10. THE CONSTITUTIONAL CONVENTION
In 1787, colonial leaders assembled in Philadelphia to replace the ailing Articles of Confederation. As we saw earlier, both Thomas Jefferson and James Madison were unalterably opposed to a privately owned central bank. They had seen the problems caused by the Bank of England. They wanted nothing of it.
As Jefferson later put it:
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
Many believed that the Tenth Amendment, which reserved powers to the states which were not delegated to the federal government by the Constitution, made the issuance of paper money by the federal government unconstitutional, since the power to issue paper money was not specifically delegated to the federal Government in the Constitution. The Constitution is silent on this point. However, the Constitution specifically forbade the individual States to "emit bills of credit" (paper money).
Most of the framers intended the Constitution's silence to keep the new federal government from having the power to authorise paper money creation. Indeed, the Joumal of the Convention for 16 August reads as follows:
“It was moved and seconded to strike out the words 'and emit bills of credit and the motion... passed in the affirmative.”
But Hamilton and his banker friends saw this silence as an opportunity for keeping the government out of paper money creation which they hoped to monopolise privately. So both bankers and anti-banking delegates, for opposing motives, supported leaving any federal government authority for paper money creation out of the Constitution, by a four-to-one margin. This ambiguity left the door open for the Money Changers-just as they had
planned. Of course, paper money was not itself the main problem.
Fractional reserve lending was the greater problem, since it multiplied any inflation caused by excessive paper currency issuance by several times. But this was not understood by many, whereas the evils of excessive paper currency issuance were.
In their belief that prohibiting paper currency was a good end, the framers were well advised. Prohibiting all paper currency would have severely limited the fractional reserve banking then practised, since the use of checks was minimal and arguably would have been prohibited as well. But bank loans, created as book entries, were not addressed and so were not prohibited.
As it happened, the federal and state governments were widely regarded as prohibited from paper money creation, whereas private banks were not-it being argued that this power, by not being specifically prohibited, was reserved for the people (including legal persons, such as incorporated banks).
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11. THE FIRST BANK OF THE UNITED STATES
In 1790, less than three years after the Constitution had been signed, the Money Changers struck again. The newly appointed first Secretary of the Treasury, Alexander Hamilton, proposed a bill to the Congress, calling for a new privately owned central bank.
Coincidentally, that was the very year that Mayer Rothschild made his pronouncement from his flagship bank in Frankfurt:
"Let me issue and control a nation's money and I care not who writes its laws."
Alexander Hamilton was a tool of the international bankers. He wanted to create another private central bank, the Bank of the United States, and did so. He convinced Washington to sign the bill, despite Washington's reservations and Jefferson's and Madison's opposition.
To win over Washington, Hamilton developed the "implied powers" argument used so often since to eviscerate the Constitution. Jefferson correctly predicted the dire consequences of opening such a Pandora's box, which would allow judges to "imply" whatever they wished.
Interestingly, one of Hamilton's first jobs after graduating from law school in 1782 was as an aide to Robert Morris, the head of the Bank of North America.
In fact, Hamilton had written a letter, saying:
"A national debt, if it is not excessive, will be to us a national blessing."
A "blessing" to whom?
After a year of intense debate, in 1791 Congress passed Hamilton's bank bill and gave it a 20 year charter. The new bank was to be called the First Bank of the United States, or FBUS. Thus the Third American Bank War began.
The First Bank of the United States was headquartered in Philadelphia. The bank was given authority to print currency and make loans based on fractional reserves, although private investors would hold 80 per cent of its stock. The other 20 per cent would be purchased by the US Government, but the reason was not to give the government a piece of the action: it was to provide the initial capital for the other 80 per cent owners.
As with the old Bank of North America and the Bank of England before that, the stockholders never paid the full amount for their shares. The US Government put up it’s initial $2,000,000 in cash; then the bank, through the old magic of fractional reserve lending, made loans to its charter investors so they could come up with the remaining $8,000,000 in capital needed for this risk-free investment.
As with the Bank of England, the name of bank-the Bank of the United States-was deliberately chosen to hide the fact that it was privately controlled. And, as in the case of the Bank of England, the names of the investors in the bank were never revealed.
The bank was promoted to Congress as a way to bring stability to the banking system and to eliminate inflation. So what happened? Over the first five years, the US Government borrowed $8.2 million from the First Bank of the United States. In that period, prices rose by 72 per cent.
Jefferson, the new Secretary of State, watched the borrowing with sadness and frustration, unable to stop it:
"I wish it were possible to obtain a single amendment to our Constitution, taking from the federal government the power of borrowing."
President Adams denounced the issuance of private banknotes as a fraud upon the public. He was supported in this view by all conservative opinion of his time. Why continue to farm out to private banks, for nothing, a prerogative of government?
