Title : Chapter Two THOMAS JEFFERSON AND THE MONEY POWER: The Federal Reserve Conspiracy by Antomy C. Sutton from archive.org
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Chapter Two THOMAS JEFFERSON AND THE MONEY POWER: The Federal Reserve Conspiracy by Antomy 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.
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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
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