6. THE BANK OF ENGLAND

    

    

By the end of the 1600s, England was in financial ruin. Fifty years of more or less continuous wars with France, and sometimes the Netherlands had exhausted her. Frantic government officials met with the Money Changers to beg for the loans necessary to pursue their political purposes. The price was high: a government-sanctioned, privately owned central bank, which could issue money----created out of nothing-as loans.

The Bank of England was to be the modem world's first privately owned, national central bank in a powerful country, though earlier deposit banks had existed in Venice from 1361, in Amsterdam from 1609 and in Sweden from 1661-where the first banknotes in Europe were issued that same year.

Although it was deceptively called the Bank of England to make the general population think it was part of the government, it was not. Like other private corporation, the Bank of England sold shares to get started. The investors, whose names were never revealed, were supposed to put up one and a quarter million, (British pounds) in gold coin to buy their shares in the Bank. But only £750,000 pounds was ever received.

  

Despite that, the Bank of England was duly chartered in 1694 and started out in the business of lending out several times the money it supposedly had in reserves, all at interest. In exchange the new bank would lend British politicians as much as they wanted.

  

The debt was secured by direct taxation of the British people.

So, legalisation of the Bank of England amounted to nothing less than legalised counterfeiting of a national currency for private gain. Unfortunately, nearly every nation now has a privately controlled central bank, the local Money Changers using the Bank of England as the basic model.

  

Such is the power of these central banks that they soon take total control over a nation's economy. It soon amounts to nothing but a plutocracy, rule by the rich, and the bankers soon come to be the dominant super-rich class. It is like putting control of Army in the hands of the Mafia. The danger of tyranny is extreme. Yes, we need a central monetary authority-but one owned and controlled by the government, not by hankers for their private profit.

  

In 1770, Sir William Pitt, speaking to the House of Lords, said:

  

"There is something behind the throne greater than the king himself."

  

This reference to the Money Changers behind the Bank of England gave birth to the expression, 'the power behind the throne'. 

  

In 1844, Benjamin Disraeli, in a veiled allusion to this same power, wrote:

 

"The world is governed by very different personages from what is imagined by those who are not behind the scenes."

 

On 21 November 1933, US President Franklin D. Roosevelt wrote in a letter to a confidant: 

 

"The real truth of the matter is, as you and I know, that a financial element in the large centers has owned government ever since the days of Andrew Jackson..."

 

The central bank scam is really a hidden tax, but one that benefits private banks more than the government. The government sells bonds to pay for things for which the government does not have the political wisdom or will to rise tax to pay. But about 10 per cent of the bonds are purchased with money the central bank creates out of nothing. The government then spends this new money. Once deposited, private banks use these new deposits to create ten times as much in new fractional reserve loans. This provides the economy with the additional money needed to purchase the other 90 per cent of the new bonds without drying up capital markets and forcing up interest rates. By borrowing the money (Ie., selling new bonds), the government spreads out the inflationary effects over the term of the bonds. Thus, there is little or no immediate inflation. More money in circulation makes your money worth less. The politicians get as much money as they do want, and the people pay for it in inflation-which erodes the purchasing power of their savings, fixed income and wages.

  

The perverse beauty of the plan is that not one person in a thousand can figure it out because it's deliberately hidden behind complex-sounding economics gibberish.

  

The full effects of the inflation are only experienced much later-too late to stop.

With the formation of the Bank of England, the nation was soon awash in money. Prices throughout the country doubled. Massive loans were granted for just about any wild scheme. One venture proposed draining the Red Sea to recover gold supposedly lost when the Egyptian Army drowned pursuing Moses and the Israelites. By 1698, just four years later, government debt had grown from the initial one-and-a-quarter-million pounds to £16 million. Naturally, taxes were increased and then increased again to pay for all this.

With the British money supply firmly in the grip of the Money Changers, the British economy began a wild roller-coaster series of booms and depressions-exactly the sort of thing a central bank claims it is designed to prevent.

   

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7. THE RISE OF THE ROTHSCHILDS

  

  

This is Frankfurt, Germany. Fifty years after the Bank of England opened its doors, a goldsmith named Amschel Moses Bauer opened a coin shop-a counting house-in 1743, and over the door, he placed a sign depicting a Roman eagle on a red shield. The shop became known as the Red Shield firm or, in German, Rothschild. When his son, Mayer Amschel Bauer, inherited the business, he decided to change his name to Rothschild.' Mayer Rothschild soon learned that lending money to governments and kings was more profitable than lending to private individuals. Not only were the loans bigger, but they were secured by the nation's taxes.

