WEBVTT NOTE The Founding Fathers of Monetary Destruction 1 00:00:00.000 --> 00:00:08.440 Regarding what Doug just said, the business of Americans urging us all to spend more and save less, 2 00:00:08.440 --> 00:00:14.040 it reminded me of a couple of weeks ago, I went to play golf, of course, in Florida, 3 00:00:14.040 --> 00:00:18.840 and my golfing partner and I were paying cash for the greens fees, 4 00:00:18.840 --> 00:00:22.880 and there were two members of the greatest generation standing there, 5 00:00:22.880 --> 00:00:27.040 and they chastised us for not using credit cards. 6 00:00:27.040 --> 00:00:33.040 They were telling us it was our patriotic duty to put the golf fee on a credit card. 7 00:00:33.040 --> 00:00:39.040 And needless to say, for those of you who know me, we didn't depart as friends. 8 00:00:39.040 --> 00:00:44.040 These two old guys and older guys. 9 00:00:44.040 --> 00:00:47.040 Doug also mentioned Lawrence White. 10 00:00:47.040 --> 00:00:54.040 There are two prominent Larry Whites in the economics profession who are both monetary economists. 11 00:00:54.040 --> 00:00:58.080 There's the bad Larry White, who he quoted, and the good Larry White, who was an Austrian 12 00:00:58.080 --> 00:00:59.080 School economist. 13 00:00:59.080 --> 00:01:01.920 I thought I'd straighten that out. 14 00:01:01.920 --> 00:01:04.920 For a while, actually, they both taught at New York University. 15 00:01:04.920 --> 00:01:09.880 There were two Lawrence Whites, and so you'd see an article in the economics journal, and 16 00:01:09.880 --> 00:01:13.640 the Austrian economist would look at it and say, well, this is horrible. 17 00:01:13.640 --> 00:01:14.640 What happened to Larry? 18 00:01:14.640 --> 00:01:20.720 He's lost his mind, but it was the other Larry White, so it's not the bureaucrat Larry 19 00:01:20.720 --> 00:01:49.720 The Founding Fathers of Monetary Destruction Bob Murphy, who is going to talk to us later, gave a talk at my university last week and one of the comments I made to him during the day and a half he was there was that how politicians are so clever at lying to us and manipulating us and never taking responsibility for their actions ever. 20 00:01:49.720 --> 00:01:54.120 But when it comes to policy, they seem to just do the same thing over and over and over again, 21 00:01:54.120 --> 00:01:56.360 decade after decade after decade. 22 00:01:56.360 --> 00:01:59.440 Bob's talk was about his book on the Great Depression, 23 00:01:59.440 --> 00:02:06.000 and of course we're doing almost exactly the same bad things now that they did in the 1930s 24 00:02:06.000 --> 00:02:08.200 that made the Great Depression worse. 25 00:02:08.200 --> 00:02:13.800 But even worse than that, it all started at the very beginning of the American Republic. 26 00:02:13.800 --> 00:02:15.600 It really is amazing. 27 00:02:15.600 --> 00:02:26.160 In my book, Hamilton's Curse, the subtitle, which Doug just read, is how Jefferson's arch-enemy betrayed the American Revolution and what it means for Americans today. 28 00:02:26.160 --> 00:02:35.800 Well, Hamilton did betray the American Revolution, and so monetary destruction had a lot to do with what he did. 29 00:02:35.800 --> 00:02:42.800 He was the Fed itself. If you were to go online and Google Alexander Hamilton and the Fed, 30 00:02:42.800 --> 00:02:48.900 You'll find a Fed publication that calls him the founding father of central banking in America, which is true. 31 00:02:48.900 --> 00:02:55.500 The idea for the Bank of the United States, which was a precursor to the Fed, was Hamilton's idea. 32 00:02:55.500 --> 00:03:02.800 And so after the revolution was over, Hamilton and his political cronies, the Federalists, 33 00:03:02.800 --> 00:03:09.400 mostly the New England, New York, Philadelphia commercial class, decided that, 34 00:03:09.400 --> 00:03:27.400 Well, you know, this British system that had a central bank, the Bank of England, that subsidized businesses and funded corporate welfare is a pretty good gig, it's a pretty good system if you're on the receiving end of that system. 35 00:03:27.400 --> 00:03:42.400 Economists called it mercantilism, and the American Revolution was fought to separate ourselves or to secede from that system, the British system, which had become increasingly exploitative of the colonists. 36 00:03:42.400 --> 00:03:56.400 But Hamilton and his cronies fought kind of like Mel Brooks in the movie, History of the World Part II, where Mel Brooks plays the king of France, and he keeps saying over and over in the movie, it's good to be the king. 37 00:03:56.400 --> 00:04:00.080 And so if you're on the receiving end, it's a good deal. 38 00:04:00.080 --> 00:04:05.520 If you're on the paying end, it might be worth fighting a revolution over, as they had just done. 39 00:04:05.520 --> 00:04:11.360 But as soon as the revolution was over, not even as soon as, before the revolution was over, 40 00:04:11.360 --> 00:04:17.840 Hamilton, Alexander Hamilton, was harder to work making his connections with Robert Morris, 41 00:04:17.840 --> 00:04:23.600 the prominent Philadelphia businessman who benefited greatly from the revolution. 