9. THE BANK OF NORTH AMERICA
Towards the end of the Revolution, the Continental Congress, meeting at Independence Hall in Philadelphia, grew desperate for money. In 1781, they allowed Robert Morris, their Financial Superintendent, to open a privately-owned central bank in hopes that would help. Incidentally, Morris was a wealthy man who had grown wealthier during the Revolution by trading in war materials.
Called the Bank of North America, the new bank was closely modeled after the Bank of England. It was allowed to practice (or rather, it was not prohibited from) fractional reserve banking - that is, it could lend out money it didn't have, then charge interest on it. If you or I were to do that, we would be charged with fraud, a felony. Few understood this practice at the time, which was, of course, concealed from the public and politicians as much as possible. Further, the bank was given a monopoly on issuing bank notes, acceptable in payment of taxes.
The Bank's charter called for private investors to put up $400,000 worth of initial capital. But when Morris was unable to raise the money, he brazenly used his political influence to have gold deposited in the bank which had been loaned to America by France. He then loaned this money to himself and his friends to reinvest in shares of the bank. The second American Bank War was on.
Soon, the dangers became clear. The value of American currency continued to plummet, so, 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, a patriot named William Findley, of Pennsylvania, 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."
Plutocracy, once established, will corrupt the legislature so that laws will be made in its favor, and the administration of justice, to favor the rich.
The men behind the Bank of North America - Alexander Hamilton, Robert Moms, and the Bank's President, Thomas Willing - did not give up.
Only six years later, Hamilton - then Secretary of the Treasury - and his mentor, Morris, rammed a new privately-owned central bank through the new Congress.
Called the First Bank of the United States, Thomas Willing again served as the Bank's President. The players were the same, only the name of the Bank was changed.
Acknowledgement and credits
The Money Masters: How International Bankers Gained Control of America
Produced by Patrick S. J. Carmack
Directed by Bill Still
Royalty Production Company 1998