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December 17, 2003
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World Bank Chief: It's Time to Restore Balance
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Economy

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In our world of 6 billion people, one billion own 80 percent of global GDP, while another billion struggle to survive on less than a dollar a day. This is a world out of balance.

When James Wolfensohn, president of the World Bank, addressed the Board of Governors of the Bank at a meeting in Dubai, United Arab Emirates, on September 23, he concluded his talk with an appeal to re-balance the economy on a world wide scale.

Wolfensohn said: "It is time to take a cold, hard look at the future. Our planet is not balanced. Too few control too much, and too many have too little to hope for. Too much turmoil, too many wars. Too much suffering." He continued, saying that, acting together, "we must rebalance our world to give everyone the chance for life that is secure - with a right to expression. Equal rights for women. Rights for the disabled and disadvantaged. The right to a clean environment. The right to learn. The right to development... These are not exotic objectives. All of us want the same, rich and poor alike."

The World Bank and specially the Board of Governors Wolfensohn was addressing at the occasion, hold the key to ending the economic imbalance of this world, but don't hold your breath that they will actually do so. Drumming up donations for poor countries is all they can come up with, when what's needed would be deep reforms of the very monetary system this planet runs under.

When, in conclusion, Wolfensohn states: "we all share one planet. It is time to restore balance to the way we use it. Let us move forward to fight poverty, to establish equity, and assure peace for the next generation", he does not tell us that it is the economic policies pursued by the institution he heads and whose owners he addresses, which are the underlying cause of poverty. He does not tell us that World Bank loans come with conditions to gut social programs in poor countries - it's called tightening the belt - and that most of the money they loan never even arrives in the countries who need the money but goes straight to the "creditor banks" to pay for ... interest. He does not tell us that instead of favouring a debt free economy world wide, the Bank's policies are driving us deeper and deeper into the hole day by day.

Contrast that with the experience of a group of small islands in the English Channel. Their misery seemed endless and their debt was a burden without hope - until they happened upon a trick that allowed them to slip out from underneath the yoke of the international banking system's destructive debt based economic straitjacket.

Countries all over the world should look into the experience of Jersey and Guernsey and take heart: There IS a way out of economic misery. But it does imply re-thinking the basics of monetary policy.

Channel Islands model of debt-free money

Patricia Knox
Adapted extract from a submission to the Institute.

The British government, like most other governments, has delegated money-creation to the central bank. Money is therefore loaned at interest to the government by the central bank, instead of being issued debt-free by the government. Increasing amounts of tax revenue are therefore being used to repay the debt to the Bank of England. Since there is no mechanism for writing off any government debt, present day tax money is being used to pay interest on the accumulated debt of the past 300 years. High interest rates only aggravate the situation.

The banks should pay governments for a licence to create money. Governments should not pay interest.

As each year goes by, an increased percentage of tax revenue is swallowed up by the Bank of England, and social services are withdrawn as there is not enough money left to fund them.

Debt is like a cancer in society. It causes the ills of unemployment, bankruptcy, poverty and destitution, which lead, in turn, to crime and ill health. At some point in the future, at least in some countries, the rate of money-creation, increasing at an exponential rate, will be overtaken by the size of the government debt, increasing at an even faster exponential rate.

At that point, all wealth will go to pay an unrepayable loan, and there will be no social services. This is already the case in Third World countries, where the real wealth of those countries is exported to pay an unrepayable debt, and where every newborn baby is already in debt to foreign banks.

In the Channel Islands it is different. There, the government has not delegated the money-creating powers to the banks. There, the government creates debt-free money and spends it into the economy, rather than lending it into the economy, so that the government has no debt to the banks. Partly as a result, Jersey and Guernsey experience prosperity unknown in many countries. Income tax is only 20%. There is no VAT, inheritance tax or capital gains tax.

Governments everywhere should take back their power to create interest-free money, and nations would thus reach a new level of prosperity. An essential first step would be to make all loans unenforceable, like gambling debts are now, and then money lenders would become more responsible in their lending. Equity finance, where the investor shares in either profit or loss, rather than loans on fixed interest, would become the approved method of finance.

Patricia Knox, Pen Llywenan, Bodedern, Holyhead, Gwynedd, Wales LL65 4TS (tel [phone]).



THE ISLE OF GUERNSEY

It's perfectly reasonable for anyone to ask if there is any nation in the world today smart enough to use interest-free money. And, if so, what have been the consequences. Canada's Finance Minister, who claims (on the previous page) that governments "printing money ... leads to hyperinflation" obviously hasn't heard of the success of interest-free money on the Isle of Guernsey, or if he has, he must surely claim that Guernsey defies reason ... his reason. Because, not only has "inflation" never been evident on the island of Guernsey, but it has had a stable and prosperous economy for over one hundred and fifty years.

Now, how do you suppose a Finance Minister, such as Canada's, would account for that? Would he say that it's because the Channel Islands are tax havens? Indeed they are, but it should also be pointed out to the Honourable Finance Minister, that Guernsey only became a tax haven this century ... whereas the citizens of Guernsey were long out of debt and well on the road to prosperity way back in the eighteenhundreds.

No, Guernsey's secret of success is the fact that it has been a "protectorate" of the British Isles for centuries and, as such, is able to make its own laws and thereby determine its own destiny. By controlling its own money supply from 1816 onwards, Guernsey was able to avoid the century old trap of borrowing when it didn't have to.


The following brief account of the history of Guernsey is largely taken from The Guernsey Experiment by Olive & Jan Grubiak and The Debt Virus by Dr. Jacques S. Jaikaran

As Olive & Jan Grubiak describe, Guernsey in 1960 was ... a small but beautiful island ... well favoured by nature ... occupying an area of only 24 square miles .... having a population of fifty to sixty thousand ... and where resides that most uncommon of human attributes ... common sense. It is the second largest of the Channel Islands in the United Kingdom, next to Jersey.

In 1815, Guernsey was nothing like it is today. They only had a rudimentary marketplace and the roads were only cart-tracks 4 feet wide. Even though there were many able-bodied men and women to repair the roads and fix the dykes, they were leaving the island in great numbers because of the high level of unemployment.

To be sure there was lots of work to be done, but no way to pay for it. The sea walls and dykes were crumbling, the coast was eroding and the English Channel was fast making claim to what little there was left of the island. The Island Accounts in 1816 looked something like this:

Island Debt 19,000 Pounds
Annual Income: 3,000 Pounds
Interest Expense on the Debt 2,470 Pounds
(@ 13% interest; compounded)
______
Net Revenue 530 Pounds


But repairing the sea walls was estimated to be Pounds 10,000. So, the island was not only impoverished ... it was literally sinking ... in a sea of debt.

What could they do? They couldn't increase taxation. The islanders were already taxed to the limit. Nor could they afford to borrow any more money from the banks. Whatever more they borrowed could never be repaid.