42 00:04:23.600 --> 00:04:32.480 and he sold a lot of stuff to the government as a defense contractor and Hamilton admittedly 43 00:04:32.480 --> 00:04:40.800 knew nothing about finance and economics and he asked in the last days of the revolution, 44 00:04:40.800 --> 00:04:47.280 he asked Timothy Pickering who was George Washington's adjutant general who was known 45 00:04:47.280 --> 00:04:52.380 to know something about finance, do you have any books I could read to learn something 46 00:04:52.380 --> 00:04:57.820 about Economics and Finance, so Pickering gave him a few books, enough to allow Hamilton, 47 00:04:57.820 --> 00:05:03.780 who was a brilliant mind, he had a brilliant mind, he was a workaholic and a genius in 48 00:05:03.780 --> 00:05:08.180 the eyes of a lot of people, he read these books and that enabled him to write a 30 page 49 00:05:08.180 --> 00:05:14.660 letter to Robert Morris, who was one of the wealthiest men in America, saying essentially 50 00:05:14.660 --> 00:05:20.420 dear Mr. Morris, I agree completely with all of your political proposals for a central 51 00:05:20.420 --> 00:05:27.420 Federal Bank, protectionist tariffs, corporate subsidies to corporations, and so forth. 52 00:05:27.420 --> 00:05:34.420 By the way, I'm George Washington's aide-de-camp. George is sitting right here. I don't think 53 00:05:34.420 --> 00:05:40.540 he actually said that in the letter. Wouldn't you know it, after the revolution, George 54 00:05:40.540 --> 00:05:46.340 Washington gets a letter from Robert Morris recommending, guess who, to be Secretary of 55 00:05:46.340 --> 00:05:52.180 of the Treasury, Alexander Hamilton, who just, you know, six months earlier admitted he knew 56 00:05:52.180 --> 00:05:58.460 next to nothing about finances. He was a clerk in a molasses trading business as a teenager 57 00:05:58.460 --> 00:06:04.900 in St. Croix, but other than that, he didn't really know much about it. And so Hamilton 58 00:06:04.900 --> 00:06:11.980 was really sort of the political puppet of Robert Morris and his business associates 59 00:06:11.980 --> 00:06:16.980 and the Federalist Party, who wanted to bring the British system to America. 60 00:06:16.980 --> 00:06:22.980 That's why the subtitle of my book is How Hamilton Betrayed the American Revolution. 61 00:06:22.980 --> 00:06:24.980 And they worked diligently to it. 62 00:06:24.980 --> 00:06:29.980 And Murray Rothbard, in The Mystery of Banking, he put it this way, 63 00:06:29.980 --> 00:06:35.980 Central banking has been a corrupt mercantilist scheme and an engine of corporate welfare 64 00:06:35.980 --> 00:06:38.980 from its very beginning in the late 18th century. 65 00:06:38.980 --> 00:06:48.980 The first bank, the Bank of North America, who's ever heard of this, was driven through the Continental Congress by Robert Morris in the spring of 1781. 66 00:06:48.980 --> 00:07:04.980 And so from the very beginning, even before the Constitution, and Murray goes on to say that the main objective of the Nationalists, they were known as the Nationalists, who were also known as Federalists, was to establish an American version of the British mercantilist system, 67 00:07:04.980 --> 00:07:11.260 system, the very system that the revolution was fought to separate us from. 68 00:07:11.260 --> 00:07:14.820 And one more quote from Murray Rothbard about their aim. 69 00:07:14.820 --> 00:07:17.260 What were these men up to? 70 00:07:17.260 --> 00:07:21.900 Their aim was, quote, to re-impose in the new United States a system of mercantilism 71 00:07:21.900 --> 00:07:28.120 and big government similar to that in Great Britain against which the colonists had rebelled. 72 00:07:28.120 --> 00:07:33.140 The object was to have a strong central government, particularly a strong president or king as 73 00:07:33.140 --> 00:07:39.020 as Chief Executive, built up by high taxes and heavy public debt. The strong government 74 00:07:39.020 --> 00:07:45.060 was to impose high tariffs to subsidize domestic manufacturers, develop a big navy to open 75 00:07:45.060 --> 00:07:50.620 up and subsidize foreign markets for American exports, and launch a massive system of internal 76 00:07:50.620 --> 00:07:55.260 public works. In short, the United States was to have a British system without Great 77 00:07:55.260 --> 00:08:02.260 Britain." And that was Murray Rothbard writing that. And he called this the Morris Scheme, 78 00:08:03.140 --> 00:08:10.940 Robert Morris, the Morris Scheme, and so they did start up this Bank of North America, and 79 00:08:10.940 --> 00:08:16.660 the Bank of North America was given a monopoly privilege in the issuance of notes receivable 80 00:08:16.660 --> 00:08:23.900 in all tax payments from state and local governments and the federal government, and it was a monopoly. 