"The Bank Was Saved, and the People Were Ruined"

By Jeff Thomas, International Man

The above quote is from William Gouge, commenting on the Panic of 1819. The panic had been caused when the First Bank of the United States had first expanded the money supply dramatically by offering loans, then contracted the money supply by tightening its requirements for new loans, causing a crash.

This is a useful quote, as, in its simplicity, it states the very nature of crashes brought on by irresponsible banking practices. In every case in which this occurs, it is possible through the complicity of the government of the day.

The origin of this syndrome goes back to Mayer Rothschild, a very clever fellow who, in the late 18th century, offered financial benefits to politicians in Germany in trade for political support for whatever activities his bank might practice. Rothschild was a long-term thinker; his method involved the offering of regular emoluments to politicians without their having to provide him with anything immediately. Then, when he needed a large favour, he would call it in.

Movie buffs may see a similarity between Rothschild's method and the deals made by Don Corleone in The Godfather. "Some day - and that day may never come - I'll call upon you to do a service for me."

Rothschild created boom-and-bust cycles which were highly profitable for his bank, but depended upon the support of the government when the "bust" part came along.

As described above, the bank would offer loans to the public on generous terms, then suddenly rein in those terms on all future loans. The claim the bank would make would be that inflation was taking place and the bank was taking action to control that inflation. (Of course, Rothschild did not bother to mention that it was the bank itself that had caused the inflation.)

The net result would be a "panic," or, in today's terms a "depression." Everyone involved would be harmed by the event except the politicians and the bank.

This scheme was accurately and succinctly described by G. Edward Griffin in 1994:

"It is widely believed that panics, boom-and-bust cycles, and depressions are caused by unbridled competition between banks; thus the need for government regulation. The truth is just the opposite. These disruptions in the free market are the result of government prevention of competition by the granting of monopolistic power to the central bank."

Mayer Rothschild's five sons followed in his footsteps and would go on to control much of the banking in Europe. The Rothschilds are perhaps best known for the Bank of England, which is still in operation today as one of the world's most powerful banks.

So, let's have a brief look at central banking in America.

In 1782, the Bank of North America was opened in America during the infancy of the United States. It was modelled after Rothschild's Bank of England. It operated as a central bank and, as it was organised by Congressman Robert Morris, it was intended from the start to serve both its directors and the politicians of the day.

The bank did indeed serve the bankers and politicians - at the expense of the depositors. Although the bank lost its charter in 1783, an effort was soon afoot to create a virtually identical bank, called, "The Bank of the United States." The proposal was backed by the Rothschilds, who intended to control it.

Having just seen, first hand, how much damage a central bank, with a fascist relationship to the government could do, a terrible (and ongoing) row took place within the Cabinet of President George Washington as to whether another potentially disastrous bank should be allowed. The main protagonist was good Secretary of State Thomas Jefferson, who said,

"The system of banking [is] a blot left in all constitutions, which, if not covered, will end in their destruction... I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity…is but swindling futurity on a large scale."

On the other side, Secretary of the Treasury Alexander Hamilton led the argument in favour of the creation of a second central bank. Incredibly, even though Congress had just seen what a disaster this could be, they approved the charter for the new bank in 1791. It opened with less than nine percent of the private funds required by its charter.

A primary object of the bank was to provide fiat currency for the government, whilst collecting deposits from the public. Immediately, the new bank began to print money and to lend it, with predictable results. By 1811, it had closed its doors, having rewarded only its directors and some politicians, whilst the depositors lost their money.

This, surely, would be the end of the failed concept of a central bank, a fascist partnership between financiers and politicians. However, in 1816, Congress granted a charter to the second "Bank of the United States." Within three years, the bank had caused the Panic of 1819, as stated in the opening paragraph of this article and, again, as Gouge said, "the bank was saved and the people were ruined."

In 1832, President Andrew Jackson was up for re-election and he risked his success on a campaign to stop the renewal of the charter of the Bank of the United States. Although he won both his re-election and his bid to stop the renewal of the charter, both the Rothschild family and their American counterparts continued their efforts to create a central bank that would provide both bankers and politicians with wealth whilst using depositors as cash cows.