It just so happened, though, that in 1815, those concerned gathered together to try to figure out a way to improve their decrepit Public Market ... the hub of their local economy. During that meeting someone came up with the brilliant idea of issuing their own "interest-free money" ... more money which the Island Government could print at little cost, spend into circulation and eventually retire, if need be ... money on which they would not have to pay any interest.

In 1816, they decided to issue Pounds 6,000 of their own "interest-free" Guernsey State Notes. This was in addition to the current supply of English pounds which two main banks were circulating on the island already.

By 1837, Pounds 50,000 had been spent into circulation by the government for the primary purpose of local projects such as the sea walls, the roads, a new marketplace, a church and a college. This £50,000 more than doubled the money supply. But there was no inflation.

In 1914, while the British restricted their own money supply, Guernsey issued more ... another Pounds 140,000 over the next four years. By 1958, over Pounds 500,000 of interest-free money was in circulation on Guernsey and still no inflation.

By 1990, there was a total of Pounds 6.5 million in circulation issued interest-free. There was no public debt as in the rest of Britain which was still paying for its war debts. And yet on Guernsey, prosperity was very much evident everywhere.

When Dr. Jacques Jaikaran visited Guernsey in 1990, he reported on the state of the Guernsey economy in his book The Debt Virus: "There were about 60,000 permanent residents; the average family owned 3.3 cars; their unemployment rate was zero and their standard of living was very high. Also, there was no public debt and a surplus of public funds was earning them interest. The Guernsey Treasury increased the money supply by 50% over a 3 year period and this increase did not cause any inflation. The price for a gallon of gas in the UK was about $5, but the price in Guernsey was about $2. Contrary to the teachings of economics in all higher institutions, inflation, it was claimed, was not related to the volume of money, but rather to the size of the commercial debt."

Dr. Jaikaran also mentioned that Guernsey's income tax was only a "flat" 20%. Not bad, compared to the rest of the world.


See also related:

Articles on innovative economic ideas in the Economy section of this site

My older articles on Silvio Gesell and the problem of interest in debt-based currencies

Transaction Net

Access Foundation

Local Employment and Trading Systems

Cyberclass Net

the open money project

Communities create own currency to help their small businesses


Here is a more recent statement by the World Bank's president:

"Madness is running over our planet."

- World Bank President James Wolfensohn addressing students at Stanford University, in California, ticking off statistics on development assistance and defense budgets. World development help is running at about $56 billion a year, he said, while military expenditures are almost 20 times higher at more than $900 billion. Subsidies and tariff protections for world agriculture, including large commercial interests, reach about $350 billion a year. "This is a huge frustration. We have to find a way to focus on poverty and development ... but the big issue is indifference. People don't care. Money is not flowing to where it is needed," Wolfensohn told the students.

Global Development Briefing -- Madness
March 11, 2004


See also:

David Korten - When Corporations Rule the World and other books.





--------------------------------------------------------------------------------

posted by Sepp Hasslberger on Wednesday December 17 2003
updated on Thursday October 6 2005

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Readers' Comments


I've linked to this story from http://parli.blogalia.com

Lucas

Posted by: lugon on February 17, 2004 03:15 PM





New link to the Bloggers' Parliament:

http://mbpgroupblog.blogspot.com/

Posted by: Sepp on March 15, 2004 01:11 PM





A discussion of the Guernsey monetary experience, sent in by Tom Kennedy:

As more and more people are being awakened to the reality that indeed, we can create and spend our own tokens to be used to facilitate trades/exchanges, researchers are uncovering stories about similar actions being taken in various parts of the world in the 19th and 20th Centuries.

The historic monetary policy of the Island of Guernsey which was launched early in the 19th Century, has relevance, as we-the-people of this 21st Century, are learning that given the ease of modern technology, we can actually create and spend our own usuryfree time currency within our own loyal database(network) which can serve us locally, nationally and internationally.

Enjoy this day!
Working with you for peace and plenty by 2020
AND Bringing usuryfree living alive in 2 oh oh 5
I AM
Tom J. Kennedy otherwise known as Tommy UsuryFree
www.cyberclass.net
www.usuryfree.net
www.thirdmarket.net

*******************************************************************

The article The Guernsey Market House Scheme appeared in the THE FIG TREE Quarterly edited by C. H. Douglas (No. 10, September, 1938, pp.190-3):

The Guernsey Market House Scheme

By D. M. SHERWOOD

THE financial experiment known as the Guernsey Market House Scheme was started over 100 years ago and, although of modest proportions, since it was confined to a small island of 25 square miles, it contained so many fundamental principles that everybody should know of it.

At the beginning of the nineteenth century, as a result of the Napoleonic wars, the trade of Guernsey was practically extinguished and the people were in despair. Unemployment was rife, the sea defences were breaking down, there were practically no roads, public buildings were in disrepair and, above all, a new market house, where the islanders could exchange their produce, was urgently needed.

It was impossible for the Government to finance these necessary improvements out of revenue, as this only amounted to £3,000 yearly, all of which was required for ordinary expenses and the interest charges on the island's debt of £19,000. Nor could the necessary finance be obtained by borrowing; the Government sought indeed to raise a loan, but such was the poor state of the island's assets that the only would-be lenders demanded the prohibitive rate of 17 per cent. per annum.

"Necessity is the mother of invention"; and in this case the idea put forward that the State should issue its own money daily gained ground. It was argued that, as labour and materials were both available, it was absurd for improvements to be held up simply through lack of money, and as conditions became even worse, this plan served to provide the only solution. Finally, after various setbacks and considerable opposition, the adherents of State money carried the day and, in 1816, 4,000 notes of £1 each were printed by the Government and paid out for the most urgent repairs.

By the success of this issue the principle was established and during the next 20 years the Government authorised notes to the extent of £80,000, which were utilised in building the new Market House, schools in every parish, roads all over the island, St. Elizabeth's Cottage, etc. These Government notes were redeemed, as the economic circumstances of the island justified, from earnings derived from the collection of market rents, customs duties, etc., and in 1836, when the scheme ended, there was a balance outstanding of £55,000 Government notes.

OPPOSITION

It is sad to relate that in spite of its eminent success this experiment was deliberately brought to an end. Although, after the first issue of the notes, there had been little active opposition to it in Guernsey itself, there were two outside bodies violently opposed to it. First, the inhabitants of the neighbouring island of Jersey became so jealous of Guernsey's prosperity that, in 1819, they obtained from Westminster an Order in Privy Council to the effect that the Government of Guernsey should not in any year exceed the amount of its annual income without Royal Consent. The Guernsey Government, however, took no notice of this and continued issuing notes as and when required.*

[*It would be interesting to know by whose advice Jersey was induced to appeal to the Privy Council.]

A few years later, however, opposition came from another quarter, the banking community in England. Although there had been no bank in Guernsey since 1810, there is reason to believe that the English bankers were becoming more and more apprehensive as the success of the Guernsey State money became more widely known.