81 00:08:23.900 --> 00:08:29.300 It was illegal for anyone to compete, but even so, it only lasted barely more than a 82 00:08:29.300 --> 00:08:35.300 in a year because there was so little confidence in the value of these notes that the whole thing imploded. 83 00:08:35.300 --> 00:08:43.300 And so, who Murray Rothbard called Robert Morris's youthful disciple, Alexander Hamilton, 84 00:08:43.300 --> 00:08:47.300 began his crusade for the Bank of the United States. 85 00:08:47.300 --> 00:08:53.300 He weaseled his way into becoming Secretary of Treasury, of the Treasury. 86 00:08:53.300 --> 00:08:57.300 And at the Constitutional Convention, which by the way was Hamilton's baby, 87 00:08:57.300 --> 00:09:04.260 He lobbied for seven years to overthrow the original constitution, the Articles of Confederation. 88 00:09:04.260 --> 00:09:08.940 He worked as much as anyone to get a constitutional convention to do that. 89 00:09:08.940 --> 00:09:13.340 And when he showed up, he laid out his plan, which was really the plan of Robert Morris 90 00:09:13.340 --> 00:09:18.460 and the Federalists, and it was for a permanent president who would appoint all governors 91 00:09:18.460 --> 00:09:22.240 who would have veto power over all state legislation. 92 00:09:22.240 --> 00:09:26.500 So essentially a king, Jefferson and the Jeffersonians said that. 93 00:09:26.500 --> 00:09:30.100 They didn't say this exactly, but they must have said, 94 00:09:30.100 --> 00:09:31.660 what are you crazy? 95 00:09:31.660 --> 00:09:33.500 We just fought a revolution against the king. 96 00:09:33.500 --> 00:09:34.720 Why would we want a king? 97 00:09:34.720 --> 00:09:39.500 But this king was always tied to the mercantilist agenda. 98 00:09:39.500 --> 00:09:40.900 You see, they wanted high tariffs 99 00:09:40.900 --> 00:09:42.460 to protect them from competition. 100 00:09:42.460 --> 00:09:44.860 And you couldn't allow, say, South Carolina 101 00:09:44.860 --> 00:09:48.100 to have low tariffs, but New York and Massachusetts 102 00:09:48.100 --> 00:09:49.100 to have high tariffs. 103 00:09:49.100 --> 00:09:49.940 It just wouldn't work. 104 00:09:49.940 --> 00:09:52.740 The shipping would all go to South Carolina. 105 00:09:52.740 --> 00:09:54.820 And so you had to have a monopoly government 106 00:09:54.820 --> 00:10:00.620 that would impose one central plan, sort of Soviet-style central plan on the whole economy. 107 00:10:00.620 --> 00:10:03.820 That's why they were nationalists and not Federalists. 108 00:10:03.820 --> 00:10:06.820 They needed a national government to do that. 109 00:10:06.820 --> 00:10:10.020 And so Hamilton went to work. 110 00:10:10.020 --> 00:10:14.620 Of course, we didn't adopt his system of government of a king who would appoint all the governors. 111 00:10:14.620 --> 00:10:22.420 That took Abe Lincoln to essentially achieve that system that we all slave under today. 112 00:10:22.420 --> 00:10:28.020 And here's another thing that Rothbard wrote about, you know, what came of this. 113 00:10:28.020 --> 00:10:35.120 A critical part of their program, the Hamilton program, was put through in 1791 by their leader, 114 00:10:35.120 --> 00:10:39.420 Secretary of the Treasury, Alexander Hamilton, a disciple of Robert Morris. 115 00:10:39.420 --> 00:10:45.920 Hamilton put through Congress the first bank of the United States, modeled after the old bank of North America, 116 00:10:45.920 --> 00:10:52.020 whose longtime president and former partner of Robert Morris, Thomas Willing of Philadelphia, 117 00:10:52.020 --> 00:10:58.120 was made president of the new bank. So literally the president of the first fed was Robert 118 00:10:58.120 --> 00:11:04.260 Morris's business partner. And so that's what happened. And of course the story of how we 119 00:11:04.260 --> 00:11:10.060 got the first central bank, George Washington asked Thomas Jefferson and Hamilton to write 120 00:11:10.060 --> 00:11:18.580 their opinions on the efficacy and constitutionality of a bank. And Jefferson very quickly dismissed 121 00:11:18.580 --> 00:11:25.020 by pointing out that it was discussed, he knew from talking to people who were at the 122 00:11:25.020 --> 00:11:30.340 Constitutional Convention, that it was discussed and proposed at the Constitutional Convention 123 00:11:30.340 --> 00:11:31.900 but rejected. 