The First Bank of the United States

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

When Alexander Hamilton entered office in 1789 as our first Secretary
of the Treasury, Congress asked him to prepare a report on the state of
the finances. As part of this report, Hamilton proposed a national bank,
with the Federal Government owning one fifth of the stock. He suggested
the bank on the grounds that (1) it would provide needed paper currency,
(2) it would be a safe-haven for public funds, (3) it would provide banking
facilities for commercial transactions, (4) it would provide for the sale
of government bonds. The proposed bank would have enormous fiscal power
and virtually dictate federal fiscal policy. [1]

The Bank was chartered in 1791 after the bill passed both Houses
of Congress and President Washington signed it into law. The charter was
to last 20 years with a beginning capital of $10,000,000. $8 million was
to be subscribed by private investors, with the Federal Government owning
the rest. Economic historians are almost universal in their positive assessment
of the Bank. Harold Faulkner summarizes:

      The first Bank of the United States was nevertheless a salutary influence

 

      in the financial operations of the early republic, fulfilling amply the

 

      expectations of its advocates. Aided by the credit of the government, it

 

      was able to do business in a conservative fashion and acted as an efficient

 

      agent of the Treasury Department. During its twenty years it loaned the

 

      federal government $13,500,000 and when the government sold its stock it

 

      realized a profit of $700,000. But beyond all that it provided a safe paper

 

      currency. As a creditor of many state banks and by its policy of refusing

 

      the notes of non-specie-paying banks, it drove out fiat money and kept

 

    the paper at par [face value]. [2]

Not so the conspiracy theorists. A central bank to a New World Order
conspiracy theorist is the equivalent of a cross to a vampire. The mere
mention of our own Federal Reserve System elicits the now familiar gnashing
of teeth, the proverbial finger print of a true New World Order conspiracy
theorist. The same is true for the history of central banking as well.
Let’s see what the conspiracy theorists have said about our first attempt
at central banking, the first Bank of the United States. Wicliffe B. Vennard,
author of the tome, The Federal Reserve Hoax: The Age of Deception,
states:

      The rich money lenders were on the side of Hamilton and all the powerful

 

      influence of what might be called the Money Power was exerted to pass the

 

    bill. [3]

Actually, Vennard’s statement is accurate insofar as the basic facts
without the froth are concerned. At the time there were only four banks
in existence; the Bank of North America, the Bank of New York, the Bank
of Massachusetts, and the Bank of Maryland, which was established in 1791.
These were among the supporters of the bill to incorporate the Bank. [4]
The real contradiction comes later when the charter renewal bill went before
Congress. The Bank was so successful that when the vote to recharter the
Bank came up again in Congress twenty years later, many who opposed it
were now leading the fight for its recharter, Treasury Secretary Gallatin
and President Madison being prime examples. With the exception of the large
state banks, the opposition and the supporters of the charter renewal bill
had mostly reversed each other. [5] Vennard, then, will have no doubt much
to ponder. Namely, who dropped out of the conspiracy and who forgot to
pay their dues. John K. Galbraith observes:

    What the Bank accomplished was precisely what many did not want. [6]

Bob Adelmann, in a reprint from “The New American” magazine, states
the following:

      Again, just like the ill-fated Bank of North America, it was granted a

 

      monopoly on the creation of irredeemable paper money. Again, just as in

 

      the previous instances, prices from 1791 to 1796 rose 72 percent in response

 

    to the flood of new paper money that was issued by the bank. [7]

Again, Adelmann is found to be grossly lacking in his facts. Elgin
Groseclose, author of the classic, Money and Man, destroys the monopoly
argument:

      The bank did not enjoy a monopoly of the note issue, as the various states

 

    still chartered banks with this privilege. [8]

The issue of “irredeemable paper money” is equally ridiculous just
as is blaming the Bank for the rise in prices. Galbraith writes:

      Both the government and private borrowers took their loans, or some part,

 

      in notes of the Bank. These were exchangeable [redeemable] for gold or

 

      silver, circulated at par [face value] therewith, and were well regarded

 

    by the public. [9]

Anyone with even the most basic knowledge of the first Bank of the
United States would know that its currency circulated at par (face value).
It was the note issues of the state banks that were the cause
of the currency and inflationary problems, not that of the central bank.
Margaret Myers would later remind us:

      There were many complaints about the “bank rags” which passed for money

 

      at various rates of discount. Many banks issued far more than they could

 

      hope to redeem, some of them postdated so that there was not even a promise

 

      to redeem them until the more or less distant future. The quality of the

 

      bank notes would have been even lower without the influence of the Bank

 

      of the United States. Its systematic presentation of their notes for redemption

 

      made it a kind of regulator of their issues, a circumstance which was not

 

    always appreciated by the country banks. [10]

So, on all four of the major points cited, Adelmann has no credibility.
The Bank did not enjoy a monopoly of note issue, its note
issues were redeemable in gold or silver, it was the state
banks that were to blame for the inflationary problems, and none
of this was due to the money issued by the Bank. All of this, mind
you, in the short span of just two sentences. Adelmann as well has much
to ponder.