Millions of Americans feel the same way today. They watch in helpless frustration as the federal government borrows the American taxpayer into oblivion, borrowing from private banks and the rich, the money the government has the authority to issue itself, without debt. (now we know why liberals and globalists always scream: "we don't want government control, we don't want governments to be involved")
So, although it was called the First Bank of the United States, was not the first attempt at a privately owned central bank in the US.
As with the first two, the Bank of England and the Bank of North America, the government put up the cash to get this private bank going, then the bankers lent that money to each other to buy the remaining stock in the bank. It was a scam, plain and simple---and they wouldn't be able to get away with it for long.
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12. NAPOLEON'S RISE TO POWER IN FRANCE
Next, we have to travel back to Europe to see how a single man was able to manipulate the entire British economy by obtaining the first news of Napoleon's final defeat.
In Paris in 1800, the Bank of Francc was organised, along similar lines to the Bank of England. But Napoleon decided France had to break free of debt.
He never trusted the Bank of France, even when he put some of his own relatives on the governing board.
Napoleon declared that when a government is dependent upon bankers for money, the bankers-not the leaders of the government-are in control:
"The hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency: their sole object is gain."
He clearly saw the dangers, but did not see the proper safeguards or solution.
Back in America, unexpected help was about to arrive. In 1800, Thomas Jefferson narrowly defeated John Adams to become the third President of the United States. By 1803, Jefferson and Napoleon had struck a deal. The US would give Napoleon $3,000,000 in gold, in exchange for a huge chunk of territory west of the Mississippi River: the Louisiana Purchase. With that three million dollars in gold, Napoleon quickly forged an army and set off across Europe, conquering everything in his path. But England and the Bank of England quickly rose to oppose him. They financed every nation in his path, reaping the enormous profits of war. Prussia, Austria and finally Russia all went heavily into debt in a futile attempt to stop Napoleon.
Four years later, with the main French Army in Russia, thirty years old Nathan Rothschild-the head of the London office of the Rothschild family-personally took charge of a bold plan to smuggle a much-needed shipment of gold right through France to finance an attack from Spain by Britain's Duke of Wellington.
Nathan later bragged at a dinner party in London that it was the best business he'd ever done. He made money on each step of the shipment. Little did he know then that he would do much better business in the near future.
Wellington's attacks from the south, and other defeats, eventually forced Napoleon to abdicate. Louis XVIII was crowned King and Napoleon was exiled from France to Elba, a tiny island off the coast of Italy, supposedly for ever.
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13. DEMISE OF THE FIRST BANK OF THE UNITED STATES AND THE WAR OF 1812.
While Napoleon was in exile, temporarily defeated by England with the financial help of the Rothschilds, -America was trying to break free of its central bank as well. In 1811, a bill was put before Congress to renew the charter of the Bank of the United States. The debate grew very heated and the legislature of both Pennsylvania and Virginia passed resolutions asking Congress to kill the bank. The press corps of the day attacked the bank openly, calling it "a great swindle", a "vulture", a "viper", and a "cobra". Oh, to have an independent press again in America.
Prospects didn't look good for the bank. Some writers have claimed that Nathan Rothschild " warned that the United States would find itself involved in a most disastrous war if the bank's charter were not renewed." (do you see the similarities here? If you don't play the game an economic disaster will fall on you and you will be destroyed. Well, the brave, little Malaysia proved them wrong.)
But it wasn't enough. When the smoke had cleared, the renewal bill was defeated by a single vote in the House and was deadlocked in the Senate.
By now, America's fourth President, James Madison, was in the White House. Remember that Madison was a staunch opponent of the bank. His Vice President, George Clinton, broke a tie in the Senate and sent the First Bank of the United States-the second privately owned central bank based in America-into oblivion. Thus, the Third American Bank War, lasting 20 years, ended in defeat for the Money Changers.
Within five months, as Rothschild was said to have predicated, England attacked the United States and the War of 1812 was on.
But the British were still busy fighting Napoleon, and so the War
of 1812 ended in a draw in 1814. It is interesting to note that, during this war, the US Treasury printed some government paper money, not bearing interest, to fund the war effort-an act not repeated until the Civil War.
Though the Money Changers were temporarily down, they were far from Out. It would take them only another two years to bring in a fourth private central bank, bigger and stronger than before.
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14. THE BATTLE OF WATERLOO, 1815
But now, let’s return for a moment to Napoleon. This episode aptly demonstrates the cunning of the Rothschild family in gaining control of the British stock market after Waterloo.
In 1815, a year after the end of the War of 1812, Napoleon escaped his exile and resumed to Paris. French troops were sent out to capture him, but such was his charisma that the soldiers rallied around their old leader and hailed him as their Emperor once again. Napoleon returned to Paris a hero. King Louis fled in to exile and Napoleon again ascended the French throne-this time without a shot being fired.