They succeeded marvelously in 1913 with the creation of the Federal Reserve, a more sophisticated relationship between bank and State that has operated ever since. In the boom-and-bust cycles it has created, the US dollar has been devalued by over 96% and, in 1999, the repeal of the Glass Steagall Act allowed bankers to create the Mother of All Loaning Sprees, resulting directly in the collapse of the real estate bubble in 2007 and the crash of the stock market in 2008.

But the system today is far more advanced than in the eighteenth century. It is no longer necessary to fold the banks involved, or at least not immediately. In the aftermath of the 2007/2008 crashes, Government has declared that the closing of the central banks would be the worst catastrophe that could befall the country and therefore, the country must borrow heavily to re-fund them. No requirement was made of the banks to actually offer these funds on loan, let alone to bail out the debtors. The banks have instead been able to absorb the funds, continuing the massive bonuses to the very directors who caused the disaster in the first instance.

The above history is a brief, thumbnail sketch of events relative to central banking in the US since the formation of the country. It is not meant to be all-encompassing and the reader is encouraged to study the subject further. But the sketch does have a purpose.

Today, most of the First World is in the midst of an economic crisis that has been caused by debt. That debt has been the product of bankers and governments working together.

History shows us that the present situation is not an accident. It is the repetition of a very successful method by which bankers, with the complicity of governments, create boom-and-bust cycles; cycles that, whilst damaging for nearly all citizens of a country, are very profitable for those who create the cycles.

If we are to watch the evening news, there are, daily, politicians and pundits offering "solutions" - "Provide quantitative easing," "tax the one percent," or simply, "kick the can down the road." Through endless debate, viewers are encouraged to believe that somehow, the government and the directors of the banks and the Chairman of the Federal Reserve will come up with a solution to the problem.

However, a brief read of the history above suggests that there will be no "solution," as no solution is intended by those who have created the problem. The entire concept is to periodically hang the depositor out to dry. (It's not done to be purposely unkind; it's done because it's so very profitable.)

If the reader has not yet been squeezed to the point that his net worth (value of assets, minus debt) is under water, he would be well advised to consider means by which his liquid assets can be removed from the banking system, a system that, if history repeats, may soon take those remaining assets, as the second half of the Great Unravelling unfolds.

Does this mean that the reader should run right down to the bank and withdraw his assets? Not necessarily. What it does mean is that it would be best to recognise that a clear pattern has existed for hundreds of years regarding boom-and-bust banking and the reader would be well-advised to ask himself some unpleasant questions. Here are a few:

- Will my bank be one of those that crashes?

- Will my savings be lost partially or entirely?

- How much time do I have before I should remove my deposits?

- Will my bank honour the agreement of the paper gold that they have sold me?

- Will I be able to take delivery of allocated gold that they "hold" for me?

- What do I do with my assets if I withdraw them from the bank?

- Will there be banks that will remain in business? Which ones?

The above questions should be asked periodically, as events unfold. Doing so may mean the difference between the retention or loss of assets that the reader now trusts his bank to hold for him.

[If you're going to successfully internationalize - whether assets, income or personally - you'll need some good resources to do it. Join us at the International Man Network and gain access to our library of useful reports on a wide range of diversification topics from moving gold overseas or finding an international broker to getting set up on the ground in a number of different countries around the world. Click here for more information.]