By the way, let’s not forget the short-interval absurdity of J.R.
Church, lest you think that Adelmann is alone in such matters. Forthwith
the dubious is hereby inscribed:

      At the conclusion of the Revolutionary War, Alexander Hamilton established

 

      his central bank in New York City. It is said that Thomas Jefferson was

 

    so furious he resigned Washington’s cabinet.[11]

The Bank being discussed is the first Bank of the United States.
It may well be confused with the Bank of North America, but the rest of
the page and his bibliographical reference source [12] makes the context
obvious. First, The Bank was not started at the conclusion
of the Revolutionary War, the Bank was started some eight years later,
in 1791. [13] Second, the Bank was not based in New York
City, it was based in Philadelphia. [14] Third, it is not
said that Jefferson resigned in anger. This is a complete fabrication on
his part; further attestation to Church’s abilities as a true researcher.
Fourth, Thomas Jefferson resigned at the end of Washington’s first term
for only one reason; he planned it that way! [15]

Pat Robertson, author of The New World Order states on page
120:

      Except for Alexander Hamilton, all of the founders of this nation and their

 

      successors fought any attempt to take the power of money away from the

 

      people in order to place it in a privately owned or foreign-dominated central

 

    bank. [16]

Frankly, it is a national embarrassment that someone so completely
ignorant of his own national history should come so close to the Office
of the President of the United States. It is even worse that he is so obvious
in his attempt to deliberately mislead his reader. Robertson, a Yale educated
lawyer, surely would have known that the bill to incorporate the Bank would
have to pass both Houses of Congress (largely populated with founding fathers)
and have to be signed by President Washington. Anyone with Robertson”s
academic credentials could not make this obvious an error without raising
serious questions. This scribe can find no rationale for this magnitude
an error.

Emanuel M. Josephson, author of the tome, The “Federal” Reserve
Conspiracy & Rockefellers: Their “Gold Corner,”
says of the beginnings
of the first Bank of the United States:

      The First Bank Of The U.S. was the first entry of the Federal government

 

      into the field of money and banking under the emergency powers granted

 

    by the Constitution. [17]

The Bank charter was not passed in such a manner, that being the
emergency powers granted under the Constitution. While it is true that
there was a need for such a bank, its charter was passed just as any other
law would have been passed. Josephson’s error in stating that the Bank
was created by the emergency powers is not repeated in any other writings;
conspiracy or otherwise. Further down the same paragraph, Josephson
casts an interesting new light on the Bank:

      But as the emergency cleared up, the private bankers chafed at honest guidance

 

      and control and resented the barrier which it [the first Bank of the United

 

    States] set up to looting the public. [18]

“Tis a trifle curious indeed that one conspiracy writer would break
ranks with all others on the subject and even have the audacity to defend
a central bank. Upon hearing this, many in the conspiracy camp will no
doubt head for the gun closet. 00 buckshot will no doubt be the ammo of
choice.

William T. Still, author of, New World Order: The Ancient Plan
of Secret Societies
, laments one of the most celebrated quotes in conspiracy
theory writing:

      Rothschild interests owned such a substantial share that they were said

 

    to be “the power in the old Bank of the United States.” [19]

G. Edward Griffin cites the more often quoted longer version:

      Under the surface, the Rothschilds long had a powerful influence in dictating

 

      American financial laws. The law records show that they were the power

 

    in the old Bank of the United States. [20]

Griffin now continues, enunciating what every other conspiracy writer who cites the above says of the Rothschilds:

      The Rothschilds, therefore, were not merely investors nor just an important

 

      power. They were

the

      power behind the Bank of the United

 

    States! [21]

In so citing this, Griffin and Still have continued to propagate
a bald faced fraud in order to prove their absurd New World Order conspiracy
theory. Here is the real truth. The citation is from Gustavus
Myers” History of the Great American Fortunes. The actual quote
is as follows:

      Under the surface, the Rothschilds long had a powerful influence in dictating

 

      American financial laws. The law records show that they were powers in

 

    the old Bank of the United States. [22]

Did you catch the difference? The Rothschilds were not the
power (singular), they were powers (plural-one of many powers).
A blatant fraud propagated by almost every conspiracy writer* who
cites this, for one simple reason; it helps to prove their case that the
Rothschild family is part of the conspiracy. Without it, of course, the
theory’s credibility is seriously damaged. Dare you think that, so far,
this ridiculous affair damages the credibility of Griffin and Still, there
is still the matter of context. Let’s cite Gustavus Myers again, adding
the next sentence for context:

      Under the surface, the Rothschilds long had a powerful influence in dictating

 

      American financial laws. The law records show that they were powers in

 

      the old Bank of the United States. August Belmont and Company were their

 

    American representatives. [23]

With the introduction of August Belmont, there is now another dimension
to the quote. We now have time and place. According to Eustace Mullins,
yet another conspiracy writer, August Belmont did not arrive in the United
States until 1837. [24] Myers, then, is not talking about the first Bank
of the United States, since its charter ran out in 1811. Myers is talking
about the second Bank of the United States, chartered in
1816 and declared bankrupt after it suspended payments in 1839. In other
words, Griffin and Still not only falsely quote Gustavus Myers, they
assign the Rothschild quote to the wrong bank!!

Ignorance is indeed bliss.

G. Edward Griffin states of the charter:

      The charter specified that the Bank was required at all times to redeem

 

      its notes in gold or silver specie upon demand by the depositor. That was

 

      an admirable provision but, since the Bank was not also required to keep

 

      specie in its vaults in the full amount of its note obligations, it was

 

    a mathematical impossibility to uphold. [25]

As is so often the case in conspiracy writing, Griffin is only half
correct. Margaret Myers again reveals Griffin’s obvious error:

      There was no requirement for specie redemption of its notes, or for a specie

 

    reserve against deposits. [26]

Is there nothing sacred? Griffin’s gross ignorance of the truth
even reaches into the trivial. Frankly, there is no excuse for such obvious
errors. Even the basics are easily refuted if there is no initial research
to begin with. It’s nice to talk about conspiracy, but where Griffin”s
research is concerned, there is no there there. Griffin continues
with yet another obvious error:

      Reminiscent of the Morris scheme in capitalizing the Bank of North America,

 

      this federal “investment” was essentially a means whereby federal funds

 

      could be used to make up the short-fall of the private investors. The Bank

 

      was able to open its doors with less than nine percent of the private capital

 

      required by its charter. The total capitalization was specified at $10

 

      million, which means that $8 million was to come from private stockholders.

 

      However, as John Kenneth Galbraith wryly observed: “Numerous thrifty participants

 

      confined themselves to a modest down payment, and the bank began operations

 

    on around $675,000 in hard cash.” [27]

The transparent fraud in this citation is beyond imagination. A
short-fall of private investors? Myers writes again:

      When the books were opened for subscription to the stock of the Bank in

 

      July 1791, such was the demand that the whole four-fifths of the public

 

    capital was oversubscribed within an hour. [28]

It is simply not possible for Griffin to come to this conclusion
without complete fabrication on his part. If he did any research at all
on the subject, this is what he found. If he didn”t, then why did he imply
that he did by writing it? Let’s not forget the implication that the Bank
opened its doors with less cash than it was supposed to, either. The absolute
minimum requirements of the charter would calculate to $625,000 in cash,
$50,000 less than the figures cited by Galbraith. [29] Further,
Bray Hammond, author of the classic, Banks and Politics in America,
would later observe:

      Though the authorized capital of the Bank was $10,000,000, of which $2,000,000

 

      was to be paid in specie, the Bank was permitted to organize as soon as

 

    $400,000 had been received from the subscribers. [30]

No conspiracy here, either. Griffin is again wanting on the issue
of minimum requirements. All legal and no hanky panky. It is sad indeed
that this passes for scholarship in New World Order conspiracy circles.
Lest there be any doubt about the credibility of Griffin and fellow conspiracy
buff Pat Robertson, the following should suffice. Robertson writes:

      History records that shortly after the establishment of the United States,

 

      the Rothschild interests attempted to saddle the country with a private

 

    central bank. [31]

Griffin is slightly more prolific in his ignorance:

      Who were these private investors? Their names do not appear in the published

 

      literature, but we can be certain they included the Congressmen and Senators

 

      and their associates who engineered the charter. But there is an interesting

 

      line in Galbraith’s text that hints at another dimension to the composition

 

      of this group. On page 72 of Money: Whence It Came, Where It Went, he states

 

      matter-of-factly: “Foreigners could own shares but not vote them.” What

 

      a story is hidden behind that innocuous statement. The blunt reality is

 

      that the Rothschild banking dynasty in Europe was the dominant force, both

 

      financially and politically, in the formation of the Bank of the United

 

    States. [32]

So, without even so much as a hint of any basic research, Griffin
and Robertson casually mislead their readers into thinking that the Rothschild
family was the “dominant force” behind the Bank. Like water off a duck”s
back, Griffin is even audacious enough to admit, “their names do not appear
in the public literature,” yet still concludes a “blunt reality.”
Incredible!! Where neither has done any research to find the real facts
on the issue, enter Margaret Myers and one of her probable sources, Bray
Hammond. Myers writes:

      Among the subscribers were the state of New York, the Bank of Massachusetts,

 

      Harvard College, thirty members of congress, merchants, and professional

 

    men. [33]

Is it not outright fraud to state a fact without any
supporting data? Is there no shame to these who would so casually use the
printed word to propagate a theory that has not a shred of evidence in
support of it? This scribe certainly thinks so. We have found again that
the New World Order conspiracy theory is riddled with fraud, blatant deception,
and factual errors that are frankly insulting to those who have done any
serious research on the issue. So, the beginnings of central banking in
the U.S. are not so frightening as the New World Order types would have
us believe. Funny thing this stuff we call history.

* Gary Allen and Larry Abraham, authors of None Dare Call It Conspiracy,
are the only conspiracy writers that I am aware of that correctly cite
the passage.

References

1) Harold Underwood Faulkner, American Economic History (New York: Harper & Row Publishers, Inc. 1960) 155

2) Faulkner, p. 156

3) Wickliffe B. Vennard, The Federal Reserve Hoax: The Age of Deception (Palmdale, CA:Omni Publications) 62

4) Margaret G. Myers, A Financial History Of The United States (New York: Columbia University Press, 1970) 68

5) Bray Hammond, Banks and Politics in America (Princeton: Princeton University Press, 1957) 197-226

6) John Kenneth Galbraith, Money: Whence It Came, Where It Went (Boston: Houghton Mifflin Company, 1975) 73

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

8) Elgin Groseclose, Money and Man (Oklahoma: University of Oklahoma Press, 1976) 183. See also Richard Hildreth, The History of Banks (Boston: Hilliard, Gray & Company, 1837; reprinted August M. Kelley, Publishers, 1968) 54

9) Galbraith, p. 72

10) Myers, p. 70

11) J.R. Church, Guardians of the Grail (Oklahoma City: Prophecy Publications, 1989) 178

12) “Bank of the United States,” The World Book Encyclopedia, volume 2, 1973, p. 60 (as cited by church)

13) Groseclose, p. 182

14) Myers, p. 68

15) Noble E. Cunningham, Jr., In Pursuit of Reason (Baton Rouge: Louisiana State University Press, 1987)178

16) Pat Robertson, The New World Order (Dallas: Word Publishing, 1991) 120

17) Emanuel M. Josephson, The “Federal” Reserve Conspiracy & Rockefellers: Their “Gold Corner” (New York: Chedney Press, 1968)15

18) Josephson, p. 15

19) William T. Still, New World Order: The Ancient Plan of Secret Societies (Lafayette: Huntington House Publishers, 1990) 147

20) G. Edward Griffin, The Creature from Jekyll Island (Appleton: American Opinion Publishing, Inc., 1995) 331

21) Griffin, p. 331

22) Gustavus Myers, History of the Great American Fortunes (New York: Random House, 1936) 556

23) Gustavus Myers, p. 556

24) Eustace Mullins, Secrets of the Federal Reserve: The London Connection
(Staunton: Bankers Research Institute,1993) 53

25) Griffin, p. 330

26) Myers, p. 68

27) Griffin, p. 330

28) Myers, p. 68

29) M. St. Clair Clarke and D.A. Hall, Legislative and Documentary History of the Bank of the United States (Washington: Gales & Seaton, 1832; reprinted August M. Kelley, Publishers, 1967) 31

30) Hammond, p. 123

31) Robertson, p. 123

32) Griffin, p. 331

33) Myers, p. 68

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