RAILROADS
In 1850 the only outlet or inlet for Chicago was a series of river connections which led to the Mississippi River
and New Orleans. A direct rail connection between Chicago and New Orleans was necessary. The Illinois Central
Railroad was set up to achieve a direct railroad connection between Chicago and New Orleans. The attorney for
the corporation was Abraham Lincoln. Before he became President of USA Lincoln had a vested economic
interest in shattering New Orleans’ domination of US shipping industry.
When corporation was established three forces sought to own and control railroad. 1. based in southern Illinois.
2. Morgan interests in New York City. 3. group from London, England. English group gained control and still
maintains control of Illinois Central.
At the time of Reconstruction, Northern and European interests were attempting to construct and dominate new
Southern railroads. One Mississipian, William Falkner, gained ownership of a local railroad in Mississippi.
In order to assist his cause with railroads he sought a position in the Mississippi Legislature. He won. On
evening of his election Falkner was shot and killed by a former partner who had been enticed by an owner of an
Eastern USA railroad.
EUROPEAN CENTRAL BANKS
Most European nations had developed "central" banks. Concept of "Central Bank" evolved out of deficiencies
of system. Ordinary banks unable to supply enough currency to keep system moving and stimulated. So create a
"banker's bank" and loan money to banks. Then get Government to assume responsibility for notes.
Government will raise revenues to back notes through taxation.
At time of "great depression" Central Banks began to change strategy. They had given too much time and
energy to protecting value of money in relation to gold and other precious metals and too little time and energy
to stimulating economic development. They abandoned "gold standard". No longer necessary to back a
currency with a corresponding amount of gold or other precious metal.
The idea of "Central Banks" did not catch on until twentieth century. Concept was not new. John Law proposed
concept two centuries earlier. Bank of England moving toward that concept for 3 centuries.
3 principles of John Law became part of strategy of Central Banks. 1. When system breaks down, governments
assume responsibility for debts. 2. Imports always exceed exports. Keep them in debt. 3. Bank can assume many
of duties of government without actually being a government.
Some of John Law's principles (e.g. monopoly of trade, arming and equipping vessels of war) Central Banks
have not assumed but have left to multi national corporations they assist.
2 concepts evolved from Central Banks. 1. Expanded credit, especially for corporations. If ordinary person
borrows money and takes out "note" that is considered liability, something you repay. If corporation borrows
money, it can take that "note" use it as an asset and borrow more money. 2 bankruptcy. We used to think of
bankruptcy as failure. Today, "bankruptcy" is a booming business. Lawyers, accountants, corporate officials and
officers all make large sums of money from process of bankruptcy. The bankrupt corporation simply takes on a
new life, a new structure. It is corporate reincarnation. Concepts are not new. They were advocated by John
Law 250 years ago.
In 16th century modern central banks began to emerge in most European nations. They were the banker of
government. In some cases they were allowed to extend credit and/or make loans even though their charter did
not permit them to do so. But if you are the banker to government, you get away with things other banks cannot.
By World War 1 most European central banks involved in large scale purchase of government securities. This
was extremely important in financing the war. In course of World War 2 German banks penetrated deeply into
financial systems of several occupied countries. This also helped finance war effort of Germany.
In post war Germany Allies declared all shares purchased by Germans to be void. All foreign affiliates of German
banks liquidated. All central banks of Europe nationalized.
BANKING IN BRITISH EMPIRE
history of banking in Great Britain and the Commonwealth especially interesting. Original bankers were
goldsmiths. By 1697 Bank of England had taken over banking market. Bank of England lent money to the
government. Eventually began issuing its own notes. Most of its cash reserve held in Bank of England notes
rather than gold.
By 1850 Bank of England abandoned all private deposits and concentrated exclusively on central banking.
London became banker to world. After 1890 Bank of England became teacher of other banks in world. She
began communicating "hints" on banking to other banks. Established a quarterly conference on banking for all
bankers of the world. Within 30 years English banking came to consist of a very few large banks operating a
nation wide system of branches.
Most Commonwealth nations held significant part of capital in London Most British colonies controlled by
British banks. Commonwealth means wealth of all nations held in common in London???
Central banking in USA quite a different story. 2 attempts made early in our history to establish central bank.
