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Greenbacks in the American Civil War |
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| Uploaded on Sunday 30 March, 2014 to the money trust |
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| The National Banking Acts of 1863 and 1864 |
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Since Andrew Jackson's toppling of the Second Bank of the United States in 1836, the United States remained without a central bank, but, the root cause of boom and bust trends, fractional reserve lending, remained in use by the numerous state chartered banks. This led to economic instability in the years prior to the Civil War of 1861.
The money trust tried in vain to regain their cherished central bank. They would use any means necessary to achieve this. If they could not get their way, they would plunge America into war, much like they had done in 1812 after the First Bank of the United States was not rechartered. Why war? Because warfare generates debt and dependency.
History shows that slavery is a well documented cause for the outbreak of the Civil War. The northern states had, for the most part, eradicated slavery but the southern states' economies still depended on it in sectors such as e.g. cotton picking. The 1861 Constitution of the Confederate States references slavery no less than ten times and the state of Texas (one of 13 secessionist states) wrote in its declaration of secession the following:
"We hold as undeniable truths that the governments of the various states, and of the confederacy itself, were established exclusively by the white race, for themselves and their posterity; that the African race had no agency in their establishment; that they were rightfully held and regarded as an inferior and dependent race, and in that condition only could their existence in this country be rendered beneficial or tolerable."
By the 1860s, the northern states had become averse to the institution of slavery, hence a reason why the southern states seceded from the union. Other economic factors too played a part. The south had benefited from advantageous tax reductions with the introduction of the Tariff of 1857. This tax reduction was authored primarily by Robert Mercer Taliaferro Hunter of Virginia. The bill was offered in response to a federal budget surplus in the mid-1850s. Hunter intended to disperse this surplus through a tax cut.
Supporters of the bill came mostly from southern and agricultural states, which tended to be export dependent and also held the "free trade" position. They were also joined by a handful of New England wool manufacturers. This constituency traditionally supported protectionism in the 19th century.
But by 1861, the tide had shifted for the southern states with the introduction of the Morrill Tariff, named after its sponsor, Representative Justin Smith Morrill of Vermont, who drafted it with the advice of Henry Charles Carey, an economist of Pennsylvania.
Prior to the Morrill Tariff, agriculturalists in southern states turned to Europe for their cheap industrial equipment, opting to buy there rather than to purchase from the northern states. This trend drove Congress to put through protective tariffs in order to protect northern industrialists from foreign competition, thereby imposing an import tax on any goods brought in from outside of America. Unimpressed by these measures, European countries retaliated by halting cotton imports from the United States. This ban was a heavy blow to the economies of the southern states since they were heavily export dependent. Their problems hereon were twofold as the south now had diminishing trade with Europe and so too were they forced to pay higher prices to northern industrialists for their basic necessities of life. Tensions between the north and the south had reached boiling point by this time.
Another contributory factor for the division of the north from the south came from external intervention by, we suspect, mainly European financiers who conspired to unsettle and break up the union of the United States.
Within months into the Civil War, the central bankers loaned Napoleon III two hundred and ten million francs to seize Mexico and station troops along the southern border of the United States, taking advantage of the unrest caused by the Civil War, and, violate the Monroe Doctrine of 1823 and return Mexico to colonial rule.
With the outbreak of the war against the south imminent, President Lincoln sought bank loans to fund the military. The banks offered Lincoln loans at high interest varying from 24% to 36%. Lincoln, not willing to indebt into perpetuity the posterity of his country, refused to borrow at such high rates. Unsure about his next steps, he turned to an old friend for advice, Colonel Edmund Dick Taylor of Illinois. When he was asked what would be the best course of action to raise money, he suggested for Congress to pass a bill authorising the printing of full legal tender treasury notes. He is quoted as having said to President Lincoln:
"Why, Lincoln, that is easy; just get Congress to pass a bill authorising the printing of full legal tender treasury notes... and pay your soldiers with them and go ahead and win your war with them also."
This ingenious solution led to the birth of United States notes, known popularly as the "greenback" (a pseudonym depicting the green ink on the dollar notes), which was essentially fiat money backed by nothing more than the credibility of the U.S. government coupled with the good faith of the American people. The greenback dollar came at no cost to the government. It had no intrinsic value but it worked well nonetheless because people accepted it like any other money. On the 25th of February, 1862, Congress passed the Legal Tender Act, which authorized the first issuance of United States notes, giving Lincoln the means to go forth with confronting the south.
Fast forward two years into the Civil War to 1863, with federal and confederate troops beginning to mass for the decisive battle (Battle of Gettysburg) and the treasury in need of further congressional authority to issue more greenbacks, Lincoln, together with his Secretary of the Treasury, Salmon P. Chase, promoted the National Bank Act to raise more liquidity. The act enabled banks to buy up government issued treasury bonds with their newly created money, National Bank notes. These would gradually supersede the United States notes until they too would be replaced, in 1914, by Federal Reserve notes.
America's debt based monetary system predates 1913, when the Federal Reserve System (the FED) was set up. Trends of government borrowing/deficit spending really began in 1863 with the passing of the National Bank Act. A central bank, whether or not in existence, is irrelevant because what really counts is who's behind it and what is its modus operandi. Abolishing the FED on its own without addressing the need for monetary reform will not solve America’s debt problems.
The national debt numbers tens of trillions of dollars and cannot possibly be repaid under this monetary system, nor do the money trust wish for it to be repaid because doing so would put an end to the vast sums of money which they generate off the federal government in interest payments. |
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