  

Mayer Rothschild had five sons. He trained them all in the secret techniques of money creation and manipulation, then sent them out to the major capitals of Europe to open branch offices of the family banking business. His will directed that one son in each generation was to rule the family business; women were excluded.

  

Mayer's first son, Amschel, stayed in Frankfurt to mind the home town bank. His second son, Salomon, was sent to Vienna. His third son, Nathan, was clearly the most clever; he was sent to London at age 21 in 1798, a hundred years after the founding of the Bank of England. His fourth son, Karl, went to Naples. His fifth son, Jakob (James), went to Paris.

  

In 1785, Mayer moved his entire family to a larger house, a five-storey dwelling he shared with the Schiff family. This house was known as the Green Shield house. The Rothschilds and the Schiffs would play a central role in the rest of European financial history and in that of the United States and the world. The Schiffs' grandson moved to New York and helped fund the Bolshevik coup d'dtat in 1917 in Russia.

  

The Rothschilds broke into dealings with European royalty, in fact, the wealthiest monarch in all of Europe-Prince William of Hesse. At first, the Rothschilds were only helping William speculate in precious coins. However, when Napoleon chased Prince William into exile, William sent £550,000 (a gigantic sum at that time, equivalent to many millions of today's US dollars) to Nathan Rothschild in London with instructions to buy consols-British

Government bonds or government stock-but Rothschild used the money for his own purposes. With Napoleon on the loose, the opportunities for highly profitable wartime investments were nearly limitless. William returned some time prior to the Battle of Waterloo in 1815. He summoned the Rothschilds and demanded his money back. The Rothschilds returned William's money, with the eight per cent interest the British consols would have paid him had the investment actually been made. But the Rothschilds kept all the vast wartime profits they had made using Wilhelm's money-shady practice in any century.

Partly by such practices, Nathan Rothschild was able to brag later that in the 17 years he had been in England he had increased his original £20,000 stake given to him by his father by 2,500 times, Ie., to £50,000,000-a truly vast sum at that time, comparable in purchasing power to billions of US dollars today.

  

As early as 1817, the director of the Prussian Treasury wrote on a visit to London that Nathan Rothschild had:

  

"..,incredible influence upon all financial affairs here in London. It is widely stated.., that he entirely regulates the rate of exchange in the City. His power as a banker is enormous".

  

Austrian Prince Mettemich's secretary wrote of the Rothschilds,

as early as 1818, that:

  

"... they are the richest people in Europe."

  

By cooperating within the family, using fractional reserve banking techniques, the Rothschilds' banks soon grew unbelievably wealthy. By the mid-1800s, they dominated all European banking and were certainly the wealthiest family in the world. A large part of the profligate nobility of Europe became deeply indebted to them.

  

By virtue of their presence in five nations as bankers, the Rothschilds were effectively autonomous, an entity independent from the nations in which they operated. If one nation's policies were displeasing to them or their interests, they could simply do no further lending there, or lend to those nations or groups opposed to such policies.

  

Only they knew where their gold and other reserves were located, thus they were shielded from government seizure, penalty, pressure or taxation, effectively making any national investigation or audit meaningless. 

  

Only they knew the extent (or paucity) of their fractional reserves, scattered in five nations-a tremendous advantage over purely national banks engaging in fractional reserve banking.

  

It was precisely their international character that gave the Rothschild banks unique advantages over national banks and governments, and that was precisely what rulers and national parliaments should have prohibited, but did not.

  

This remains true of international or multinational banks to this very day, and is the driving force of globalisation-the push for one-world government.

  

The Rothschilds provided huge loans to establish monopolies in various industries, thereby guaranteeing the borrowers' ability to repay the loans by raising prices without fear of price competition, while increasing the Rothschilds' economic and political power.

  

They financed Cecil Rhodes, making it possible for him to establish a monopoly over the goldfields of South Africa and DeBeers diamonds.

In America, they financed the monopolisation of railroads. The National City Bank of Cleveland, which was identified in congressional hearings as one of three Rothschild banks in the United States, provided John D. Rockefeller with the money to begin his monopolisation of the oil refinery business, resulting in the formation of Standard Oil.

