Forum Post: Why Is Socialism Doing So Darn Well in Deep-Red North Dakota? It's the Banks
Posted 11 years ago on March 31, 2013, 7:46 p.m. EST by LeoYo
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Why Is Socialism Doing So Darn Well in Deep-Red North Dakota? It's the Banks
Sunday, 31 March 2013 11:33 By Les Leopold, Alternet | News Analysis
http://truth-out.org/news/item/15435-why-is-socialism-doing-so-darn-well-in-deep-red-north-dakota
North Dakota is the very definition of a red state. It voted 58 percent to 39 percent for Romney over Obama, and its statehouse and senate have a total of 104 Republicans and only 47 Democrats. The Republican super-majority is so conservative it recently passed the nation's most severe anti-abortion resolution – a measure that declares a fertilized human egg has the same right to life as a fully formed person.
But North Dakota is also red in another sense: it fully supports its state-owned Bank of North Dakota (BND), a socialist relic that exists nowhere else in America. Why is financial socialism still alive in North Dakota? Why haven't the North Dakotan free-market crusaders slain it dead?
Because it works.
In 1919, the Non-Partisan League, a vibrant populist organization, won a majority in the legislature and voted the bank into existence. The goal was to free North Dakota farmers from impoverishing debt dependence on the big banks in the Twin Cities, Chicago and New York. More than 90 years later, this state-owned bank is thriving as it helps the state's community banks, businesses, consumers and students obtain loans at reasonable rates. It also delivers a handsome profit to its owners -- the 700,000 residents of North Dakota. In 2011, the BND provided more than $70 million to the state's coffers. Extrapolate that profit-per-person to a big state like California and you're looking at an extra $3.8 billion a year in state revenues that could be used to fund education and infrastructure.
One of America's Best Kept Secrets
Each time we pay our state and local taxes -- and all manner of fees -- the state deposits those revenues in a bank. If you're in any state but North Dakota, nearly all of these deposits end up in Wall Street's too-big to-fail banks, because those banks are the only entities large enough to handle the load. The vast majority of the nation's 7,000 community banks are too small to provide the array of cash management services that state and local governments require. We're talking big bucks; at least $1 trillion of our local tax dollars find their way to Wall Street banks, according to Marc Armstrong, executive director of the Public Banking Institute.
So, not only are we, as taxpayers, on the hook for too-big-to-fail Wall Street banks, but we also end up giving our tax dollars to these same banks each and every time we pay a sales tax or property tax or buy a fishing license. In North Dakota, however, all that public revenue runs through its public state bank, which in turn reinvests in the state's small businesses and public infrastructure via partnerships with 80 small community banks.
How the State Bank Creates Jobs
Banks are supposed to serve as intermediaries that turn our savings and checking deposits into productive loans to businesses and consumers. That's how jobs are supported and created. But the BND, a state agency, goes one step further. Through its Partnership in Assisting Community Expansion, for example, it provides loans at below-market interest rates to businesses if and only if those businesses create at least one job for every $100,000 loaned. If the $1 trillion that now flows to Wall Street instead were deposited in public state banks in all 50 states using this same approach, up to 10 million new jobs could be created. That would effectively end our destructive unemployment crisis.
No Bailouts for the BND
Banking doesn't have to be a casino. It doesn't have to be designed to create gambling opportunities so bank traders and executives can make seven- and eight-figure salaries. As BND president Eric Hardmeyer said in a 2009 Mother Jones interview:
We’re a fairly conservative lot up here in the upper Midwest and we didn’t do any subprime lending and we have the ability to get into the derivatives markets and put on swaps and callers and caps and credit default swaps and just chose not to do it, really chose a Warren Buffett mentality—if we don’t understand it, we’re not going to jump into it. And so we’ve avoided all those pitfalls.
As state government employees, BND executives have no incentive to gamble their way toward enormous pay packages. As you can see, the top six BND officers earn a good living, but on Wall Street, cooks and chauffeurs earn more.