BANKS INTERVENE

It was in 1827 that a bank was established in the island and started issuing notes, which circulated side by side with those of the State. Two years later the directors of this bank complained to Westminster that the Government, by issuing its own notes, had exceeded its powers as defined by the Privy Council some ten years earlier. The Privy Council wrote to the Guernsey Government for an explanation, and such a logical and determined reply was sent that no further action was taken at that time.

In 1835 a second bank was started and more bank notes were issued to an extent to produce inflation, and by 1836 there was something akin to panic in the island. The Guernsey Parliament met and hurriedly appointed a Committee to discuss, with the bankers, the steps necessary to control the position. The members of this Committee were not all fully sympathetic to the issue of Government notes and the bankers won the day, for an agreement was reached whereby the Government was to convert £15,000 of their notes into a bank loan at 3 per cent. interest, and to cease issuing further notes, whilst, on the other hand, no limit was placed on the issue of notes by the banks.

This was the end of what was commonly known as the Market House scheme, the balance of the original Government notes, amounting to £40,000, being still outstanding today. Although since 1914 the Guernsey Government has again issued its own notes, these are now always covered by the Government deposits with the banks, and as today Guernsey currency is linked with sterling, these notes are issued or withdrawn in conformity with orthodox principles.

In considering the Market House experiment the following points should be borne in mind.

Orthodox finance could do nothing to get the people out of the depression caused by the Napoleonic wars. The Government could not obtain the necessary funds, either by taxation or by borrowing, and provided that labour and materials were available, as they were, there was nothing to prevent the Government issuing its own money. This it did, with the result that the appearance of the island changed out of all recognition. From its backward and depressed state it became, within 20 years, renowned for its well-being.

Moreover, by issuing State money, this transformation was carried out without increasing the island's national debt and without incurring interest charges. In fact if interest had been payable on the capital sums for these improvements, they could not possibly have been carried

It is interesting to note that up to 1914 the Government of Guernsey had collected in taxes over £35,000 to pay the interest on the £15,000 of State notes which were converted into a bank loan by the agreement of 1836.

THE BOGEY OF INFLATION

The opponents of State issuance of money can usually be relied upon to raise the bogey of inflation. It must be remembered that inflation depends on the amount of money issued relative to the goods for sale, and does not depend on who issues the money. In the case of Guernsey, when the State first issued money, if it had been inflation there would have been either a shortage of commodities or else a rise in prices, and there is no record of either of these until 1836. Up to that year the Government had gradually and continuously increased the note issue, and it is reasonable to suppose that the net increase of money approximately corresponded with the island's increasing productivity. In that year, however, the banks deliberately brought about inflation, flooding the island with notes, with the inevitable result that, as there was no corresponding increase in goods for sale, prices began to rise and a panic ensued.

Let us compare the conditions of Guernsey and its need a century ago, with the condition and need of England today. When we hear arguments against slum clearance, against building new schools or hospitals or providing better roads, or even against providing everybody with a sufficient income to keep themselves decently, on the grounds that we have not the money, if we remember the Guernsey Market House experiment, we realise how specious such arguments are.

END


Posted by: Sepp on June 28, 2005 02:53 PM

Link: http://www.newmediaexplorer.org/sepp/2003/12/17/world_bank_chief_its_time_to_restore_balance.htm

[bartermania]

WHY DO GOVERNMENTS LET BANKS CREATE MONEY?



Did President Kennedy's decision that the US government should issue its own notes like this one lead to his assasination? Some conspiracy theorists think so.


One of the most perplexing problems future economic historians will face will be that of explaining why almost every 19th and 20th Century government allowed private banks to create almost all the money their citizens used even to the extent of requiring their state treasuries to pay interest for the loan of money private banks had created merely by making entries in their account books when the governments could have created an equivalent amount of currency the same way themselves and financed, interest-free, whatever they wished to do. At the very least, the practice constituted - and constitutes - a massive subsidy to the banking sector and to the wealthiest groups in society.

According to the late John Hotson, who retired as Professor of Economics at the University of Waterloo in Canada in 1992, roughly 95% of a typical industrial nation's currency is created by privately-owned banking organisations granting loans to their customers 27. One of the few occasions on which governments put interest-free money into circulation is when their central banks decide they need new premises and simply issue the currency to pay for their construction.

At almost all other times, governments feel constrained to borrow all the funds they need and therefore pay interest on money the private banks have created. Quite why governments feel unable to create money for, say, public capital projects apart from central bank buildings and have run up massive National Debts in their determination not to do so has never been adequately explained, although bigots with hypotheses abound. For example, neo-Fascists claim it is due to a Jewish conspiracy and sell books about it through badly-printed mail-order catalogues alongside works which claim that the Holocaust never happened. An equally silly, but perhaps less dangerous theory comes from the Order of St. Michael in Canada, where Social Credit (the idea that a society should create its own purchasing power) was a powerful political force in the 1930s. The Order's members, who call themselves 'slaves of Mary' and 'Catholic Patriots' working 'to deliver nations from Communism and the banking dictatorship', hold the Freemasons responsible but, like the Fascists, fail to produce a shred of evidence.

Three extremely serious consequences flow from allowing banks to create almost all a country's money by issuing loans for which they charge interest. The most pernicious is that the need to pay this interest creates the capitalist system's constant need for economic growth and thus makes it unsustainable in a finite world. We will be discussing this more fully in the next chapter when we consider how interest should be managed in a local economy.

The second consequence of their delegating the power to create money is that governments have too little control over the amount put into circulation. For example, if the banks issue so many loans that the economy overheats and the inflation rate rises, one of the few ways governments can respond is to raise interest rates by selling government stocks to mop up the excess funds - in other words, by borrowing some of the excess money themselves. This can seriously distort the distribution of national income because if the interest rate rises above the percentage rate at which the gross domestic product is growing in money terms, the wealth of lenders begins to increase faster than that of borrowers and the total debt owed to financial institutions by everyone in the country, including companies and the state itself, grows in relation to GDP. This is exactly what happened in Britain in the 1980s: because inflation was suppressed by raising interest rates and real growth rates were low, the proportion of national income going to moneylenders significantly increased as we noted in Chapter One.

The third consequence of not issuing money is that governments cannot do what Paul Glover has done with his Ithaca Hours and the Westport LET system with its Reeks - pay to get things done without incurring a debt on which interest must be paid indefinitely. Only two places in the world have issued their currencies on a non-debt, non-interest basis - Jersey and Guernsey - and the results have been remarkable.

The Guernsey system dates back to the period just after the Napoleonic Wars which had seriously damaged the island's economy because they prevented smuggling, the people's most important income source. As a result, according to Olive and Jan Grubiak's 1960 pamphlet, The Guernsey Experiment 28, the island was in a distressed state: "The deep roads ... in wet weather became muddy rivers between steep banks. The town was ill-paved and unattractive, and there was not a vehicle for hire of any kind on the island. There was no trade, nor hope of employment for the poor. Worst of all, the sea was encroaching the land, and washing away large tracts of it, thanks to the sorry state of the dykes."

