The Founding Fathers' Vision of Prosperity Has Been Destroyed → Washingtons Blog
The Founding Fathers' Vision of Prosperity Has Been Destroyed - Washingtons Blog

Friday, October 29, 2010

The Founding Fathers' Vision of Prosperity Has Been Destroyed

Paintings by Anthony Freda:

The Founding Fathers not only fought for liberty and justice, they also fought for a sound economy and freedom from the tyranny of big banks:

"[It was] the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War."
- Benjamin Franklin

"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt."
- John Adams

“If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied”.
— Thomas Jefferson

"I believe that banking institutions are more dangerous to our liberties than standing armies...The issuing power should be taken from the banks and restored to the Government, to whom it properly belongs."
- Thomas Jefferson

“The Founding Fathers of this great land had no difficulty whatsoever understanding the agenda of bankers, and they frequently referred to them and their kind as, quote, ‘friends of paper money. They hated the Bank of England, in particular, and felt that even were we successful in winning our independence from England and King George, we could never truly be a nation of freemen, unless we had an honest money system. ”
-Peter Kershaw, author of the 1994 booklet “Economic Solutions”

As I noted last year:

Everyone knows that the American colonists revolted largely because of taxation without representation and related forms of oppression by the British. See this and this.

But - according to Benjamin Franklin and others in the thick of the action - a little-known factor was actually the main reason for the revolution.

To give some background on the issue, when Benjamin Franklin went to London in 1764, this is what he observed:

When he arrived, he was surprised to find rampant unemployment and poverty among the British working classes… Franklin was then asked how the American colonies managed to collect enough money to support their poor houses. He reportedly replied:

“We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.”

In 1764, the Bank of England used its influence on Parliament to get a Currency Act passed that made it illegal for any of the colonies to print their own money. The colonists were forced to pay all future taxes to Britain in silver or gold. Anyone lacking in those precious metals had to borrow them at interest from the banks.

Only a year later, Franklin said, the streets of the colonies were filled with unemployed beggars, just as they were in England. The money supply had suddenly been reduced by half, leaving insufficient funds to pay for the goods and services these workers could have provided. He maintained that it was "the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War." This, he said, was the real reason for the Revolution: "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."

(for more on the Currency Act, see this.)

Alexander Hamilton echoed similar sentiments:

Alexander Hamilton, the nation's first treasury secretary, said that paper money had composed three-fourths of the total money supply before the American Revolution. When the colonists could not issue their own currency, the money supply had suddenly shrunk, leaving widespread unemployment, hunger and poverty in its wake. Unlike the Great Depression of the 1930s, people in the 1770s were keenly aware of who was responsible for their distress.

As historian Alexander Del Mar wrote in 1895:

[T]he creation and circulation of bills of credit by revolutionary assemblies...coming as they did upon the heels of the strenuous efforts made by the Crown to suppress paper money in America [were] acts of defiance so contemptuous and insulting to the Crown that forgiveness was thereafter impossible . . . [T]here was but one course for the crown to pursue and that was to suppress and punish these acts of rebellion...Thus the Bills of Credit of this era, which ignorance and prejudice have attempted to belittle into the mere instruments of a reckless financial policy were really the standards of the Revolution. they were more than this: they were the Revolution itself!
And British historian John Twells said the same thing:
The British Parliament took away from America its representative money, forbade any further issue of bills of credit, these bills ceasing to be legal tender, and ordered that all taxes should be paid in coins ... Ruin took place in these once flourishing Colonies . . . discontent became desperation, and reached a point . . . when human nature rises up and asserts itself.
In fact, the Americans ignored the British ban on American currency, and:
"Succeeded in financing a war against a major power, with virtually no 'hard' currency of their own, without taxing the people."

Indeed, the first act of the New Continental Congress was to issue its own paper scrip, popularly called the Continental.

Franklin and Thomas Paine later praised the local currency as a "corner stone" of the Revolution. And Franklin consistently wrote that the American ability to create its own credit led to prosperity, as it allowed the creation of ample credit, with low interest rates to borrowers, and no interest to pay to private or foreign bankers .

Is this just ancient history?


The ability for America and the 50 states to create its own credit has largely been lost to private bankers. The lion's share of new credit creation is done by private banks, so - instead of being able to itself create money without owing interest - the government owes unfathomable trillions in interest to private banks.

America may have won the Revolutionary War, but it has since lost one of the main things it fought for: the freedom to create its own credit instead of having to beg for credit from private banks at a usurious cost.