  

Jacob Schiff, who had been born in the Rothschild Green Shield house in Frankfurt and who was then the principal Rothschild agent in the US, advised Rockefeller and developed the infamous rebate deal which Rockefeller secretly demanded from railroads shipping competitors' oil. These same railroads were already monopolised by Rothschild control through agents and allies J. P.

Morgan and Kuhn, Loeb & Company (Schiff was on the Board) which, together, controlled 95 per cent of all US railroad mileage. By 1850, James Rothschild, the heir of the French branch of the family, was said to be worth 600 million French francs-150 million more than all the other bankers in France put together. Mayer Amschel had established James in Paris in 1812, with capital of $200,000. At the time of his death in 1868, fifty-six years later, his annual income was $40,000,000. No fortune in America at that time equalled even one year of James' income.

  

Referring to James Rothschild, the poet Heinrich Heine said:

  

"Money is the god of our times, and Rothschild is his prophet."

  

James built his fabulous mansion, called Ferrilres, 19 miles north-east of Paris. Wilhelm I, on first seeing it, exclaimed:

  

"Kings couldn't afford this. It could only belong to a Rothschild!"

  

Another 19th century French commentator put it this way:

  

"There is but one power in Europe, and that is Rothschild."

  

There is no evidence that the Rothschilds' predominant standing in European or world finance has changed. To the contrary, as their wealth has increased, they have simply increased their passion for anonymity. Their vast holdings rarely bear their name.

  

Author Frederic Morton wrote that the Rothschilds had:

  

"..,conquered the world more thoroughly, more cunningly, and much more lastingly than all the Caesars before..."

  

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8. THE AMERICAN REVOLUTION

  

  

Now let's take a look at the results the Bank of England produced on the British economy and how, later, this was the root cause of the American Revolution.

By the mid-1700s, the British Empire was approaching its height of power around the world. Britain had fought four wars in Europe since the creation of its privately owned central bank, the Bank of England. The cost had been high. To finance these wars the British Parliament, rather than issuing its own debt-free currency, had borrowed heavily from the bank.

  

By the mid-1700s, the British Government's debt amounted to £140,000,000-a staggering sum for those days. Consequently, the government embarked on a program of trying to raise revenues from its American colonies in order to make the interest payments to the bank.

 

But in America it was a different story. The scourge of a privately owned central bank had not yet landed in America, though the Bank of England exerted its baneful influence over the American colonies after 1694. Four years earlier, in 1690, the Massachusetts Bay colony had printed its own paper money-the first in America-and was followed in 1703 by South Carolina and then by other colonies. In the mid-1700s, pre-revolutionary America was still relatively poor. There was a severe shortage of precious metal coins to trade for goods, so the early colonists were increasingly forced to experiment with printing their own home-grown paper money. Some of these experiments were successful. Tobacco was used as money in some colonies, with success.

In 1720, every colonial Royal Governor was instructed to curtail the issue of colonial money, but this was largely unsuccessful. In 1742, the British Resumption Act required that taxes and other debts be paid in gold. This caused a depression in the colonies, and the rich for one-tenth its value seized property on foreclosure.

 

Benjamin Franklin was a big supporter of the colonies printing their own money. In 1757, Franklin was sent to London to fight for colonial paper money. He ended up staying for the next 18 years-nearly until the start of the American Revolution. During this period, more American colonies ignored Parliament and began to issue their own money, called 'colonial scrip'. The endeavour was successful, with notable exceptions. Colonial scrip provided a reliable medium of exchange and it also helped provide a feeling of unity between the colonies. Remember, most colonial Scrip was just paper money, debt-free money, printed in the public interest and not really backed by gold or silver coin. In other words, it was a fiat currency.

 

Officials of the Bank of England asked Franklin how he would account for the newfound prosperity of the colonies. Without hesitation he replied:

 

"That is simple. In the colonies, we issue our own money. It is called Colonial Scrip. 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."

 

This was just common sense to Franklin, but you can imagine the impact it had at the Bank of England. 

 

America had learned the secret of money, and that genie had to be returned to its bottle as soon as possible.

 

Therefore, Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money, and ordered them to pay all future taxes in gold or silver coins. In other words, it forced the colonies onto a gold and silver standard. This initiated the first intense phase of the First Bank War in America, which ended in defeat for the Money Changers, beginning with the Declaration of Independence and concluding with the subsequent peace deal, the Treaty of Paris, in 1783. 

