On the Bank of North America

©1997 by Gerry Rough <politico8@maplenet.net>

In the broader scheme of things, the Bank of North America
does not see very much print in New World Order circles. The Bank of North
America is barely a bump in the road on the way to the modern Federal Reserve
system. The real battle for central banking comes a decade later when the
first Bank of the United States appears in the pages of history. As background,
the Bank of North America was started in 1781 by an act of Congress. Up
until this point, Congress had experimented with paper currency issues
to help finance the Revolutionary War, but the complete collapse of these
currencies lead not only to economic depression, but a serious morale problem
for the troops and the populace. By 1780, Congress had become desperate
for new ways to finance the war with England. Enter the newly created office
of Superintendent of Finance. Its first leader, Robert Morris, was known
at the time as a wealthy merchant and financial wizard. He proposed a new
idea to Congress to start a commercial bank that would act as fiscal agent
for the government, and help to correct the problems with issuing paper
money that was rapidly depreciating. A few conspiracy theorists, of course,
try to spin this into the New World Order conspiracy. The following will
no doubt come as a shock to those who have never seen the facts.

Our first example comes from G. Edward Griffin, author of,
The Creature from Jekyll Island:

      On the other hand, the Bank [of North America] was given the right

 

      of monopoly in its field, which means there were no other bank notes allowed

 

    to circulate in competition. [1]

Griffin is partially correct in that the Bank was given a
monopoly, but the rub here is that the monopoly status was only in effect
during the Revolutionary War, not indefinitely. It is highly unlikely that
Griffin was even aware of this fact, since the second half of the above
citation completely redefines the word monopoly as used in the original
charter. The charter stated that no other banks were to be chartered by
the several states for the duration of the war, directly contradicting
Griffin’s redfinition. The Bank of North America was the first commercial
bank in the United States, but there were two other banks that were created
during the confederation period as well (1776-1789). [2] The Bank of New
York and the Bank of Massachusetts were both started in 1784. [3] The Bank
of North America was given a monopoly of its charter, not of note issue.

Second, there were other bank notes allowed to circulate.
In fact, the Bank of North America circulated two different bank notes
at the same time. The first were the notes of the Bank. The second were
called Morris notes. These were bank notes backed by the personal fortune
of Robert Morris. E. James Ferguson picks up the story:

      Morris focused his attempt to establish the credit of his administration

 

      on an effort to launch and sustain a new series of paper instruments. This

 

      paper was of two kinds: “Morris’s notes,” and the notes of the Bank of

 

      North America”.”My personal credit,” he wrote, “has been substituted for

 

      that which the country had lost.””Their [Morris notes”] security was his

 

      personal ability to direct payment out of government funds and, failing

 

    that, his private assets as a merchant. [4]

So, on further examination, Robert Morris, far from the fellow
conspirator of the New World Order, sacrificed his own personal fortune
for the sake of the new fledgling democracy. Of interesting note, Morris
would suffer financial ruin because of his lack of attention to his private
affairs while in office; a devastating argument against any ridiculous
conspiracy theory. [5] It is astounding to this observer that the conspiracy
theorists have failed to see such an obvious point. Griffin’s assertions,
then, have been found to be grossly wanting on the facts.

For this next argument, we”ll have to cut this paragraph one
slice at a time in order to get the real picture. Griffin writes:

      The Bank of North America was fraudulent from the very start. The charter

 

      required that private investors provide $400,000 for the initial subscription.

 

      When Morris was unable to raise that money, he used his political influence

 

      to make up the shortfall out of government funds. In a maneuver that was

 

      nothing less than legalized embezzlement, he took the gold that had been

 

    loaned to the United States from France and had it deposited in the Bank.[6]

Of the $400,00 initial subscription, only $70,000 were subscribed
by individual investors. Morris then used $254,000 of this loan from France
to subscribe the remaining shares to the government, making the U.S. government
the principle stockholder. [7] How both Griffin and his source came up
with the ridiculous notion that any of this was legalized embezzlement,
especially since Congress granted the charter for the Bank, is really beyond
comprehension. [8] But the ironic rub of all this is that nowhere in any
conspiracy writing is it realized that at this point, the Bank of North
America was a government bank, since the government was the principle stockholder.
Conspiracy theorists are universal in their condemnation of central banks,
by the way, because they are privately owned. Here is the prime historical
example of a central bank not controlled by any foreigners or private investors,
and still it is derided, chided and otherwise maligned as
the enemy of a free people.

Griffin continues the aforementioned paragraph:

      Then, using this as a fractional-reserve base, he simply created the

 

      money that was needed for the subscription and loaned it to himself and

 

    his associates. [9]

For those who may not be aware of the term, fractional-reserve
base means that you keep only a fraction of the original money, say 10%,
then loan out the rest. This is how modern banks work. They keep 10% in
their vaults as reserve, then loan out the rest of their depositors” money.
An obvious fabrication on his part, Griffin at this point has crossed the
line of blatant fraud. Morris only used that money for subscribing
the remaining shares to the government. He never used it for a fractional-reserve
base, never lent it to himself, never lent it to his associates.