There seemed little possibility that the island's government would be able to erect the necessary sea defences, which were expected to cost £10,000, since the £2,390 interest bill on Guernsey's public debt of £19,137 (equivalent to approximately thirty times that amount today) absorbed all but £600 of its annual income and, in view of the people's poverty, there was no scope for further taxation. However, a committee was set up to see how money could be raised for a smaller project - the erection of a covered market. This reported back in 1816 with the proposal that the cost of the market and various other public works be met by issuing 6,000 States Notes, each with a face value of £1, to circulate alongside the £50,000-worth of banknotes then in use on the island. The idea was accepted although notes worth only £4,000-worth were initially issued, and since it was proposed to redeem them with British money in stages, the arrangement amounted to little more than an ingenious interest-free way of borrowing the funds to finance the island's capital works programme. However, other tasks including the sea defences and the construction of schools were taken on, and further note issues made, so that by 1829, States Notes worth £48,000 were in circulation.

In 1826 a complaint was made to the Privy Council in London that the States (as the Guernsey Parliament is called) had no right to issue currency without royal consent. The States submitted a lengthy report to the Privy Council on the ways in which the local currency had been spent which demonstrated that the income from the projects it had financed was more than enough to redeem the notes issued. Satisfied, London took no action. The complaint was probably instigated by the promoters of the Old Bank which set up in Guernsey the following year. A second private bank, the Commercial, opened in 1830 and the two 'flooded the island with paper money.' The States held discussions with both banks and, as a result, withdrew £15,000-worth of its own notes from circulation and agreed to keep the total issue of States notes below £40,000. This agreement remained in force until 1914.

During the World War I, the local banks were prohibited from increasing their note issue while the States was under no such restriction and issued a further £100,000-worth of its currency to meet the demand. Since then, the two local banks have become part of British high-street banking chains and have ceased to issue currency - instead, British notes circulate in Guernsey alongside the island's own.

Today, if someone uses a bank on the island to cash a cheque or draws money from an automatic teller with a plastic card, they will receive Guernsey currency which the banks obtained from the States' Treasury in exchange for a sterling cheque for the same amount. The treasury then returns the sterling cheque to the bank which issued it to be lodged in a deposit account in the States' name. Each Guernsey note in circulation is therefore backed one-to-one by its British equivalent.

"We've got about £14m.-worth of notes and coin in circulation at the moment" Michael Browne, the States' Supervisor told me in early 1994. "It fluctuates a little with the seasons. It constitutes a £14m. interest-free loan for us - in fact, it's a loan we collect interest on. The payments we get on it from the banks make a small but useful contribution to the island's budget" 29.

Although Browne says it would be possible for the States to spend the sterling it receives from the banks in payment for its currency, it no longer does so. "Our policy on this island is, if we can't afford a new school building or something like that, we don't borrow, but wait until we can pay for it before we put it up. As a result, we have almost no public debt, apart from some money owed by the state trading boards which run the telephone and electricity systems. Even that is covered by sinking funds" he explains.

According to Browne, Guernsey's absence of debt is as a result of its conservative financial policies and the main reason why the island's income tax rate is only 20%. He regards the States' refusal to spend the funds obtained as a result of its currency issue simply as prudent book-keeping and suggests that the success of the 'Guernsey experiment' is largely a myth.

With the presumption of an outsider, I suggest he is mistaken. There are two ways in which Guernsey could handle the sterling it receives from the sale of its currency. One would be to spend a high proportion of the £14m. it has already collected on capital works immediately, leaving just enough on deposit in the banks to ensure that a Guernsey pound can always be exchanged for a British one. But if this course was followed, the amount of capital spending the currency issue made possible in future would fluctuate wildly from year to year as it could never be more than a prudent proportion of whatever amount of additional island currency had entered circulation during the previous twelve months. In some years, there might be no increase. In others, the amount of local currency in circulation might even decline because of a fall in economic activity, requiring the island not only to halt its capital programme but, in the event that the Guernsey pound's fractional sterling backing proved inadequate to cover the withdrawals, to use some of its tax revenue to pay interest on British pounds borrowed to ensure the exchange rate was maintained. In other words, basing the island's capital spending on how much more local currency went into circulation in a particular year would prove highly destabilising: the States would spend more when the island was booming and have to cancel its capital programme and slash its current spending when it went into decline.

The second way open to the island is to do exactly what it does - to limit itself to spending the interest on the capital sum that issuing its own currency creates. This avoids the destabilisation entailed by the first course and ensures that a relatively steady amount of capital spending can be undertaken annually. After all, if the States are able get 7% interest on their £14m. sterling deposit, this will earn them enough to cover a third of its £3m. capital budget year after year.

Jersey issues its currency in the same way. Could counties and towns elsewhere follow suit and enjoy similar benefits? There seems no reason why not because the Guernsey arrangement suits both the island and the banks. Lending is any bank's most important source of income and whenever a bank hands currency notes over to a customer, both its assets and its liabilities are reduced, cutting its capacity to make revenue-earning loans. When it hands out Guernsey currency, however, the sterling it used to buy them is deposited in another of its accounts, so there is no fall in the bank's assets and hence in its capacity to make loans. Guernsey, as we have seen, benefits too. Someone appears to be getting something for nothing - how do the benefits arise? The answer is that they come from the creation of £14m. which would otherwise have not existed by essentially the same process that banks use to create money when they grant a loan facility on which the customer writes cheques. So, given that both sides benefit, the only obstacle likely to arise would be if central banks objected to county councils convincing their residents that it was in their interests to insist on getting county currency whenever they withdrew cash from their banks.

Alternatively, county or town councils could create their own money by following the Wörgl model almost exactly: working in close collaboration with local businesses, as local authorities did whenever scrip was issued in 1930s America, they could arrange loans from their local credit unions and leave them on deposit so that anyone who wished to exchange their local money for national currency could do so on payment of a small fee. Wörgl's monthly revalidation stamping system could also be adopted to ensure that the local money was always spent in preference to that from outside.

The benefits to any council adopting either approach are clear: no longer would it have to depend almost entirely on central government or on bank borrowings to finance low-income housing, industrial starter-units, a library building or a better swimming pool. Local builders would get more work - indeed, if the council was wise, it would only embark on a big spending programme when there was spare capacity in the local construction trade. Even the national government would be better off as a result of increased tax revenues and lower social welfare claims. But would these gains be sufficient to enable it to ignore dire warnings about inflation which would undoubtedly come from its central bank or treasury department upset by the loss of some of its powers?.