Charter issued for the First Bank of USA (1791-1811). Policy of this bank severely restricted credit. Bank
received notes of private banks and immediately sought their redemption in gold or silver. Banks could offer
notes only if they had gold or silver to back the note.
1816 Second Bank of USA chartered. Charter came up for renewal in 1836. Andrew Jackson opposed it and
charter not renewed. Federal Government gave up any responsibility for monetary system. States (especially
New York) took over.
Federal Government abandoned monetary system chaotic conditions existed until 1863. States had own
currencies. Often these redeemed at 10% to 15% discount in other states. Part of reason Southern States could
wage the Civil War.
1863 U.S. Congress passed National Bank Act of 1863 to fund the war (Civil War). Proved disappointing.
Revenues not raised. Also hoped that national bank charters would become so attractive that state banks would
convert to national charters. This also failed to happen.
FEDERAL RESERVE
Beginning of 20th century, USA still lacked effective federal banking system even though European nations had
such systems 100years or more. Federal Reserve Bank set up in 1913. Initially significant opposition to the
Bank. A secret meeting was held near Savannah, Georgia. As a result of that meeting the Bank became a reality.
Federal Reserve System limped along for first 25 years of existence. Not until nation began to prepare for war
that economic activity quickened. As banker of the Federal Government, the Federal Reserve allowed the
public debt to grow from $45 billion in 1940 to $279 billion in 1945, a 520% increase in five years.
Like European central banks, Federal Reserve thrived on being the bank of government and especially thrived
in times of war.
At the time Federal Reserve Bank was set up, Arsene Pujo, a U.S. Representative from Louisiana published a
report on the banking industry in the USA. According to Pujo's findings J. P. Morgan and Co., First National Bank,
National City Bank, and Guaranty Trust Co. controled 118 directorships in 14 banks. They also controlled 105
directorships in 12 transportation companies, 63 directorships in 24 producing and trading companies, and 25
directorships in 12 public utility companies.
J.P. Morgan was an agent of the British Government. Part of their role was to purchase munitions. J. P. Morgan
company later became the U.S. representative to the Bank for International Settlements.
BANK FOR INTERNATIONAL SETTLEMENTS
Few people even know Bank for International Settlements exists. It was set up after World War I to help pay off
German debts resulting from the War. 6 European central banks and a private US concern controlled Bank. In
addition to acting as agent for paying off debts there were two other functions of the Bank as stated in their
bylaws:
1. PROMOTE CENTRAL BANK CO-OPERATION
2. PROVIDE FACILITIES FOR INTERNATIONAL FINANCIAL CO-OPERATION
Bank's web site traces history of Bank's ownership. Initially part of Belgian and part of French issues as well as
the entire U.S. issue were sold to private investors. By end of year 2000 about 14% of Bank's investments were
held in private hands. January 8, 2001 an extraordinary general meeting restricted stock ownership to central
banks. What they don't tell us is central banks are privately owned.
Over years Bank for International Settlements (BIS) has been prime force in creation of an international
monetary system completely immune from governmental intervention of any nation. BIS is primary forum for
central bank co-operation. Every year its staff performs a thorough analysis of the economy of every nation in
world. That analysis based upon what BIS considers an economy ought to be. BIS is primary forum for
exchanging information among the world's central banks. Much of information is generated by the Bank for
International Settlements. That's real power: generating information used in making money decisions.
The Bank is the primary (only) tool for promoting co-operation among central banks. During 1960's and 1970's
the Bank was also tool for promoting and defending decisions of the Bretton Woods conference.
Bank intervenes in international monetary crises. It will serve as agent which manages capital flows during debt
crises, oil crises.
Major function of Bank is promote economic globalization. European central banks are to be major force in
creating single world economy. Have not come far from European economic interests destroying the economy
of Native American then seizing his land in payment of debt.
Bank continues to prop up ailing central banks. Continues completely immune from jurisdiction of any nation or
even of the United Nations.
July 1- 22, 1944 monetary leaders from 44 Western nations met at Bretton Woods, New Hampshire. While the rest
of the world was trying to end a devastating war, their goal was to set up a single monetary system for the entire
world.