 

For those who believe that a gold standard is the answer for America's current monetary problems, look what happened to America after the Currency Act of 1764 was passed. In his autobiography, Franklin wrote:

"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."

 

Franklin claims that this was even the basic cause of the American Revolution. As Franklin put it in his autobiography:

 

“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.”

 

In 1774, Parliament passed the Stamp Act which required that a stamp be placed on every instrument of commerce, indicating payment of tax in gold-which again threatened the colonial paper money. Less than two weeks later, the Massachusetts Committee of Safety passed a resolution directing the issuance of more colonial currency and honouring the currency of other

Colonies. On 10 and 22 June 1775, the Congress of the Colonies resolved to issue $2 million in paper money based on the credit and faith of the "United Colonies". This flew in the face of the Bank of England and Parliament. It constituted an act of defiance, a refusal to accept a monetary system unjust to the people of the colonies.

Thus the bills of credit [Ie., paper money] which historians with ignorance or prejudice have belittled as instruments of reckless financial policy were really the standards of the Revolution. They were more than this: they were the Revolution itself

 

Alexander Del Mar, historian

 

By the time the first shots were fired in Concord and Lexington, Massachusetts, on 19 April 1775, the colonies had been drained of gold and silver coin by British taxation. Consequently, the continental government had no choice but to print its own paper money to finance the war.

 

At the start of the Revolution, the American colonial money supply stood at $12 million. By the end of the war, it was nearly $500 million. This was partly a result of massive British counterfeiting. Consequently, the currency was virtually worthless. Shoes sold for 55,000 a pair. 

 

As George Washington lamented:

 

“A wagon load of money will scarcely purchase a wagon load of provisions.”

 

Earlier, colonial scrip had worked because just enough was issued to facilitate trade, and counterfeiting was minimal. Today, those who support a gold-backed currency point to this period during the Revolution to demonstrate the evils of a fiat currency. But remember, the same currency had worked so well 20 years earlier during times of peace that the Bank of England had

Parliament outlaw it, and during the war the British deliberately sought to -undermine it by counterfeiting it in England and shipping it 'by the bale' to the colonies.

   

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9. THE BANK OF NORTH AMERICA

   

   

Towards the end of the Revolution, the continental Congress, meeting at Independence Hall in Philadelphia, grew desperate for money. In 1781, they allowed Robert Morris, their Financial Superintendent, to open a privately owned central bank in the hope that this would help.

Incidentally, Morris was a wealthy man who had grown wealthier during the Revolution by trading in war materials. The new bank, the Bank of North America, was closely modelled on the Bank of England. It was allowed to practise (or rather, it was not prohibited from practising) fractional reserve banking; that is, it could lend out money it didn't have, then charge interest on it. If you or I were to do that, we would be charged with fraud-a felony. Few understood this practice at the time, and, of course, it was concealed from the public and politicians as much as possible. Further, the bank was given a monopoly on issuing banknotes, acceptable in payment of taxes.

The bank's charter called for private investors to put up $400,000 worth of initial capital. But when Morris was unable to raise the money, he brazenly used his political influence to have gold deposited in the bank-gold, which had been lent to America by France. He then lent this money to himself and his friends to reinvest in shares of the bank. The Second American Bank War was on.

Soon, the dangers became clear. The value of American currency continued to plummet. Four years later, in 1785, the bank's charter was not renewed, effectively ending the threat of the bank's power. Thus, the Second American Bank War quickly ended in defeat for the Money Changers.

The leader of the successful effort to kill the bank was a patriot named William Findley, from Pennsylvania.

  

He explained the problem this way:

  

"This institution, having no principle but that of avarice, will never be varied in its object... to engross all the wealth, power and influence of the state.”

  

Plutocracy, once established, will corrupt the legislature so that laws will be made in its favour, and the administration of justice will favour the rich only.

  

The men behind the Bank of North America-Alexander Hamilton, Robert Morris, and the Bank's President, Thomas Willing-did not give up. Only six years later, Hamilton, then Secretary of the Treasury, and his mentor, Morris, rammed a new privately owned central bank, the First Bank of the United States, through the new Congress. Thomas Willing again served as the bank's president. The players were the same, only the name of the bank was changed.

  

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