124 00:11:31.900 --> 00:11:37.380 So you would think on the issue of constitutionality, if the Constitutional Convention said, let's 125 00:11:37.380 --> 00:11:42.500 propose a central bank, and they voted it down and said, no, we don't want a bank run 126 00:11:42.500 --> 00:11:46.740 by politicians out of the nation's capital, that that would be pretty good evidence that 127 00:11:46.740 --> 00:11:52.740 It was unconstitutional, but this is when Hamilton, in his report, invented the idea 128 00:11:52.740 --> 00:11:59.740 of implied powers of the Constitution. This whole business of a living Constitution or 129 00:11:59.740 --> 00:12:04.660 implied powers of the Constitution, not explicit powers of government, that was Hamilton's 130 00:12:04.660 --> 00:12:08.500 idea. He invented that, and he essentially said, well, if you read between the lines 131 00:12:08.500 --> 00:12:13.780 of the Constitution, there are implied powers. Jefferson's position was, yes, I've read 132 00:12:13.780 --> 00:12:20.180 between the lines, and it's just blank space in between the lines, no implied powers. 133 00:12:20.180 --> 00:12:27.740 But from then on, you know, John Marshall, who was Hamilton's protege in legal circles, 134 00:12:27.740 --> 00:12:34.420 became Chief Justice, and he used this idea of implied powers in a broadest possible definition 135 00:12:34.420 --> 00:12:39.720 of the general welfare clause for 38 years as Chief Justice. 136 00:12:39.720 --> 00:12:43.300 And so we got the first bank of the United States, but it wasn't because of the strength 137 00:12:43.300 --> 00:12:50.380 of Hamilton's Arguments. The way we got it, George Washington signed off on it because 138 00:12:50.380 --> 00:12:54.780 at the time they were in the process of moving the nation's capital, of creating Washington, 139 00:12:54.780 --> 00:13:00.940 D.C. from New York to Virginia. And George Washington owned a lot of land in Virginia, 140 00:13:00.940 --> 00:13:06.820 Mount Vernon, his estate, Mount Vernon. And he wanted the nation's capital to abut Mount 141 00:13:06.820 --> 00:13:10.680 Vernon. He wanted it to be right adjacent to Mount Vernon. And so the deal that they 142 00:13:10.680 --> 00:13:14.640 They cut, as George Washington said, if you extend the boundary of the nation's capital 143 00:13:14.640 --> 00:13:19.680 to be right next to my backyard, I will vote for the Bank of the United States. And he 144 00:13:19.680 --> 00:13:24.880 did. The Federalists said, okay, no problem. And so the deal was cut. And that's how we 145 00:13:24.880 --> 00:13:28.920 got the first Bank of the United States. It wasn't necessarily the wisdom of Alexander 146 00:13:28.920 --> 00:13:37.440 Hamilton who won over George Washington. It was just another political deal. And so here's 147 00:13:37.440 --> 00:13:41.720 Here's what Murray Rothbard says about this, our first Fed. 148 00:13:41.720 --> 00:13:46.240 The first bank of the United States promptly fulfilled its inflationary potential. 149 00:13:46.240 --> 00:13:50.080 It issued millions of dollars in paper money and demand deposits, pyramid-ing on top of 150 00:13:50.080 --> 00:13:54.060 two million dollars in specie, the bank gold. 151 00:13:54.060 --> 00:13:58.360 The bank invested heavily in the U.S. government and the result of the outpouring of credit 152 00:13:58.360 --> 00:14:04.240 and paper money by the new bank of the United States was an increase in prices of 72 percent 153 00:14:04.240 --> 00:14:11.740 from 1791 to 1796. So in the first five years, it created 72 percent inflation and it also 154 00:14:11.740 --> 00:14:20.520 began corrupting politics by extending cheap loans to politically favored individuals. 155 00:14:20.520 --> 00:14:26.640 And it died off. It was given a 20-year charter and it created such havoc that the charter 156 00:14:26.640 --> 00:14:31.800 was not renewed. But then because of the War of 1812 and the debt that was incurred by 157 00:14:31.800 --> 00:14:35.760 by the War of 1812, it was brought back into existence. 158 00:14:35.760 --> 00:14:38.620 And it promptly created the Panic of 1819, 159 00:14:38.620 --> 00:14:41.360 which is the topic of Murray Rothbard's 160 00:14:41.360 --> 00:14:44.640 doctoral dissertation, the Panic of 1819. 161 00:14:44.640 --> 00:14:47.800 And so the bank was resurrected in 1817. 162 00:14:47.800 --> 00:14:48.640 And what did it do? 163 00:14:48.640 --> 00:14:52.080 Well, it created the Panic of 1819 almost immediately. 164 00:14:52.080 --> 00:14:55.080 And Rothbard wrote that there was for the first time 165 00:14:55.080 --> 00:14:59.000 in America, large scale unemployment in American cities 166 00:14:59.000 --> 00:15:10.000 with manufacturing employment in Philadelphia falling from 9,700 employed persons in 1815 to only 2,100 in 1819. 167 00:15:10.000 --> 00:15:14.000 And so it created, you know, the first depression. 168 00:15:14.000 --> 00:15:19.000 And back in those days, they were called panics, and then it was, as Bob Murphy reminded me the other day, 169 00:15:19.000 --> 00:15:22.000 it was Herbert Hoover who coined the phrase depression. 