John Hotson was associated with the Committee on Monetary and Economic Reform, COMER, which describes itself as ’composed of economists and non economists, both academic and non-academic, whose goal is a sustainable financial system in a sustainable world economic/ecologic/social system.’ COMER's website, at www.comer.org, contains many interesting articles. E-mails can be sent to [e-mail] street address for COMER is: COMER Publications, 245 Carlaw Ave. Suite 107, Toronto, Ont. CANADA M4M 2S6. Membership costs US$45 per year for non-Canadians.

COMER is one of the few groups in the English-speaking world doing serious work on monetary reform. It has links with Economic Reform Australia which is working on similar lines. Economic Reform Australia's street address is P.O. Box 505, Modbury, SA 5042, and Frances Milne, co-editor of the newsletter, can be reached at [phone]. An unsurpassed source of historic material on microfiche on free money and free banking is the Libertarian Microfiche Publishing Company, 35, Oxley Street or P.O. Box 52, Berrima, NSW 2577. Another good source is The Monetary Freedom Network (website in German), c/o Siegfried H. Schwenke, Wissmannstrasse 15, D-12049 Berlin. Tel. [phone].

Back to main text of Chapter 3


Short Circuit by Richard Douthwaite: links within this site


Link: http://www.feasta.org/documents/shortcircuit/index.html?sc3/monetaryreform.html

[bartermania]

Seek To Know
Presidential & Other Quotes on Money and Banking
Link: http://www.seek2know.net/money.html



Transforming Capitalism By Transforming Money

Creating Sustainable Money for healthy local and global economies


"If a nation expects to be ignorant and free, it expects what never was and never will be." -- Thomas Jefferson

The word money came from the Latin word "moneta" which originally meant, "warning." See word origin for other words like capital, mortgage, bank etc.

(See article on Transforming Money)

"You are a den of vipers and thieves and I intend to rout you out, and by the eternal God, I will rout you out. If Congress has the right to issue paper money, it was given them to be used by themselves, and not to be delegated to individuals or corporations.." -- Andrew Jackson's address to Congress 1829

"I have two great enemies, the southern army in front of me and the financial institutions, in the rear. Of the two, the one in the rear is the greatest enemy..... I see in the future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of the war." - Abraham Lincoln

You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury." - *Benjamin Franklin Autobiography

"If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe." - Hazard Circular - London Times 1865

"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power." -*Lincoln Abraham Senate document 23, Page 91. 1865

"The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the US, if they remained as one block, and as one nation, would attain economic and financial independence, which would upset their financial domination over the world." - Otto von Bismark, Chancellor of Germany 1876


"Whoever controls the volume of money in any country is absolute master of all industry and commerce." - President James A. Garfield (1831-1881)

"The earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race." As the land gets cultivated, "it is the value of the improvement, only, and not the earth itself, that is in individual property. Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent..to every person, rich or poor...because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did" - Thomas Paine 1796, p. 611; 612-613

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since 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." -- Napoleon Bonaparte, 1815

"If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way. It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people. " - Thomas Edison, The New York Times, December 6, 1921

"The Central Banks (which charge interest to governments for the money they produce from out of nothing, with no labour or wealth involved) have secured these loans against your future taxes. Without even asking you, a substantial part of your future worth has been put up as collateral. What Central Banks do in a big way with countries, your local bank will replicate on organisations and individuals, using the same slight of hand to produce the funds they lend out of thin air." - Alternative Trading Network article

"Whosoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realise that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." - James Garfield (assasinated within weeks of release of this statement during first year of his Presidency in 1881)

"Money plays the largest part in determining the course of history" - Karl Marx (Communist Manifesto)

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

"Those few who can understand the system (check book money and credit) will either be so interested in its profits, or so dependent on it favors, that there will be little opposition from that class, while on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear it burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests." - The Rothschild Brothers of London

"Every gun that is made, every warship launched, every rocket fired signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of it laborers, the genius of its scientists and the hopes of its children" — President Dwight D. Eisenhower
"Since 1940, Washington has spent the unimaginable sum of $20 trillion ($20,000,000,000,000!) on the military--enough money to have provided for adequate nutrition, clean water, electrification, housing, literacy, and basic health care for the world's entire population. In the next four years alone an additional $1.2 trillion will go down the military rathole. Today the U.S. military budget is bigger than that of the rest of the United Nations Security Council members combined. This bloated military establishment exists to protect and serve U.S. capital--not only to extend and maintain its domination in what used to be called the Third World, the oppressed countries, but also vis-a-vis its imperialist allies and rivals." - Richard Becker

"The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt modern civilization." - Otto von Bismarck, German Chancellor (1815-1898), after Lincoln assassination.


"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits." - Sir Josiah Stamp, President of the Bank of England in the 1920's, the second richest man in Britain

"Because of 'fractional' reserve system, banks, as a whole, can expand our money supply several times, by making loans and investments." "Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU." - Federal Reserve Bank, New York

"The actual process of money creation takes place in commercial banks. As noted earlier, demand liabilities of commercial banks are money.."Confidence in these forms of money also seems to be tied in some way to the fact that assets exist on the books of the government and the banks equal to the amount of money outstanding, even though most of the assets themselves are no more than pieces of paper--.", P.3."Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU.", p. 19. "The 12 regional reserve banks aren't government institutions, but corporations nominally 'owned' by member commercial banks.",
p. 27.- Federal Reserve Bank of Chicago

"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it (p15). The process by which banks create money is so simple that the mind is repelled." - John Kenneth Galbraith, Money: Whence it came, where it went - 1975, p29.

"The bank hath benefit of interest on all moneys which it creates out of nothing." - William Patterson (founder of Bank of England)

"The modern banking system manufactures money out of nothing. The process is, perhaps, the most, astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint, and un-mint the modern ledger-entry currency". Major L. L. B. Angus


"Banks lend by creating credit. They create the means of payment, out of nothing." - Ralph M. Hawtery (Former Secretary of the British Treasury)


"Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal -- that there is no human relation between master and slave." - Leo Tolstoy

"There does exist and has existed for a generation, an international Anglophile network which operates, to some extent, in the way the radical Right believes the Communists act. In fact, this network, which we may identify as the Round Table groups, has no aversion to cooperating with the Communists, or any other groups, and frequently does so. I know of the operations of this network because I have studied it for 20 years and was permitted for two years, in the early 1960s, to examine its papers and secret record." - Carroll Quigley, Georgetown University professor (deceased), in Tragedy and Hope: A History of the World in Our Time, 1966, p.950

"The greatest enemy of mankind is his ignorance of the inherent money power in all of us. When the realization of this comes to man, he will like Samson, push down the walls of his prison." - E.C. Riegel

"In numerous years following the war, the Federal Government ran a heavy surplus. It could not (however) pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply."- John Kenneth Galbrath

"Right after the Civil War there was considerable talk about reviving Lincoln's brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution." - W.Cleon Skousen.