In March 1815, Napoleon equipped an army which Britain' Duke of Wellington defeated less than 90 days later at Waterloo.
He borrowed five million pounds from the Ouvard banking house in Paris in order to re-arm.
Nevertheless, from about this point on, it was not unusual for privately controlled central banks to finance both sides in a war. Why would a central bank finance opposing sides in a war? Because war is the biggest debt-generator of them all. A nation will borrow any amount for victory. The ultimate loser is lent jut enough to hold out the vain hope of victory, and the ultimate winner is given enough to win. Besides, such loans are usually conditional upon the guarantee that the victor will honour the debts of the vanquished. Only the bankers cannot lose.
The site of the Waterloo battlefield is about 200 miles north-east of Paris, in what today is Belgium. There, Napoleon suffered his final defeat, but not before thousands of Frenchmen and Englishmen gave their lives on a steamy summer day in June 1815.
On that day, 18 June, 74,000 French troops met 67,000 troops from Britain and other European nations. The outcome was certainly in doubt. In fact, had Napoleon attacked a few hours earlier, he would probably have won the battle.
But no matter who won or lost, back in London Nathan Rothschild planned to use the opportunity to try to seize control over the British stock-and-bond market. The Rothschilds hotly dispute the following account.
Rothschild stationed a trustee agent, a man named Rothworth, on the north side of the battlefield, closer to the English Channel. Once the battle had been decided, Rothwortt took off for the Channel. He delivered the news to Nathan Rothschild full 24 hours before Wellington's own courier.
Rothschild hurried to the stock market and took up his usual position in front of an ancient pillar. All eyes were on him. The Rothschilds had a legendary communication network.
If Wellington had been defeated and Napoleon were loose on the Continent again, Britain's financial situation would become grave indeed. Rothschild looked saddened. He stood there motionless, eyes downcast. Then, suddenly, he began selling.
Other nervous investors saw that Rothschild was selling. It could only mean one thing: Napoleon must have won; Wellington must have been defeated.
The market plummeted. Soon, everyone was selling their consols-their British government bonds and other stocks-and prices dropped. Then Rothschild and his financial allies started secretly buying through agents.
Myths, legends, you say? One hundred years later, the New York Times ran a story which said that Nathan Rothschild's grandson had attempted to secure a court order to suppress a book containing this stock market story. The Rothschild family claimed the story was untrue and libellous, but the court denied the Rothschilds' request and ordered the family to pay all court costs.
What's even more interesting about this story is that some authors claim that the day after the Battle of Waterloo, in a matter of hours, Nathan Rothschild and allied financial interests came to dominate not only the bond market but the Bank of England as well. (An interesting feature of some consols was that they were convertible to Bank of England stock.)
Intermarriage with the Montefiores, Cohens and Goldsmiths-banking families established in England in the century before the Rothschilds-enhanced the Rothschilds' financial control. This control was further consolidated through the passage of Peel's Bank Charter Act of 1844.
Whether or not the Rothschild family and their financial allies seized outright control of the Bank of England (the first privately owned central bank in a major European nation, and the wealthiest) in this manner, one thing is certain: by the mid-1800s, the Rothschilds were the richest family in the world, bar none. They dominated the new government bond markets and branched into other banks and industrial concerns worldwide. They also dominated a constellation of secondary, lesser families, such as the Warburgs, Sachs’ and Schiffs, who allied their own vast wealth with that of the Rothschilds.
In fact, the rest of the 19th century was known as the "Age of Rothschild". One author, Ignatius Balla, estimated their personal wealth in 1913 at over two billion dollars. Keep in mind, the purchasing power of the dollar was over 1,000 per cent greater then than now. Despite this overwhelming wealth, the family has generally cultivated an aura of invisibility. Although the family controls scores of banking, industrial, commercial, mining and tourist corporations, only a handful bear the Rothschild name. By the end of the 19th century, one expert estimated that the Rothschild family controlled half the wealth of the world.
Whatever the extent of their vast wealth, it is reasonable to assume that their percentage of the world's wealth has increased dramatically since then, as power begets power and the appetite therefor. But since the turn of the century, the Rothschilds have carefully cultivated the notion that their power has somehow waned, even as their wealth and that of their financial allies increases and hence their control of banks, debt-captive corporations, the media, politicians and nations, all through surrogates, agents, nominees and interlocking directorates, obscuring their role.
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About the Author
Patrick S. J. Carmack, BBA, ID, practised corporate law and is a former Administrative Law Judge for the Corporation Commission of the State of Oklahoma as well as a member of the bar of the US Supreme Court. He is the co-author of the two-volume video, “The Money Masters: How International Bankers Gained Control of America.”
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