170 00:15:22.000 --> 00:15:25.000 He thought panic was too extreme. Let's not call it a panic. 171 00:15:25.000 --> 00:15:32.000 It'll cause people to panic, if you call it a panic, call it a depression, I guess he thought that was better, 172 00:15:32.000 --> 00:15:37.000 and then now we call it a recession, so the government watered it down a little more, recession, 173 00:15:37.000 --> 00:15:43.000 and I don't know, they'll probably call it a cantaloupe next or something, who knows what they'll call it, 174 00:15:43.000 --> 00:15:51.000 but they'll water it down some more eventually, I'm sure, and so we got the bank again, and it did the same thing, 175 00:15:51.000 --> 00:15:57.800 the same thing. It created boom and bust cycles immediately and it corrupted politics as well. 176 00:15:57.800 --> 00:16:04.160 And that led to the great Andrew Jackson ending the Bank of the United States by vetoing the 177 00:16:04.160 --> 00:16:08.200 rechartering of the bank. And I put on your tables, I'm not going to read this because 178 00:16:08.200 --> 00:16:13.240 I put a couple of really great quotes by Andrew Jackson. You don't read stuff like this from 179 00:16:13.240 --> 00:16:20.680 politicians anymore apart from Ron Paul. Lew Rockwell was interviewed on the Baltimore 180 00:16:20.680 --> 00:16:24.680 I was at a radio station two weeks ago and I listened to it and they were talking about Ron Paul 181 00:16:24.680 --> 00:16:31.680 and Lew's take on Ron was that, well, one good guy in 220 years is not a very good record, is it? 182 00:16:31.680 --> 00:16:35.680 About politics. 183 00:16:35.680 --> 00:16:39.680 And Andrew Jackson did a lot of evil things as well. He was a politician. 184 00:16:39.680 --> 00:16:45.680 But the one good thing he did was to veto the rechartering of Hamilton's bank, the Bank of the United States. 185 00:16:45.680 --> 00:16:50.720 and, you know, this top, the quote at the top there, the Bank of the United States is a 186 00:16:50.720 --> 00:16:56.920 monster, a hydro-headed monster. If I didn't know who wrote that, I would say it was Murray Rothbard 187 00:16:56.920 --> 00:17:01.760 that wrote that. If someone showed me and said, guess who wrote this, it was good. And, but the 188 00:17:01.760 --> 00:17:07.680 second one, I included this second quote because I've read this before at a conference like this 189 00:17:07.680 --> 00:17:14.800 and people seem to really like it and so in order to kiss up to the audience, I thought I'd bring it 190 00:17:14.800 --> 00:17:20.080 Down. But Andrew Jackson, the historians, the historians talk about him as some sort 191 00:17:20.080 --> 00:17:28.200 of uneducated country bumpkin. But if you read this, no uneducated country bumpkin could 192 00:17:28.200 --> 00:17:36.240 write something like this and express these views over and over again in political circles. 193 00:17:36.240 --> 00:17:40.200 In the essence of that second quote, I'm not going to read the whole thing, is that he 194 00:17:40.200 --> 00:17:46.500 He recognized, as Jefferson did, that the purpose of this bank was to subsidize special 195 00:17:46.500 --> 00:17:50.880 interests, primarily the commercial interests on the Eastern Seaboard in New England and 196 00:17:50.880 --> 00:17:56.200 New York and Philadelphia, at the expense of the masses, at the expense of the people. 197 00:17:56.200 --> 00:17:57.880 It was legalized plunder. 198 00:17:57.880 --> 00:18:03.160 It was the financial vehicle through which legalized plunder would become institutionalized 199 00:18:03.160 --> 00:18:08.280 in America, and he thought that this would be a horrible thing. 200 00:18:08.280 --> 00:18:15.280 So, Andrew Jackson vetoed it. And in part of my research, I did a little digging around 201 00:18:15.280 --> 00:18:21.160 to see what American historians have said about this. And of course, they condemn Jackson 202 00:18:21.160 --> 00:18:28.440 in the harshest terms for saying this, because this is really the heart of the regime, the 203 00:18:28.440 --> 00:18:29.440 central bank. 204 00:18:29.440 --> 00:18:34.360 So, we got rid of the bank. We got rid of Hamilton's bank for a while, and we had something 205 00:18:34.360 --> 00:18:42.260 called the Independent Treasury System, where money was mostly backed by gold and silver. 206 00:18:42.260 --> 00:18:48.160 And a couple of pretty well-known economic historians, Richard Timberlake, who's retired 207 00:18:48.160 --> 00:18:52.480 from the University of Georgia, and Jeffrey Hummel, have written extensively on this independent 208 00:18:52.480 --> 00:18:59.560 treasury system that existed roughly from the late 1830s to 1862. They both argue that 209 00:18:59.560 --> 00:19:06.560 It was arguably the most stable monetary system we've ever had. It wasn't perfect. Nothing on this earth is perfect. 