Makin,
330
THE CREATURE FROM JEKYLL ISLAND
United States. It was modelled closely after the Bank of England, which means it was almost an exact replica of the previous Bank of North America. In fact, as evidence of continuity with the past, the president of the new bank was Thomas Willing, the same man who had been a partner of Robert Morris and president of the old bank.1
As before, the new Bank was given a monopoly in the issuance of bank notes. Once again, these notes were not forced on the people as legal tender for
The charter specified that the Bank was required at all times to redeem its notes in gold or silver specie upon demand by the depositor. That was an admirable provision but, since the Bank was not also required to keep specie in its vaults in the full amount of its note obligations, it was a mathematical impossibility to uphold.
As with the old Bank of North America, the new Bank of the United States was to have eighty per cent of its capital provided by private investors with the federal government putting up only twenty per cent. That was a mere bookkeeping sleight-of-hand, however, because it had been prearranged for the Bank to immediately loan back to the federal government exactly that same amount. Reminiscent of the Morris scheme in capitalizing the Bank of North America, this federal "investment" was essentially a means whereby federal funds could be used to make up the
short-fall of the private investors. "Call it by what name you please," said Jefferson, this was not a loan or an investment but an outright gift. And he was certainly right. The Bank was able to open its doors with less than nine per cent of the private capital required by its charter. The total capitalization was specified at $10 million, which means that $8 million was to come from private stockholders. However, as John Kenneth Galbraith wryly observed: "Numerous thrifty participants confined themselves to a modest down payment, and the bank began operations on around $675,000 in hard cash."2
1. It is interesting to note that, as a member of the Continental Congress, Willing had been one of those who voted against the Declaration of Independence.
2. Galbraith, p. 72
THE CREATURE COMES TO AMERICA 331
THE CREATURE COMES FROM EUROPE
Who were these private investors? Their names do not appear in the published literature, but we can be certain they included the Congressmen and Senators—and their associates—who engineered the charter. But there is an interesting line in Galbraith's text that hints at another dimension to the composition of this group. On page 72 of
What a story is hidden behind that innocuous statement. The blunt reality is that the Rothschild banking dynasty in Europe was the dominant force, both financially and politically, in the formation of the Bank of the United States. Biographer, Derek Wilson, explains:
Over the years since N.M. [Rothschild], the Manchester textile manufacturer, h a d b o u g h t cotton from the Southern states, Rothschilds had developed heavy American commitments. Nathan ...
had made loans to various states of the Union, had been, for a time, the official European banker for the US government and was a pledged supporter of the Bank of the United States.
Gustavus Myers, in his
Under the surface, the Rothschilds long had a powerful influence in dictating American financial laws. The law records show that they were the power in the old Bank of the United States.
The Rothschilds, therefore, were not merely investors nor just an important power. They were
INFLATION ALL OVER AGAIN
From the beginning, the primary purpose of the Bank was to create money for the federal government. Money for the private 1. Derek Wilson, p. 178.
2. Gustavus Myers,
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