23 thoughts on “"The Bank Was Saved, and the People Were Ruined"

  1. Excellent artcle.Any future is in downsizing government and military to the bare core ,abolishing central bank and strip and jail bansters.Turn this fascist-socialist system back into pure capitalism,republicanism.Martin

  2. The paper currency or fiat only can exist because it's backed by the taxpayers' tax pool, not by gold today. So U.S. currency or fiat by definition belongs to all the people of the U.S. who make their currency possible. Here's where the problem comes in. The 3rd party [private] "bankers" get between the nation _____ and its currency. They are allowed to then print it "as if" it belongs to them personally so that when it's loaned to individual borrowers or to the government it's not owed back to the government i.e. the nation it's owed to the private bankers simply because they were allowed to print it. You may ask then, why if the government can print it, as its own central bank for loan like constitutionally they're supposed to, and it's then owed back to the people and their government - how come we're the ones in 'debt'? Well it's because the [private] bankers and the key politicians they own get in the middle of it as I've described and make that [legal] even though it's unconstitutional. Then they're all very, very rich and money talks much, much louder than the constitution, a piece of parchment. That's why the "Federal" Reserve is private, just like say "Federal Express" and is the instrument for the third parties in the middle doing this. This has been a problem in Western Cicilization since the early 1600's when it began. The third parties in the middle are 'federal' in name only. Wouldn't you want to be able to print the money and it's all owed back to you instead of to the nation (whose currency it is) if you could pull it off. Well, they did pull it off. That now more and more people are waking up to it, then more and more people have to be crushed, and it looks like (unless they ammend their ways) that's what they're preparing to do. And, it will all be done [legally] under 'federal' auspice, so that resisters will be the bad guys or the 'terrorists'. It's not a theory like a 'conspiracy' type theory. It's just in fact the way banking with key politicians in sync has been done now for 400 years. Ask yourself what don't they own with everything they've printed being owed back to them, personally. Then big corporations near the top of the heap or pyramid all go along with it, and so on. What can you do? Only they can change their system. Unless at this point they just want to become outright cannibals and start eating people? But it's not theory. It's 'The' system and has been for a long time. And probably this way in some form for a long time to come. How can you change the way it is? Democracies don't mean beans in this regard. It's even easier to do this in a democracy.

  3. The recipe for decade(s) of stagnation has evolved via economic catch 22's such as global imbalances, demographic security and the unlimited power of elites.

    Attempts to privately d-leverage economy is countered via higher taxes, insurance, utilities, and cartels.

    Attempts to heavily invest in science is countered via corruption, technical understanding, entitlements, and the cost impact of monopolized resources.

    Attempts to shift consumption to Asia is countered via state owned enterprise, inflation of commodities and the lack of civil institutions.

    Are we nearing more radical forms of expropriating wealth via military might, and socialism.

    Are the outstanding obligations to big to unwind avoiding a total collapse?

    I think it's all too complicated to predict.

    I think it's all to obvious adjusting to do without the opportunities and lifestyle of the past for decades to come.

    I think any wild card is another catch 22 other than the totally unpredictable

  4. If anybody posts that it's all part of the International illuminati, Jewish Bankers, Templar, conspiracy I'm unsubscribing.

    I thought this was meant to be an investment blog not a venue for rehashed 19th Century paranoid conspiracy theories.

    1. Why did you read the article if you have already dismissed the possibilities it discusses? It seems to me the title does not attempt to disguise the content.

    2. Lot of uneasiness out there. I sense that more and more folks have the feeling that something is very wrong and its showing in the market gyrations.
      If you prefer reality, do a Wikipedia or other search for Agenda 21.

    3. We are in the 21st century and criticism of central bank policy is well justified regardless of who are pulling the strings. We have been swung between feast and famine by self serving banking policies since 1913 and prior. It is a totally inefficient and damaging management system where the on/off money creation leads to costly overheating and underutilization of labor and resources. The de facto reserve requirement dropping to 3% from the synthetic capital creation during early to mid 2000's without any supervision from the Fed and banking regulators and to then, after the collapse of the housing market, shutting off nearly all credit for mortgage lenders, and raising the reserve requirements to 10% coupled with tighter loan requirements has been disastrous. These people are either totally incompetent or have mastered a very efficient system for the confiscation of middle class assets. To add insult to injury they've been using taxpayer money to purchase the near worthless junk bonds to bail out the (allegedly too big to fail) banks jeopardizing the whole world financial system.
      Shame on them, whoever the hell they are.