210 00:19:06.560 --> 00:19:09.560 But in terms of economic stability, it was pretty good. 211 00:19:09.560 --> 00:19:19.560 But that was all ended by the evil Abe Lincoln in 1862 with the National Currency Acts. 212 00:19:19.560 --> 00:19:26.560 So what you have in American history is you have, at the very beginning, 213 00:19:26.560 --> 00:19:32.120 And you had these men, Hamilton and the Federalists, who wanted to bring the British system here. 214 00:19:32.120 --> 00:19:34.720 And they fought mightily and they achieved success. 215 00:19:34.720 --> 00:19:40.600 And then the Jeffersonians fought back, and Jackson was a Jeffersonian, they destroyed 216 00:19:40.600 --> 00:19:43.320 that system, they got rid of the central bank. 217 00:19:43.320 --> 00:19:48.240 But the Whig Party picked up that mantle, and Lincoln was a Whig a lot longer than he 218 00:19:48.240 --> 00:19:49.240 was a Republican. 219 00:19:49.240 --> 00:19:56.540 He was a Whig from 1832 to 1852, when the Whig Party disappeared, essentially. 220 00:19:56.540 --> 00:20:00.540 And there's a big book on the history of the Whig Party by Michael Holt, a University of 221 00:20:00.540 --> 00:20:06.080 Virginia historian, and it's even thicker than that book on the presidents that Doug 222 00:20:06.080 --> 00:20:11.460 held up. And he says in that book that of all the Whig politicians in America, no one 223 00:20:11.460 --> 00:20:18.400 was a more vociferous proponent of a central bank than Abraham Lincoln was. He traveled 224 00:20:18.400 --> 00:20:24.960 the country giving stump speeches for political candidates for the Whig Party in favor of 225 00:20:24.960 --> 00:20:29.960 of bringing back the Bank of the United States or some version of the Bank of the United States, because that was their system. 226 00:20:29.960 --> 00:20:36.960 What were the Whigs for? The Whigs were for protectionist tariffs, a central bank, and corporate welfare. 227 00:20:36.960 --> 00:20:43.960 Hamilton himself called this the American system, which was really the British system, but he called it the American system. 228 00:20:43.960 --> 00:20:47.960 And Henry Clay picked up that mantle, called it the American system. 229 00:20:47.960 --> 00:20:53.960 And then Lincoln, who said in one of his speeches that Henry Clay was his political idol, 230 00:20:53.960 --> 00:21:00.360 All of his ideas, Lincoln said, regarding policy come from Henry Clay, he picked up the mantle. 231 00:21:00.360 --> 00:21:06.160 The Republican Party picked up the mantle of this so-called American system when they 232 00:21:06.160 --> 00:21:10.120 replaced essentially the Whig Party in the 1850s. 233 00:21:10.120 --> 00:21:17.500 And so Lincoln was a crusader for a central bank, his whole political career. 234 00:21:17.500 --> 00:21:20.800 In my book, The Real Lincoln, one of the quotes that I put in there at the top of one of the 235 00:21:20.800 --> 00:21:26.280 The chapter is what Lincoln said the very first time he made a speech announcing he was a 236 00:21:26.280 --> 00:21:31.800 candidate for political office in Illinois. And he said something to the effect that my 237 00:21:31.800 --> 00:21:38.280 political views are short and sweet like the old woman's dance, is the way he put it. 238 00:21:38.280 --> 00:21:44.480 High protectionist tariffs, a central bank, and internal improvement subsidies. Hamilton's 239 00:21:44.480 --> 00:21:49.000 American system. That's the reason Abe Lincoln gave for getting into politics in the first 240 00:21:49.000 --> 00:21:59.080 and he wasn't very educated on economics as was Hamilton. Hamilton, one of the 241 00:21:59.080 --> 00:22:03.520 things that aggravates me in the academic arena here is people like 242 00:22:03.520 --> 00:22:07.320 John Steele Gordon is a business historian, John Steele Gordon, he wrote an 243 00:22:07.320 --> 00:22:11.600 article in the Wall Street Journal shortly after the big bailouts began, 244 00:22:11.600 --> 00:22:18.040 blaming the whole mess today that we're in today on Thomas Jefferson. It's his 245 00:22:18.040 --> 00:22:24.360 is Fault. It was called A Short Banking History of the United States in the Wall Street Journal. 