank of the United States (BUS). Not only deceptively named to sound official, but also to take attention away from the real first bank which had been shut down. Its initials however gave a clear indication that Americans were once again being taken for a ride. And true to its British model, the names of the investors were never revealed. Having gotten away with it a second time, some of them probably wished Amschel Rothschild had picked a different time to make his pronouncement from his private central bank in Frankfurt, Germany.

"Let me issue and control a nation's money and I care not who writes the laws." Mayer Amschel Rothschild, 1790

Not to worry, no one was listening, the American government borrowed 8.2 million dollars from the bank in the first 5 years and prices rose by 72%. This time round the money changers had learned their lesson; they had the new Constitutional government guarantee a twenty year charter. The first Secretary of State, and then Vice-President, who could see an ever increasing debt with little chance of ever paying it back, had this to say:

"I wish it were possible to obtain a single amendment to our Constitution - taking from the federal government their power of borrowing."-Thomas Jefferson,

1798 while the independent Anti-Federalist press, who had not been bought off yet, called the scam "a great swindle, a vulture, a viper, and a cobra." As with the real first bank, the government had been the only depositor to put up any real money. The remainder being raised from loans the investors made to each other, using the magic of fractional reserve banking. When time came for renewal of the charter in 1811, the bankers were warning of bad times ahead if they didn't get what they wanted. The charter was not renewed by congress or the fourth President, James Madison. Five month later Britain had attacked America and started the war of 1812.

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