"While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. Greed and fear of scarcity are being continuously created and amplified as a direct result of the kind of money we are using. For example, we can produce more than enough food to feed everybody, and there is definitely not enough work for everybody in the world, but there is clearly not enough money to pay for it all. In fact, the job of central banks is to create and maintain that currency scarcity. Money is created when banks lend it into existence When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000."- Bernard Lietaer, Former Central Banker
"In addition to almost unlimited usury, the bankers have another method of drawing vast amounts of wealth. The banks are able to approve or disapprove large loans to large and successful corporations to the extent that refusal of a loan will bring about a reduction in the selling price of the corporation's stock. After depressing the price, the bankers' agents buy large blocks of the company's stock. Then, if the bank suddenly approves a multi-million dollar loan to the company, the stock rises and is then sold for a profit. In this manner, billions of dollars are made with which to buy more stock. This practice is so refined today that the Federal Reserve Board need only announce to the newspapers an increase or decrease in their "discount rate" to send stocks soaring or crashing at their whim. Banks collect billions in interest by loaning to Government and the Corporations!" - Pastor Sheldon Emry

Instances of shrinking money supply with adoption of gold and rejection of silver standard:

"I went to America in the winter of 1872-73, authorised to secure, if I could, the passage of a bill demonetising silver. It was in the interest of those I represented - the governors of the Bank of England - to have it done. By 1873, gold coins were the only form of coin money." -
Ernest Seyd, agent of Bank of England.

"The disaster of the Dark Ages was caused by decreasing money and falling prices... Without money, civilisation could not have had a beginning, and with a diminishing supply, it must languish and unless relieved, finally perish. At the Christian era the metallic money of the Roman Empire amounted to $1,800 million. By the end of the fifteenth century it had shrunk to less than $200,million. History records no other such disastrous transition as that from the Roman Empire to the Dark Ages..." - United States Silver Commission

"I have never seen more senators express discontent with their jobs. ... I think the major cause is that, deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. .. We have defrauded our country to get ourselves elected." -John Danforth, Republican senator from Missouri, reported in the Arizona Republic of April 21, 1992

"Most Americans have no real understanding of the operation of the international money lenders... The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and... manipulates the credit of the United States." -Sen. Barry Goldwater (R-AZ)

"Your money's value is determined by a global casino of unprecedented proportions: $2 trillion are traded per day in foreign exchange markets, 100 times more than the trading volume of all the stockmarkets of the world combined. Only 2% of these foreign exchange transactions relate to the "real" economy reflecting movements of real goods and services in the world, and 98% are purely speculative. This global casino is triggering the foreign exchange crises which shook Mexico in 1994-5, Asia in 1997 and Russia in 1998. These emergencies are the dislocation symptoms of the old Industrial Age money system." - Future of Money by Bernard Lietaer

"US foreign policy during the Cold War was not primarily about keeping the USSR out of Western Europe, but rather about promoting the global capitalist system on a worldwide stage. American foreign policy since 1945 has primarily been driven by the goal of being hegemon of the world capitalist economic system. As protector of global capitalism, the United States has replaced the United Kingdom which played this role for more than a century before World War II. Although the 1947-91 Cold War presented an easy-to-understand threat to this objective, US diplomacy in these years was not primarily about keeping the USSR out of Western Europe (the usual explanation for containment), but rather about projecting its own power, globally. It was not about making the world safe for democracy, but about being the leader of the capitalist world, upholder of the international economic system." - Michael Sullivan

"Federal Reserve is not Federal and it has doubtful reserves. The name is an open deception designed to give this private bank the appearance that it is operating in the public's interest, when in fact it is run solely to gain private profit for its select stock holders. It came into being as the result of one of the slickest moves in financial history. On 23rd December 1913 the house of representatives had past the Federal Reserve Act, but it was still having difficulty getting it out of the senate. Most members of congress had gone home for the holidays, but unfortunately the senate had not adjourned sene die (without day) so they were technically still in session. There were only three members still present. On a unanimous consent voice vote the 1913 Federal Reserve Act was passed. No objection was made, possibly because there was no one there to object." from Who owns the FED


"All the ingredients for ending poverty of a person always comes neatly packaged with the person himself. A human being is born in this world fully equipped not only to take care of himself (which all other life-forms can do too), but also to contribute in enlarging the well-being of the world as a whole. Poverty is not created by the poor people. So we shouldn't give them an accusing look. They are the victims. Poverty has been created by the economic and social system that we have designed for the world. It is the institutions that we have built, and feel so proud of, which created poverty. It is the concepts we developed to understand the reality around us, made us see things wrongly! It is the failure at the top - rather than lack of capability at the bottom - which is the root cause of poverty. Concepts, institutions, and analytical frame conditions which created poverty, cannot end poverty. If we can intelligently re-work the frame conditions, poverty will be gone, never to come back again....Try to imagine how the economists would have built their theory if they had started out with an axiom that all men and women are created equal, that each of them is endowed with unlimited creativity, and each of them is a potential entrepreneur. In some important ways our designing of the theoretical framework of economics or the misrepresentation of it is responsible for perpetuating poverty."

- Commonwealth Lecture 2003 by Professor Muhammad Yunus, Creator of Grameen Bank

Transforming Money by Susmita Barua








Untaught History! : Disclaimer: You must think for yourself. And everything you read or hear you must verify on your own.

* The first law regulating Colonial money was passed by the British Parliament 1751, then expanded by a more restrictive law in 1763. The Stamp Act of 1765 required payment of various taxes in specie or English coin. Franklin reported that only one year after implementation of the prohibition on Colonial Scrip, the streets of the Colonies were filled with unemployed and beggars, just like those he had seen in England, because there was not enough money to pay for their goods and work. The English Banker's new laws had reduced the circulating medium by half. Franklin added that this was "the original Colonial Script was made illegal by the Currency Act of 1764 and true cause of the American Revolution;" and not the tax on tea or the Stamp Act, as has been taught our children for generations in "history" books. More on the Colonial Scripts & Greenbacks

On January 8, 1835, Jackson paid off the final installment on our national debt, and it was the only time in history that our national debt was reduced to zero, and we were able to accumulate a surplus, $35 million of which was distributed to the States. Nicholas P. Trist, the President’s personal secretary, said: “This is the crowning glory of A.J.’s life and the most important service he has ever rendered his country.” The Boston Post compared it to Christ throwing the money-changers out of the Temple.

