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provide a feeling of unity between the colonies. Remember, most By the time the first shots were fired in Concord and Lexington, colonial scrip was just paper money, debt-free money, printed in Massachusetts, on 19 April 1775, the colonies had been drained of the public interest and not really backed by gold or silver coin. In _ gold and silver coin by British taxation. As a result, the continen- other words, it was a fiat currency. tal government had no choice but to print its own paper money to Officials of the Bank of England asked Franklin how he would finance the war. account for the newfound prosperity of the colonies. Without At the start of the Revolution, the American colonial money hesitation he replied: supply stood at $12 million. By the end of the war, it was nearly That is simple. In the colonies we issue our own money. It is $500 million. This was partly a result of massive British counter- called Colonial Scrip. We issue it in proper proportion to the feiting. As a result, the currency was virtually worthless. Shoes demands of trade and industry to make the products pass eas - sold for $5,000 a pair. As George Washington lamented: ily from the producers to the consumers... In this manner, A wagon load of money will scarcely purchase a wagon load creating for ourselves our own paper money, we control its of provisions. purchasing power, and we have no interest to pay to no one. Earlier, colonial scrip had worked because just enough was This was just common sense to Franklin, but you can imagine issued to facilitate trade, and counterfeiting was minimal. Today, the impact it had at the Bank of England. America had learned those who support a gold-backed currency point to this period the secret of money, and that genie had to be returned to its bottle during the Revolution to demonstrate the evils of a fiat currency. as soon as possible. As a result, Parliament hurriedly passed the But remember, the same currency had worked so well 20 years Currency Act of 1764. This prohibited colonial officials from earlier during times of peace that the Bank of England had issuing their own money, and ordered them to pay all future taxes Parliament outlaw it, and during the war the British deliberately in gold or silver coins. In other words, it forced the colonies onto sought to undermine it by counterfeiting it in England and ship- a gold and silver standard. This initiated the first intense phase of _ ping it 'by the bale’ to the colonies. the First Bank War in America, which ended in defeat for the Money Changers, beginning with the Declaration of | 9. THE BANK OF NORTH AMERICA Independence and concluding with Towards the end of the Revolution, the subsequent peace deal, the Treaty i i the continental Congress, meeting at of Paris, in 1783. There Is no evidence that the Independence Hall in Philadelphia, For those who believe that a gold Rothschilds predominant grew desperate for money. In 1781, standard is the answer for America's standing in European or world they allowed Robert Morris, their current monetary problems, look . Financial Superintendent, to open a what happened to America after the finance has changed. privately owned central bank in the Currency Act of 1764 was passed. In To the contrary, as their wealth hope that this would help. his autobiography, Franklin wrote: Incidentally, Morris was a wealthy In one year the conditions were has increased, they have simply man who had grown wealthier during increased their "passion for so reversed that the era of pros - the Revolution by trading in war perity ended and a depression materials. set in, to such an extent that the anonymity’. The new bank, the Bank of North streets of the Colonies were America, was closely modelled on the filled with unemployed. Bank of England. It was allowed to Franklin claims that this was even the basic cause of the practise (or rather, it was not prohibited from practising) fraction- American Revolution. As Franklin put it in his autobiography: al reserve banking; that is, it could lend out money it didn't have, The Colonies would gladly have borne the little tax on tea then charge interest on it. If you or I were to do that, we would be and other matters had it not been that England took away charged with fraud—a felony. Few understood this practice at the from the Colonies their money, which created unemployment time, and, of course, it was concealed from the public and politi- and dissatisfaction. cians as much as possible. Further, the bank was given a monop- In 1774, Parliament passed the Stamp Act which required thata _ oly on issuing banknotes, acceptable in payment of taxes. stamp be placed on every instrument of commerce, indicating The bank's charter called for private investors to put up payment of tax in gold—which again threatened the colonial $400,000 worth of initial capital. But when Morris was unable to paper money. Less than two weeks later, the Massachusetts raise the money, he brazenly used his political influence to have Committee of Safety passed a resolution directing the issuance of gold deposited in the bank—gold which had been lent to America more colonial currency and honouring the currency of other by France. He then lent this money to himself and his friends to colonies. reinvest in shares of the bank. The Second American Bank War On 10 and 22 June 1775, the Congress of the Colonies resolved was on. to issue $2 million in paper money based on the credit and faith of Soon, the dangers became clear. The value of American cur- the "United Colonies". This flew in the face of the Bank of rency continued to plummet. Four years later, in 1785, the bank's England and Parliament. It constituted an act of defiance, a charter was not renewed, effectively ending the threat of the refusal to accept a monetary system unjust to the people of the bank's power. Thus the Second American Bank War quickly colonies. ended in defeat for the Money Changers. Thus the bills of credit [i.e., paper money] which historians The leader of the successful effort to kill the bank was a patriot with ignorance or prejudice have belittled as instruments of named William Findley, from Pennsylvania. He explained the reckless financial policy were really the standards of the problem this way: Revolution. They were more than this: they were the This institution, having no principle but that of avarice, will Revolution itself. never be varied in its object...to engross all the wealth, power Alaw ar Dal Mae hict. and in a ak tha otata By the time the first shots were fired in Concord and Lexington, Massachusetts, on 19 April 1775, the colonies had been drained of gold and silver coin by British taxation. As a result, the continen- tal government had no choice but to print its own paper money to finance the war. At the start of the Revolution, the American colonial money supply stood at $12 million. By the end of the war, it was nearly $500 million. This was partly a result of massive British counter- feiting. As a result, the currency was virtually worthless. Shoes sold for $5,000 a pair. As George Washington lamented: A wagon load of money will scarcely purchase a wagon load of provisions. Earlier, colonial scrip had worked because just enough was issued to facilitate trade, and counterfeiting was minimal. Today, those who support a gold-backed currency point to this period during the Revolution to demonstrate the evils of a fiat currency. But remember, the same currency had worked so well 20 years earlier during times of peace that the Bank of England had Parliament outlaw it, and during the war the British deliberately sought to undermine it by counterfeiting it in England and ship- ping it 'by the bale’ to the colonies. standing in European or world finance has changed. To the contrary, as their wealth has increased, they have simply increased their ‘passion for anonymity’. was on. Soon, the dangers became clear. The value of American cur- rency continued to plummet. Four years later, in 1785, the bank's charter was not renewed, effectively ending the threat of the bank's power. Thus the Second American Bank War quickly ended in defeat for the Money Changers. The leader of the successful effort to kill the bank was a patriot named William Findley, from Pennsylvania. He explained the problem this way: This institution, having no principle but that of avarice, will never be varied in its object...to engross all the wealth, power and influence of the state. NEXUS - 13 There is no evidence that the Rothschilds’ predominant — Alexander Del Mar, historian FEBRUARY — MARCH 1999