246 00:22:24.360 --> 00:22:30.280 And the basic argument was that, well, Jefferson is a famous critic of the Fed, and this evil 247 00:22:30.280 --> 00:22:36.060 philosophy exists to this day in the persona of people like Ron Paul, John Silverman said 248 00:22:36.060 --> 00:22:41.240 in the Wall Street Journal. And the problem, the reason we're in a dilemma today, is that 249 00:22:41.240 --> 00:22:46.600 the Fed doesn't have enough power. And it's because of people like Ron Paul that the Fed 250 00:22:46.600 --> 00:22:51.180 doesn't have enough power. And I responded to this on lewrockwell.com with an article 251 00:22:51.180 --> 00:22:56.960 entitled A Fake Banking History of the United States. And apparently aggravated Gordon because 252 00:22:56.960 --> 00:23:03.080 I was on a radio show and the radio host was quoting me John Steele Gordon's snide remarks 253 00:23:03.080 --> 00:23:10.480 about me on the show. But these people deserve it. They deserve all the slapping down they 254 00:23:10.480 --> 00:23:40.480 they can get, they're liars for the regime is what they are and there was Forbes magazine chimed in too at the same time blaming the current economic dilemma on Ron Paul I'm not making this up anyone who wants the references email me and I will send you the links to the articles making the same article these fed critics central banking critics as though we are all powerful you know we sit here and speak in a 255 00:23:40.480 --> 00:23:49.840 and the Fed listens, or something, but anyway, but Lincoln was like this, he was an imbecile 256 00:23:49.840 --> 00:23:55.240 in economics like Alexander Hamilton was. Jefferson read Adam Smith, David Ricardo, 257 00:23:55.240 --> 00:24:00.600 Turgot, if you go to Monticello tomorrow, you walk in the front door, there's a bust 258 00:24:00.600 --> 00:24:05.000 of Turgot, the French finance minister, right there by the front door. He was very well 259 00:24:05.000 --> 00:24:17.000 What did Hamilton know? He read the superstitions of British mercantilists, like Sir James Stewart, who today would just be called a PR hack for the steel industry. 260 00:24:17.000 --> 00:24:31.000 He would write all sorts of superstitions like transportation costs are an unnecessary cost. We should not allow transportation costs to hold down our economy. 261 00:24:31.000 --> 00:24:49.000 And of course, it costs something to transport something from England to America. Therefore, we shouldn't allow imports because Lincoln actually made the argument at one point that anything that is grown or made here in America should not be allowed to be imported into the country. 262 00:24:49.000 --> 00:24:59.000 He said, for example, we don't grow coffee here, so we can let coffee in, but we do make shoes here, so we shouldn't let anybody compete with us in making shoes or anything else. 263 00:24:59.000 --> 00:25:01.800 And so, but this was sort of the Hamiltonian way of thinking. 264 00:25:01.800 --> 00:25:07.700 Hamilton made the exact same argument about transportation costs in his report on manufacturers. 265 00:25:07.700 --> 00:25:13.700 And Lincoln, one of his speeches on the bank, he said, he warned this about the independent treasury system, 266 00:25:13.700 --> 00:25:16.200 the one that replaced the bank in the United States. 267 00:25:16.200 --> 00:25:24.900 He said, because of this system, this quote would lead to a situation where all people will suffer more or less 268 00:25:24.900 --> 00:25:30.500 and very many will lose everything that renders life desirable." 269 00:25:30.500 --> 00:25:34.620 So if you allow money to be backed by gold or silver, you will lose everything that makes 270 00:25:34.620 --> 00:25:38.700 life worth living, in the sage words of Abe Lincoln. 271 00:25:38.700 --> 00:25:43.380 And there's one famous story about Lincoln that illustrates his devotion to central banking 272 00:25:43.380 --> 00:25:48.320 that's told by David Donald, the Pulitzer Prize winning biographer of Lincoln, and it's 273 00:25:48.320 --> 00:25:54.560 It's about how, in the Illinois legislature, there was a law that was about to go out of 274 00:25:54.560 --> 00:26:01.440 existence on December 31st, January 1st of one year in the 1830s, and then once this 275 00:26:01.440 --> 00:26:05.440 law went out of existence, currency in the state of Illinois would have to be backed 276 00:26:05.440 --> 00:26:07.680 by gold and silver. 277 00:26:07.680 --> 00:26:11.840 Lincoln was the leader of the Whigs in the Illinois legislature, and so he instructed 278 00:26:11.840 --> 00:26:18.280 his fellow Whigs to leave the room so that they couldn't have a quorum and vote to adjourn 279 00:26:18.280 --> 00:26:26.680 to leave. But a marshal had locked the door and they couldn't get out the door. And so 280 00:26:26.680 --> 00:26:31.960 according to David Donald, Abe Lincoln, who was 6'5", jumped out the second story window 281 00:26:31.960 --> 00:26:37.120 and all the other wigs followed him and jumped out the window to leave the room to try to 282 00:26:37.120 --> 00:26:44.760 delay the dark day where sound money would reappear once again in Illinois. Because Lincoln 283 00:26:44.760 --> 00:26:50.400 and also had been a champion of a $10 million spending bill for roads and canals in Illinois, 284 00:26:50.400 --> 00:26:55.760 none of which was ever finished, and much of the money was stolen, it just disappeared, 285 00:26:55.760 --> 00:27:01.160 but it was a boom to whoever got all that money, that is the backers of the Whig Party 286 00:27:01.160 --> 00:27:06.280 in Illinois and the backers of Abe Lincoln's political career, and so of course they needed 287 00:27:06.280 --> 00:27:10.180 to print money within the state of Illinois. 