Griffin will no doubt soil his central banking skivvies upon hearing this,
so a slight digression is in order. Robert Morris, as mentioned earlier,
was elected by the Continental Congress to head the office of Superintendent
of Finance. Prior to this, he was a former congressman and merchant who
had dealings in arms and supplies to help fight the Revolutionary War.
During his stay with Congress, Morris was made head of the Secret Committee
of trade. E. James Ferguson picks up the story:

      The Secret Committee which Morris headed in 1776 was the chief agency in

 

      the purchase of foreign goods, which the committee bought overseas or from

 

      merchants who imported them”.The Secret Committee had unusual discretionary

 

      powers. Because aid was expected from technically neutral countries, the

 

      committee’s activities were kept secret even from Congress, which neither

 

      supervised its operations nor examined its accounts. The committee delegated

 

      its own agents the authority to manage Continental business. To a very

 

      large degree, the individual members of the committee were free to carry

 

      on as they saw fit, restrained only by the need to produce results and

 

      the prospect of one day having to display their accounts”.Most of the other

 

      members were leagued with him in commercial enterprises, and for the sake

 

      of concealment much of the committee’s business was conducted by the firm

 

      of Willing and Morris under its own name. Only the book-keeping entries

 

    separated the company’s affairs from those of the government. [10]

Griffin and others will be quick to point the finger at evidence
like this and spin conspiracy into the facts. But what the inevitable end
of the argument will be is that Morris was several times investigated by
his enemies in Congress and found to be innocent of all charges. Then,
as now, it was far easier to run a smear campaign than it was to get at
the truth. Albert S. Bolles, author of, The Financial History of the
United States: 1774-1789,
summarizes:

      His desire to reduce expenses was inspired by the mean wish, so it

 

      was asserted, of impairing the strength, and lessening the respectability,

 

      of the country. His enemies accused him of speculating in the funds of

 

      the government; but he stoutly denied the charge. He was accused of ruining

 

      the public credit; but this accusation was groundless. During his administration

 

      the public finances had been much improved, and the credit of the government

 

      had been considerably strengthened. The belief in Congress in his integrity

 

      and ability was never shaken by any reports circulated about him. A year

 

      previous to his resignation, a committee were appointed to examine all

 

      matters concerning the administration of his office, who made a report

 

      which was entered on the journal of Congress. They declared that the business

 

      of the office had been conducted with great ability and assiduity, in a

 

      manner highly advantageous to the United States, and in conformity with

 

    the system established by Congress. [11]

Thomas D. Schauf provides our next example. The reader is
reminded that the subject matter we are discussing is the Bank of North
America, begun in 1781 and founded by Robert Morris. Schauf writes:

      BANK OF AMERICA

International bankers saw that interest-free scrip would keep America
free of their influence, so by 1781 banker-backed Alexander Hamilton succeeded
in starting the Bank of America. [12]

Believe it or not, we are still on the same subject. Schauf’s
blatant ignorance is frankly beyond insult. This is what actually passes
for scholarship for New World Order conspiracy theorists. Although the
average reader will see that there is a difference between the Bank of
North America and the Bank of America, it is interesting to note that the
Bank of America was started in 1904 by A.P. Giannini, and was originally
called the Bank of Italy. [13] If I were Thomas D. Schauf, I would be embarrassed
to know that I had made this magnitude an error and yet still claim to
be credible.

Our Last example comes from Bob Adelmann. The article is a reprint from
“The New American” magazine. Adelmann writes of the Bank of North America:

      By 1783 the Bank of North America had failed, because of a “run” by

 

    panicked depositors trying to redeem their paper currency for gold. [14]

Words could never do justice to this magnitude of outright
fraud. The entire statement is a deliberate fabrication. Adelmann has done
virtually no research on the issue, yet still continues to be credible
in the eyes of his devoted following. If New World Order conspiracy theorists
are wanting to be credible, they can start by cleaning house of those who
would so blatantly deceive as serious researchers.

Sources

1) G. Edward Griffin, The Creature from Jekyll Island (Appleton: American Opinion Publishing, Inc., 1995) 326

2) E. James Ferguson, The Power of the Purse (Chapel hill: The University of North Carolina Press, 1961) 136

3) Margaret G. Myers, A Financial History Of The United States (New York: Columbia University Press, 1970) 43

4) Ferguson, p. 135, 136

5) Clarence L. Ver Steeg, Robert Morris: Revolutionary Financier (Philadelphia: University of Pennsylvania Press, 1954) 190,191

6) Griffin, p. 326

7) William M. Gouge, A Short History of Paper Money and Banking in the United States (Philadelphia: T.W. Ustick, 1833; reprinted August M Kelley, 1968) 34

8) Griffin, p. 325-327. See also Murray N. Rothbard, Conceived In Liberty: The Revolutionary War, 1775-1784 (New Rochelle, New York: Arlington House, 1979), Vol. IV, p. 392

9) Griffin, p. 326

10) Ferguson, p. 76,77

11) Albert S. Bolles, The Financial History of the United States: 1774-1789 (New York: D. Appleton & Company, 1884; reprinted August M. Kelly, 1969) 328, 329

12) Thomas D. Schauf, “The Federal Reserve,” 1992

13) “Bank of the United States,” The World Book Encyclopedia, volume 2, 1973, p. 60

14) Bulletin: Committee To Restore The Constitution, February, 1989. P.O. Box 986, Ft. Collins, CO 80522

Additional Resources

Norman Angel, The Story of Money (New York: Frederick A. Stokes Company, 1929)

Elgin Groseclose, Money and Man (Oklahoma: University of Oklahoma Press, 1976)

Davis Rich Dewey, Financial History of the United States ( New York: Longmans, Green, and Co., 1903)

Richard Hildreth, The History of Banks (Boston: Hilliard, Gray & Company, 1837; reprinted Augustus M. Kelley, Publishers, 1968)

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