*President Abraham Lincoln was assassinated after issuing the Greenback (which was a debt free non-interest-bearing note) to fund the Civil War. President James A. Garfield expressed his concern about currency problems just before his ssassination. On June 4, 1963 President John F. Kennedy signed Executive Order 11110 providing him with the authority "to issue silver certificates against all silver in the Treasury Five months later Kennedy was assassinated on November 22, 1963. There is a rumor that the "Kennedy silver certificates" were actually printed. In 1964 Johnson, serving as the voice of the Federal Reserve bankers, said, "Silver has become too valuable to be used as money." See Senate Document 23, Lincoln's Monetary Policy

*"In 1803, instead of borrowing from the bank, Napoleon sold territory west of the Mississippi to the 3rd President of the United States, Thomas Jefferson for 3 million dollars in gold; a deal known as the Louisiana Purchase. Three million dollars richer, Napoleon quickly gathered together an army and set about conquering much of Europe. Each place he went to, Napoleon found his opposition being financed by the Bank of England, making huge profits as Prussia, Austria and finally Russia all went
heavily into debt trying to stop him. Four years later, with the main French army in Russia, Nathan Rothschild took charge of a bold plan to smuggle a shipment of gold through France to finance an attack from Spain by the Duke of Wellington. Wellington's attack from the south and other defeats eventually forced Napoleon into exile. However in 1815 he escaped from his banishment in Elba, an Island off the coast of Italy, and returned to Paris. By March of that year Napoleon had equipped an army with the help of borrowed money from the Eubard Banking House of Paris. With 74,000 French troops led by Napoleon, sizing up to meet 67,000
British and other European Troops 200 miles NE of Paris on June 18th 1815, it was a difficult one to call. Back in London, the real potential winner, Nathan Rothschild, was poised to strike in a bold plan to take control of the British stock market, the bond market, and possibly even the Bank of England."

"Central Banking was initiated by international banker William Paterson in 1691, when he obtained the Charter for the Bank of England, which put the control of England’s money in a privately owned company which had the right to issue notes payable on demand against the security of bank loans to the crown. One of their first transactions was to loan 1.2 million pounds at 8% interest to William of Orange to help the king pay the cost of his war with Louis XIV of France. Paterson said: “The bank hath benefit of interest on all monies which it creates out of nothing.”

Civil War to Federal Reserve: Following their conquest of Europe early in the 1800s, the Rothschilds cast their covetous eyes on the most precious gem of them all - the United States. The Rothschilds and their friends sent in their financial termites to destroy America because it was becoming "prosperous beyond precedent." The first documentable evidence of Rothschild involvement in the financial affairs of the United States came in the late 1820s and early 1830s when the family, through their agent Nicholas Biddie, fought to defeat Andrew Jackson's move to curtail the international bankers. The Rothschilds lost the first round when in 1832, President Jackson vetoed the move to renew the charter of the "Bank of the United States" (a central bank controlled by the international bankers). In 1836 the bank went out of business. In the years following Independence, a close business relationship had developed between the cotton growing aristocracy in the South and the cotton manufacturers in England. The European bankers decided that this business connection was America's Achilles Heel, the door through which the young American Republic could be successfully attacked and overcome.

The Illustrated University History, 1878, p. 504, tells us that the southern states swarmed with British agents. These conspired with local politicians to work against the best interests of the United States. Their carefully sown and nurtured propaganda developed into open rebellion and resulted in the secession of South Carolina on December 29, 1860. Within weeks another six states joined the conspiracy against the Union, and broke away to form the Confederate States of America, with Jefferson Davis as President. The plotters raided armies, seized forts, arsenals, mints and other Union property. Even members of President Buchanan's Cabinet conspired to destroy the Union by damaging the public credit and working to bankrupt the nation. Buchanan claimed to deplore secession but took no steps to check it, even when a U.S. ship was fired upon by South Carolina shore batteries.
Shortly thereafter Abraham Lincoln became President, being inaugurated on March 4, 1861. Lincoln immediately ordered a blockade on Southern ports, to cut off supplies that were pouring in from Europe. The "official" date for the start of the Civil War is given as April 12, 1861, when Fort Sumter in South Carolina was bombarded by the Confederates, but it obviously began at a much earlier date. In December, 1861, large numbers of European Troops (British, French and Spanish) poured into Mexico in defiance of the Monroe Doctrine. This, together with widespread European aid to the Confederacy strongly indicated that the Crown was preparing to enter the war. The outlook for the North, and the future of the Union, was bleak indeed.

In this hour of extreme crisis, Lincoln appealed to the Crown's perennial enemy, Russia, for assistance. When the envelope containing Lincoln's urgent appeal was given to Czar Nicholas II, he weighed it unopened in his hand and stated: "Before we open this paper or know its contents, we grant any request it may contain." Unannounced, a Russian fleet under Admiral Liviski, steamed into New York harbor on September 24, 1863, and anchored there, The Russian Pacific fleet, under Admiral Popov, arrived in San Francisco on October 12. Of this Russian act, Gideon Wells said: "They arrived at the high tide of the Confederacy and the low tide of the North, causing England and France to hesitate long enough to turn the tide for the North" (Empire of "The City," p. 90). History reveals that the Rothschilds were heavily involved in financing both sides in the Civil War. Lincoln put a damper on their activities when, in 1862 and 1863, he refused to pay the exorbitant rates of interest demanded by the Rothschilds and issued constitutionally-authorized, interest free United States notes. For this and other acts of patriotism Lincoln was shot down in cold-blood by John Wilkes Booth on April 14, 1865, just five days after Lee surrendered to Grant at Appomattox Court House, Virginia.

Booth's grand-daughter, Izola Forrester, states in This One Mad Act that Lincoln's assassin had been in close contact with mysterious Europeans prior to the slaying, and had made at least one trip to Europe. Following the killing, Booth was whisked away to safety by members of the Knights of the Golden Circle. According to the author, Booth lived for many years following his disappearance. Undaunted by their initial failures to destroy the United States, the international bankers pursued their
objective with relentless zeal. Between the end of the Civil War and 1914, their main agents in the United States were Kuhn, Loeb and Co.and the J. P. Morgan Co. A brief history of Kuhn, Loeb and Co. appeared in Newsweek magazine on February 1, 1936: "Abraham Kuhn and Solomon Loeb were general merchandise merchants in Lafayette, Indiana, in 1850. As usual in newly settled regions, most transactions were on credit. They soon found out that they were bankers... In 1867, they
established Kuhn, Loeb and Co., bankers, in New York City, and took in a young German immigrant, Jacob Schiff, as partner. Young Schiff had important financial connections in Europe. After ten years, Jacob Schiff was head of Kuhn, Loeb and Co., Kuhn having retured. Under Schiff's guidance, the house brought European capital into contact with American industry."

Schiff's "important financial connections in Europe" were the Rothschilds and their German representatives, the M. M. Warburg Company of Hamburg and Amsterdam. Within twenty years the Rothschilds, through their Warburg-Schiff connection, had provided the capital that enabled John D. Rockefeller to greatly expand his Standard Oil empire. They also financed the activities of Edward Harriman (Railroads) and Andrew Carnegie (Steel). At the turn of the 20th century the Rothschilds, not satisfied with the progress being made by their American Operntions, sent one of their top experts, Paul Moritz Warburg, over to New York to take direct charge of their assault upon the only true champion of individual liberty and prosperity - the United States. At a hearing of the House Committee on Banking and Currency in 1913, Warburg revealed that he was "a member of
the banking firm of Kuhn, Loeb and Co. I came to this country in 1902, having been born and educated in the banking business in Hamburg, Germany, and studied banking in London and Paris, and have gone all around the world...."