  5. Is this a column for comments or a column for victims?
    The beauty of victims is the ability to offer impossible solutions to any problem, economics included.
    They offer fertile ground for terrorism as their hidden rage from childhood releases.

    1. The person commenting as "abu hassan" is certainly not an Arab. Instead, he is someone who feels a need to undermine criticism of the Rothschilds. Hasbara?

  6. This article is probably a good description on what happens in the banking system in 19e and 20e centuries, but it is not a fair description of the two last decades. This is propaganda to put Federal Reserve banks and private bankers in the same bags. This is propaganda. The banksters are the only ones responsibles for the last financial crisis of 2007-2008. To get more bigs bonus, they put in place many fraudulent financial products, they take excessive bigs risks and sell more loans to people then they can support on their own. Federal reserve banks are not responsibles for that, banksters are, they should go to jail for have doing that. Federal reserve banks have a clear mandate : control inflation and sustain the economy. We need better laws to protect the deposits of people, private banks should not be allowed to use savings of people to take big risks, a wall must be put in place to separate savings and loans to people and other more risky business banks are doing. But private banks will spend a lot of money to block those laws and Republicans will help them unfortunately

    1. Since when are Bill Clinton (Glass Steagull Demoman) Harry Reid (Fed Audit resistor) and Fancy Pelosi (Solar Advocate) Republican ?

    2. If you have access to Netflix, watch and then re-watch "Inside Job". The banks could not have accomplished their get-rich goals without the government (I.e politicians ) removing regulations. Why would removing regulations on banks make sense to anyone charged with protecting its citizens and their money?

      Second part to the question: Where did all the credit come from to allow everyone to over-extend their personal credit? Does the central bank concept loom as a possibility? How did the money supply expand without the complicity of the Federal Reserve Bank and your trusted government?

      Are the leaders genuinely leading or are they pawns as well? Until we look beyond the corporate owned news we are fed, we will never even seek the truth, let alone find it.

  7. what do you know of the coinage act of 1793? does it apply to the current debasement? can a class action suit be brought against the fed chairman etal by taxpayers and dollar holders? can citizens require congress to insist upon full accounting, and, if it does not, seek impeachment and/or misprision of office proceedings against those who refuse to do so?

  8. I have just finished watching the documentary "Zeitgeist" and its sequels. This article expands on the history of the central banking scheme and is consistent with what the Zeitgeist authors regard as enslavement through monetizing out society.

    The movies mentioned above contend that there are adequate resources in the world for all of us. Instead we chase (generally through our labour) a small portion of these resources by trying to acquire some of this non-existent money the central bank has loaned to us. This in spite of the fact the central bank has no money to lend. What is worse, is that it does not print money, it prints debt. So guess what, you now have to pay them interest (as part of your taxes) on this debt they invented so your government can pay its debts. Quite often these debts are owed to banks and large corporations who are best friends with our politicians because of mammoth election contributions they made with profits they earned by taking your hard earned money.

    Slavery has not been abolished, it has been monetized. Now it is extended to include all of those not running this central bank "Ponzi Scheme". Stay tuned for more civil unrest. When the rest of the world decides it does not want to work all their lives and still end up with nothing, not even food, unless they accept their new slave status, some will get angry.

  9. Excellent article, i read G edward Griffins book Creature from Jeckyl
    Island ,it shook me to the core. Got gold,silver, real assets.
    Fiat currencies are all going to fail.

    This same group of international bankers have been planning a one
    world government,one world currency, and enslavement of humanity.
    I fear the time is close for them to implement their plans...

  10. The fed/central banks are trying to sort out the underwater mortgages. Wait until the derivatives hit the fan. Mark-to market will be mark-to-zero?
    Take delivery of gold? How do you know what's tungsten filled and what isn't?
    Counterfeit premium coins? Search it out. More prevalent than ever.
    Seems like nothing is sacred anymore.

  11. Unfortunately the Greenspam machines (central banks) are not designed to preserve wealth for regular folks. They only work for bankers, public assistance recipients and politicians.

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