288 00:27:10.180 --> 00:27:20.060 And so the Democrats in Illinois called Lincoln, Leaping Lincoln after this, and so this was 289 00:27:20.060 --> 00:27:25.660 in the 1830s. And so it's not just a coincidence that once Lincoln became president, one of 290 00:27:25.660 --> 00:27:31.620 the first orders of business was the National Currency Acts, which greatly centralized the 291 00:27:31.620 --> 00:27:38.700 money supply in America. They imposed a tax on competing currencies and so forth. The 292 00:27:38.700 --> 00:28:08.700 The Greenbacks were created and so he spent his whole career fighting against sound money and I'll end with what happened was the result of this was that the Republicans who are really there's a line from the Federalists to the Whigs to the Republicans on these issues and here's what there's a Murray Rothbard said about it the Republican Party which inherited the Whig admiration for paper money and governmental control 293 00:28:08.700 --> 00:28:14.900 and Sponsorship of Inflationary Banking was to implant the soft money tradition permanently 294 00:28:14.900 --> 00:28:19.980 in America. So, you know, for good. It wasn't the Fed, but it was much more centralized 295 00:28:19.980 --> 00:28:24.860 than even the Bank of the United States was. And it's interesting to see what some of Lincoln's 296 00:28:24.860 --> 00:28:31.580 fellow Republicans said about this when we had the National Currency Acts and the revived 297 00:28:31.580 --> 00:28:38.500 central banking. Senator John Sherman, who was the brother of General Sherman, you can 298 00:28:38.500 --> 00:28:52.900 And for both of them, Senator John Sherman, also the author of the Sherman Antitrust Act, 299 00:28:52.900 --> 00:28:58.760 so you know that's going to be a bad thing. He said this, you know, what is the Republicans 300 00:28:58.760 --> 00:29:04.340 Party objective in bringing back this centralized banking? It was, in John Sherman's words, 301 00:29:04.340 --> 00:29:23.340 To nationalize as much as possible, even the currency, so as to make men love their country before their states, all private interests, all local interests, all banking interests, the interests of individuals, everything, should be subordinate now to the interests of the government. 302 00:29:23.340 --> 00:29:25.340 You know, could Stalin have said it any better? 303 00:29:30.340 --> 00:29:35.340 Democrat, there was a Democrat named Lazarus Powell at the time, and he said this, 304 00:29:35.340 --> 00:29:40.340 The result of this legislation is to utterly destroy the rights of the states. 305 00:29:40.340 --> 00:29:44.340 It is asserting a power which, if carried out to its logical result, 306 00:29:44.340 --> 00:29:49.340 would enable the National Congress to destroy every institution of the states 307 00:29:49.340 --> 00:29:55.340 of the States, and cause all power to be concentrated here in Washington, D.C. 308 00:29:55.340 --> 00:30:00.060 Of course, that was always the idea, as I said. That was always Hamilton's plan. And 309 00:30:00.060 --> 00:30:10.260 Hamilton's plan was finally achieved by Abe Lincoln. And we've lived under this ever since. 310 00:30:10.260 --> 00:30:14.820 And my next book that I'm working on is called A Treasury of Virtue, with a great big question 311 00:30:14.820 --> 00:30:19.220 mark. A famous poet said after the Civil War, the American government had a Treasury of 312 00:30:19.220 --> 00:30:25.940 of Virtue. And the one chapter I just finished is on how we massacred the Plains Indians 313 00:30:25.940 --> 00:30:33.780 after the war and then eventually got into the imperialism business with all this money 314 00:30:33.780 --> 00:30:39.540 printed up with greenbacks. And so the American government fundamentally changed from a constitutional 315 00:30:39.540 --> 00:30:45.260 republic to an empire very quickly. And one of the first orders of business was massive 316 00:30:45.260 --> 00:30:51.740 subsidies to the railroads, the genocide of the Plains Indians to make way for the railroads, 317 00:30:51.740 --> 00:30:56.060 we eventually got into the Spanish-American War, and later on in the century, which had 318 00:30:56.060 --> 00:31:02.180 nothing to do with us, with Americans, pure imperialism, and that wouldn't have happened, 319 00:31:02.180 --> 00:31:08.700 I don't think, had this bank not been created and the states been essentially destroyed 320 00:31:08.700 --> 00:31:13.340 as political entities, and the central bank had a lot to do with that, and my time is 321 00:31:13.340 --> 00:31:14.840 about up. 322 00:31:14.840 --> 00:31:16.840 Thank you very much.