Most of the world was concerned about ending the war, trying to rebuild, helping individuals and families put
their lives back together, reconverting to an economy based on peace rather than war. These men had a quite
different goal: set up a single monetary system for the entire world.
One of the goals formulated by the conference was to shut down The Bank for International Settlements (BIS).
However, once the conference ended, forces for BIS managed to lobby not only for it continuing but that it
actually become the bank for the world wide monetary system.
At Bretton Woods, they set up the International Monetary Fund and the International Bank for Reconstruction
and Development (the World Bank).
The World Bank is a bank of member nations. Underdeveloped nations were encouraged to become mebers of
the World Bank. The World Bank may make loans:
1. directly to member nations
2. to political subsidiaries of member nations
3. to private business or agricultural enterprise in member nations
Loans made to private business or agricultural enterprises must be guaranteed by the government, the nation's
central bank or some comparable agency.
Since 1954 the majority of loans made by the World Bank have been for
public utilities railroads
airlines and airports ports and inland waterways
telecommunications pipelines
highways and roads industrial enterprises
These loans are designed to principally aid large corporations who wish to come in and extract goods from
underdeveloped nations. They are not designed to help nations develop or meet the basic needs of its citizens.
It is simply a more advanced and sophisticated takeoff on the 18th century European ploy which sold Native
Americans a few guns at 30 deerskins each. This deal ultimately allowed non Indians to take control of the land
and its resources and assets in the name of "helping" the natives.
According to a "gentlemen's agreement" made at Bretton Woods The United States was to buy up any excess
supply of gold on the world markets. The U. S. also agreed to satisfy any excess demand of gold out of its own
reserves. European nations, on their part, are to buy up an excess of dollars.
Actually, the system only served to drain the supply of gold from the USA to Europe. At the end of 1950 the USA
controlled 85% of the world's gold. Within 20 years the USA controlled only 38% of the world's gold.
In the mid 1960's, the entire system threatened to break down because of excessive spending by the U.S.
Government due to the Vietnam war and the "war on poverty".
Several remedies were attempted to keep the system going. SDRs (a kind of paper gold) were created. USA
removed the 25% gold reserve required behind member banks' deposits at the Federal Reserve (1965) and
behind Federal Reserve currency in 1968.
The European Common Market was formed out of the demise of the Bretton Woods agreement. Within 15 years
this agreement which had established the dollar as the dominant monetary standard had begun to break up. By
1969 the Deutschmark had to be revalued and the French Franc had to be devalued.
Within a year European leaders had proposed a three stage program to establish a single European currency. In
order to set up this single currency a European Central Bank will be established. This single Central Bank for all
European member nations will be responsible for setting up a single monetary policy.
The individual central banks of the member nations will continue to exist. They, along with the single European
Central Bank will set up monetary policy for the member nations. They will be completely independent of any
government. But one of their major aims is to influence public finance.
This plan went into effect January 1, 1999. The final phase of this plan took effect on January 1, 2002. On that
date the individual currencies were completely replaced by the Euro, the currency of the European Economic
and Monetary Union. Great Britain has chosen not to enter this Union.
One of the questions which is raised by this European union is: Will the next step be a centralized currency for
the entire world? One controlled from Europe? And one completely free of any governmental control?
Such a plan would not be new. It was basically the plan proposed by John Law 300 years ago. It might well
already be in effect except that it failed and governments were forced to bail out John Law and his company.
In July 1963 President John Kennedy sent a bill to Congress. He proposed that USA eliminate all future aid to
Europe, that we cut off all assistance to Israel. He proposed withdrawing all troops and aid from Viet Nam. JFK
called for USA withdrawal from all multinational economic alliances and finally proposed that we go back on the
"gold standard" and base our currency on some substantial and real asset rather than on debt.
Kennedy's proposal was in complete opposition to economic policies which had been in motion since the first
European dealings with Native Americans. These policies had become intensified by the establishment of
central banks. The Bank for International Settlements provided the vehicle for central banks to co-operate with
one another.
Future plans called for the development of a one world economy controlled by a group of central bankers. With
the death of JFK American involvement in Vienam was intensified, aid to Israel was increased, and all attempts
to base the US economy on a real asset rather than debt were halted.