As economic writer and attorney Ellen Brown has tried to teach to Obama, Schwarzenegger, and anyone else who will listen, the way out of the economic crisis is to stop paying interest to private banks for the creation of credit, and to return to the system of government-issued credit used by the Founding Fathers to create prosperity for the people and to gain independence from their oppressors.

(And see this).

As I wrote in July:
The U.S. has become a a kleptocracy, an oligarchy, a banana republic, a socialist or fascist state ... which acts without the consent of the governed.

This essay focuses on economics, but - obviously - the other ideals of the Founding Fathers have been abandoned as well. See this and this, for example.

Note: If we can't implement public banking, let's at least return to a gold standard.


  1. Thomas Edison also knew the scenario...

    "It is absurd to say our country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the people." -- Thomas Edison

  2. I'll agree with the sentiment that the US has ceded monetary control and is suffering because of it.

    But I think it's not accurate to say the solution is to just change who is issuing the currency. After all, although the Continental succeeded in funding the Revolutionary War without taxes, it also hyperinflated and failed.

    Ideally if you could have monetary policy and credit issuance managed well, with no favoring of banking interests over public interests, that would be great. But I've seen nothing that leads me to believe we can get there from here.

    I think we really need an actual physical limitation placed on currency issue, like a gold or silver standard. I don't see any other way to restore credibility to this system, it's too far gone to trust someone promising change to actually deliver anything unless they are physically forced to.

  3. Jefferson's words were:

    "The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

    People, not government, there is a big difference.

    Having Congress or the Treasury issue currency is irrelevant to our problems as neither can create value. Neither can the central banks.

  4. Currency always will be valued by the People's Sovereign Government, unless, as at present London currency traders manipulates currency values, or private bankers set the value and rules of the money game, as in today's sovereign-less Europe. The government will never have any problem supporting their currency as long as it is issued to creat physical, tangible, stable products, ie, housing, prime farm land, prime timber land, oil wells, railroads, highways, dams, gold and other really precious metals.

    Sovereign Government (Credit based system, i.e., not debt based) must issue, U.S. Notes, currency @ zero interest for physical production and support the National, State and Private banking systems by giving free money to each bank system money under conditions of their bank charter.

    State Banks are naturally owned by its citizens. (see N. Dakota)

    Borrowers and Depositors own Private Banks (creating Credit based Private banks, i.e., not debt based, i.e., profit going anywhere but back to the people is what creates long term crushing debt).

    Nation to Sovereign Nation exchange agreements made (as with Bretton Woods) on currency value not as at present London currency markets control value which is an abomination.

    Prime Rate loans for everything involved in physical production only.
    Sub-Prime (higher) “Sliding Scale” Interest Rate loans for consumer spending. (2 or 3 tier interest set rates).

    State and Federal Usury penalties.

  5. If the founders had such a good experience with sovereign money why did they restrict states to goold and silver money?

  6. Given the uncomfortable nature of this excellent article and the fact that I'm British, I find it ironic that the problems that Britain caused in the 18th Century have come back to haunt us, courtesy of the crisis in the American mortgage-backed securities.

    In the UK, as in the US, a conflict is occurring regarding whether we are citizens of our mother nations or citizens of the big banks. With big banks constantly lobbying our politicians it is difficult to tell.

    We are separate nations but we are in it together.

  7. Free banking is better than state run banking.

    Ellen Brown is a Keynesian. (Seriously.)

  8. The last American president to issue money,currency threw congress was JFK, and we all know what happened to him

  9. Gold and silver is the only legitimate currency that has value the world over. As proof, a person can redeem an ounce of gold or silver for what ever currency in what ever country that they are in. All currency not backed by gold or silver is a fiat currency.

    In 1950 Fort Knox held 80% of the world gold and our paper currency had value the world over because it was backed by gold and silver. The currency could not be leveraged beyond actual value of gold and silver held in reserve.

    The World Banksters hated that of course, because they were limited in how much debt they could create by leveraging (fraud).

    The unconstitutional and criminal Decimal Currency Act 1963-1973 changed all that. Hey, as long as the rest of the world “thought” that the dollar was backed by gold and silver; the banksters could leverage its supposable value to the Ionosphere. Today, that debt leveraging is a whopping 200 Trillion dollars with no value to back it up.

    The banksters sacked Fort Knox of the gold and silver years ago, like the Federal Reserve accounting; it is hidden secret as to how much gold and silver is actually held in the vault.

    Before, during and after the Second American Revolution, gold and silver will be the only currency of value as the fiat dollar currency spirals through inflation and deflation.

    After the Revolution, as we rebuild the American economy, gold and silver will return as the primary reserve for paper money.


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