In the late 1800s, people didn't study banking in London and "all around the world" unless they had a special mission to perform! Early in 1907, Jacob Schiff, the Rothschild-owned boss of Kuhn, Loeb and Co., in a speech to the New York
Chamber of Commerce, warned that "unless we have a Central Bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history." Shortly thereafter, the United States plunged into a monetary crisis that had all the earmarks of a skillfully planned Rothschild "job." The ensuing panic financially mined tens of thousands of innocent people across the country - and made billions for the banking elite. The purpose for the "crisis" was two-fold: (1) To make a financial "killing" for the Insiders, and (2) To impress on the American people the "great need" for a central bank. Paul Warburg told the Banking and Currency Committee: "In the Panic of 1907, the first suggestion I made was, "let us have a national clearing house" [Central Bank].

The Aldrich Plan [for a Central Bank] contains many things that are simply fundamental rules of banking. Your aim must be the same...." Digging deep into their bag of deceitful practices, the international bankers pulled off their greatest
coup to date - the creation of the privately owned Federal Reserve System, which placed control of the finances of the United States securely in the hands of the power-crazed money monopolists. Paul Warburg became the "Fed's" first chairman!
Congressman Charles Lindbergh put his finger firmly on the truth when he stated, just after the "Federal" Reserve Act was passed by a depleted Congress on December 23, 1913: "The Act establishes the most gigantic trust on earth. When the President [Wilson] signs this Bill, the invisible government of the monetary power will be legalized....The greatest crime of the ages is perpetrated by this banking and currency bill." [See More here]

Financing of World Wars and Communism

Untaught Economics and Creature from the Jekyll Island

The Rockefeller Syndicate by Eustace Mullins

"These twelve private credit monopolies (under Federal Reserve) were deceitfully and disloyally foisted upon this Country by the bankers who came here from Europe and repaid us our hospitality by undermining our American institutions. Those bankers took money out of this Country to finance Japan in a war against Russia. They created a reign of terror in Russia with our money in order to help that war along. They instigated the separate peace between Germany and Russia, and thus drove a wedge between the allies in World War. They financed Trotsky's passage from New York to Russia so that he might assist in the destruction of the Russian Empire. They fomented and instigated the Russian Revolution, and placed a large fund of American dollars at Trotsky's disposal in one of their branch banks in Sweden so that through him Russian homes might be thoroughly broken up and Russian children flung far and wide from their natural protectors. They have since begun breaking up of American homes and the dispersal of American children" - 1934 Speech by Congressman Louis T. Mcfadden. (MacFadden tried to tell the American people that the U.S. Government was "nearly bankrupt". Shortly thereafter, he died under mysterious circumstances.)

Federal Reserve at Wiki
"The Grip of Death: a study of modern money, debt slavery and destructive economics" by Michael Rowbotham (Jon Carpenter Publishing, 1998)


The Nature of Money and Other articles at CFoss.com
31 Questions and Answers on IRS

History of Central Banking in US

The history of central banking in the United States does not begin with the Federal Reserve. The Bank of the United States received its charter in 1791 from the U.S. Congress and was signed by President Washington. The Bank's charter was designed by Secretary of the Treasury Alexander Hamilton, modeling it after the Bank of England, the British central bank. The Bank met with considerable controversy. Agrarian interests were opposed to the Bank on the grounds that they feared it would favor commercial and industrial interests over their own, and that it would promote the use of paper currency at the expense of gold and silver specie (Kidwell, 54).

Secretary of State Thomas Jefferson believed the Bank was unconstitutional because it was an unauthorized extension of federal power. Congress, Jefferson argued, possessed only delegated powers which were specifically enumerated in the constitution. The only possible source of authority to charter the Bank, Jefferson believed, was in the necessary and proper clause (Art. I, Sec. 8, Cl. 18). However, he cautioned that if the clause could be interpreted so broadly in this case, then there was no real limit to what Congress could do. Then, curiously, in the memorandum in which he articulated his thoughts on this matter, Jefferson advised that if the President felt that the pros and cons of constitutionality seemed about equal, then out of respect to the Congress which passed the legislation the President could sign it (Dunne, 17-19).

The free banking era ended in 1863 and 1864 with the passage of the National Banking Acts. These laws reasserted federal influence in the functioning of the nation's financial system. The Act had three primary purposes: (1) create a system of national banks, (2) to create a uniform national currency, and (3) to create an active secondary market for Treasury securities to help finance the Civil War (for the Union's side). By 1865 there were 1,500 national banks, about 800 of which had converted from state banking charters. An imposition of tax on State banks eventually led to demise of State banks (325 were left by 1870).

During the free banking era of 1837-1863 the federal government divorced itself from almost all attempts to regulate the banking system. Following the demise of the Second Bank of the United States in 1836, the nation was left with state banks as its only supplier of banking services. States were left in charge of regulating the banks they chartered, and in the states that adopted the free banking laws, this meant little or no regular supervision. By the onset of the Civil War state banks numbered 1,562.

To further facilitate the growth of banking, the 1837 Michigan Act was adopted as the first of the nation's free banking laws. Literally, a free banking system is one without any form of government restriction on banking activities, save the enforcement of legal contracts and prohibitions against fraud (Sechrest, 3). The Michigan Act did not achieve this pure definition, but it and the other free banking laws enacted in subsequent years constitute the closest the U.S. has come to literal free banking. Read More here

The English Civil War was caused by the Bank of Rome (precursor of Bank of England)

The Money Masters video

The Perfect Economy

About Islamic Banking

Origin of Money (in diverse areas) and Banking (in Sumeria)

169 Questions&Answers on Money, Subcomm. on Domestic Finance, Comm. on Banking & Currency 9-21-1964

"We have no poor houses in the Colonies, and if we had, we would have no one to put in them, as in the Colonies there is not a single unemployed man, no poor and no vagabonds." - Benjamin Franklin's comment to England's Representative. Also see the Hazard Circular, 1862 distributed to Wealthy Aristocrats prior to Civil War.

"When Dr. Jacques Jaikaran visited Guernsey in 1990, he reported on the state of the Guernsey economy in his book The Debt Virus: There were about 60,000 permanent residents; the average family owned 3.3 cars; their unemployment rate was zero and their standard of living was very high. Also, there was no public debt and a surplus of public funds was earning them interest. The Guernsey Treasury increased the money supply by 50% over a 3 year period and this increase did not cause any inflation."
Read about debt-free money systemThe Isle of Guernsey at Monetary Reform Magazine Archive


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