Creature From Jekyll Island by G. Edward полностью

After five more years of analysis and debate, Sir Robert Peel succeeded in passing a banking reform act. It squarely faced the cause of England's booms and busts: an elastic money supply. What Peel's Bank Act of 1844 attempted to do was to limit the amount of money the banks could create to roughly the same as it would be if 1- Roy W. Jastram, The Golden Constant (New York: Wiley, 1977), p. 113.

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THE CREATURE FROM JEKYLL ISLAND

their banknotes were backed by gold or silver. It was a good try, but it ultimately failed because it fell short on three counts: (1) It was a political compromise and was not strict enough, allowing the banks to still create lending money out of nothing to the extent of

£14,000,000; in other words, a "fractional" amount thought to be safe at the time; (2) The limitation applied only to paper currency issued by the Bank. It did not apply to checkbook money, and that was then becoming the preferred form of exchange. Consequently, the so-called reform did not even apply to the area where the greatest amount of abuse was taking place; and (3) The basic concept was allowed to remain unchallenged that man, in his infinite political wisdom, can determine what the money supply should be more effectively than an unmanaged system of gold or silver responding to the law of supply and demand.

THE ROLLER COASTER CONTINUES

Within three years of the "reform," England faced another crisis with still more bank failures and more losses to depositors. But when the Bank of England tottered on the edge of insolvency, once again the government intervened. In 1847, the Bank was exempted from the legal reserve requirements of the Peel Act. Such is the rock-steady dependability of man-made limits to the money supply.

Groseclose continues the story:

Ten years later, in 1857, another crisis occurred, due to excessiveand unwise lending as a result of over-optimism regarding foreigntrade prospects. The bank found itself in the same position as in 1847,and similar measures were taken. On this occasion the bank wasforced to use the authority to increase its fiduciary [debt-based money]

issue beyond the limit imposed by the Bank Charter Act....

Again in 1866, the growth of banking without sufficient attentionto liquidity, and the use of bank credit to support a speculativecraze...prepared the way for a crash which was finally precipitated bythe failure of the famous house of Overend, Gurney and Co. The Act of1844 was once more suspended....

In 1890, the Bank of England once again faced crisis, again theresult of widespread and excessive speculation in foreign securities,particularly American and Argentine. This time it was the failure ofBaring Brothers that precipitated the crash.

1. Groseclose, Money and Man, pp. 195-96.

THE SECRET SCIENCE

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THE MECHANISM SPREADS TO OTHER COUNTRIES

It is an incredible fact of history that, in spite of the general and recurring failures of the Bank of England during these years, the central-bank mechanism was so attractive to the political and monetary scientists that it became the model for all of Europe. The Bank of Prussia became the Reichsbank. Napoleon established the Banque de France. A few decades later, the concept became the venerated model for the Federal Reserve System. Who cares if the scheme is destructive? Here is the perfect tool for obtaining unlimited funding for politicians and endless profits for bankers.

And, best of all, the little people who pay the bills for both groups have practically no idea what is being done to them.

SUMMARY