Despite the fact that JFK was acting in direct opposition to the most influential international monetary elements,
no hint of this as a potential factor in his assassination ever appeared in any investigation of his death.
There are two tools used most often by economic interests to gain and keep control. One is war. War is costly
and creates large national debts. From 30 deerskin for a single gun to the twenty-first century, debt has been a
tool for keeping people dependent.
The second tool is to coerce governments to assume responsibility for the economy, especially the debts
incurred in our economic activity. After World war 2 our Federal Reserve Bank coerced President Truman and
the United States Congress to officially state that the United States Government is responsible for the economy.
Just as indiviuals are to be kept in debt, nations and governments are also to be kept in debt.
Neither the President nor the Congress has much to say about the actual running and functioning of the
economy. But if anything goes wrong they are responsible and the United states Government must put up any
money required. If excess money comes into the system the United States Government does not receive a
bonus. But if the system is deficient in money, the United States Government is expected to make good.
CONCLUSIONS
There are stages in gaining financial control. First eliminate any personal control over the value of material
being exchanged as well as control over the value of our labor. This was done in the case of the Native
Americans by eliminating the barter system.
Next, create a debt. Once "in debt" it is difficult to get out of "the system". In the case of the Native Americans
this was done by selling guns at 30 deerskins each.
Debts are often not easy to pay off. Provisions need to be made to prolong the period of payment. New "credit"
is needed. This leads to what we today call inflation. The "value" of an hour's work is lessened. Currency
becomes less available.
In the case of the Native Americans they were given more time, more "credit". As they hunted more and more
deerskins it was more difficult to find the skins. The "value" of each hour's labor lessened, their currency
became less and less available.
Ultimately, when the debt could not be paid off, land or some other valuable entity was extracted as payment.
The next two hundred years offered differing variations on this basic pattern of economic control. With each
new variation one or more structures which support this pattern fall into place. Then, in the late 19th and early
20th century we see this pattern extended to national levels. We see, first in Europe, then in the USA, the
establishment of central banks.
Central banks are independent of any government agency. They control and regulate the banks of a nation.
They determine what interest rates will be. They decide how much money will be in circulation. They do in a
more sophisticated way what early European traders did to Native Americans.
Central banks, like early European traders, manage to eliminate any individual or local control over labor,
currency, the tools of economic activity. Central banks create debt and extend credit. Central Banks do not deal
with individuals or corporations. They deal only with banks.
War is a major economic tool. Governments create huge debts by reason of war. To the money changers, it is as
important to keep governments in debt as it is to keep individuals in debt. The money changers have learned
that it is not important that they govern. It is only necessary that they control the economy. But in order to
prevent governments from attempting to govern, it is essential that they be kept in debt. War is one of the
major tools which helps keep governments in debt.
FROM JFK TO WTC
From the time of John Kennedy's death and the reversal of his plan to assume responsibility for our own
economic future there has been a steady move away from U.S. responsibility to that of a "world economy". This
has shown itself in several ways:
1. A movement toward a world economy, perhaps even a single currency for the entire world. Much local control
is given up when we take on a multi-national currency.
2. Individual businesses now have their own "central bank." Virtually every major corporation and many smaller
corporations have a "corporation" that is known to only a few persons and answerable to no one except them.
This corporation is able to create money, launder money, move money about within the corporation with no
oversight from directors or government agencies.
3. There are corporations like casinos which do a largely cash business. Much of the money which comes into
the corporation comes in the form of cash. Much of the money which exits the corporation does so as cash. It is
not too difficult to launder drug money, CIA money, terrorist money, all at a handsome profit, of course.
There is even room in legitimate dealings to hide huge profits. Every casino, for example, gives "comps" to
persons who have lost a good deal of money. These "comps" come in the form of food, drinks, lodging,
clothing, and other goods. The "comps" can be written off at a "reasonable" price but a price far above the
actual cost to the casino. This can result in several million dollars profit per year which does not show up
anywhere in the records as a profit.
4. The top 15 investors control from 5% to 20% of the stock of most U.S. corporations. When we look at the real
ownership and control of these investors about 80% of them are foreign owned - chiefly British.
Not much has changed in 300 years. The British still control much of our economy.
Our museum contains a display on this economic history.
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CHARENTON HERITAGE MUSEUM
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