•Eric Hardmeyer, President and CEO: $232,500
•Bob Humann, Chief Lending Officer: $135,133
•Tim Porter, Chief Administrative Officer: $122,533
•Joe Herslip, Chief Business Officer: $105,000
•Lori Leingang, Chief Administrative Officer: $105,000
•Wally Erhardt, Director of Student Loans of North Dakota: $91,725
The very existence of a successful BND undermines Wall Street's claim that in order to attract the best talent big banks need to offer enormous pay packages. Yet somehow, North Dakota is able to find the talent to run one of the soundest banks in the country? The BND is living proof that Wall Street's rationale for sky-high executive pay is a self-serving fabrication. (For more information on financial inequality please see my latest book, How to Earn a Million Dollars an Hour, Wiley, 2013.)
Wall Street Is Gunning for Bank of North Dakota
As you can well imagine, our financial elites would love to see this successful (socialist!) bank disappear. Its salary structure and local investments makes a mockery of Wall Street's casino banking system. But the bigger threat comes from the possible spread of this public banking concept to other states. Already, there are 20 or so state legislatures that are exploring state banks. Collectively, more public banks would pose an enormous threat to the $1 trillion in state and local bank deposits that now run through Wall Street.
But elite financiers also stand to lose much more. In the 49 states without a public bank, there's no safe place to turn for loans to rebuild schools and finance other public infrastructure projects. That creates an enormous opportunity for Wall Street firms to hook localities on expensive bond programs -- like capital appreciation bonds, which can lead to repayments equaling 10 times the original loan. Investment bankers and advisers also make enormous fees by selling expensive, high-risk financial schemes to state and local governments (read an investigative report here). But such schemes are useless in North Dakota where the state bank provides the capital the state needs for a fraction of the long-term costs.
Trade Agreements: Wall Street's Weapon of Mass Destruction
Clearly, from Wall Street's perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street's stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate "non-tariff" barriers including regulations that create "unfair" competition with state-owned financial enterprises.
Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because "foreign bankers could claim the BND stops them from lending to commercial banks throughout the state," according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.
The Public Bank Movement
A small but highly dedicated group of financial writers, public finance experts and former bankers have formed the Public Bank Institute to spread the word. Working on a shoestring budget, its president Ellen Brown (author of Web of Debt), and its executive director Marc Armstrong have become the Johnny Appleseeds of public banking, hopping from state to state to encourage legislatures to explore state-owned banks.
The movement is gathering steam as it holds a major conference on June 2-4 at Dominican University in San Rafael, CA featuring such anti-Wall Street hell raisers as Matt Taibbi and Gar Alperowitz, along with Brigitte Jonsdottir, a member of the Icelandic parliament, and Ellen Brown.
Is America Up For This Fight?
Since the crash, the financial community has largely managed to wriggle off the hook. In fact, fatalism may be replacing activism as we sense that maybe Wall Street is simply too big and too powerful to change. After all, the big banks seem to own Washington, as too-big-to-fail banks are permitted to grow even larger and more invulnerable to prosecution and control.
But this new public banking movement could have legs, especially if it teams up with those fighting for a financial transaction tax (see National Nurses United.) Most Americans remain furious about how financial elites profited from the crisis -- before, during and after -- while the rest of us pick up the tab. Americans know deep down that Wall Street is the predator and we are the prey.
The state-owned and operated Bank of North Dakota proves that it doesn't have to be that way. This is the time to fight for public state banking in a big way.
You game?
This piece was reprinted by Truthout with permission or license.
9.The separation of corporation and state being necessary for the independence of a democratic government in serving the needs of the people, no public service shall be under the management of a private sector entity and each State of the United States shall have a state bank collectively forming the Union Reserve Bank of the United States with a state appointed bank official from each State to compose the Union Board of Governors exercising all the responsibilities of the Open Market Committee.
http://occupywallst.org/forum/free-democracy-amendment/
Without having to wait upon the corporate bought state legislatures to finally act in the interests of the People, the public can initiate the establishment of the Union Reserve Bank in the 24 ballot initiative states.
LeoYo, great post.... I suggest we try to define & distance the idea of the "Union Reserve Bank" from the existing "Federal Reserve Bank" ....
for many reasons.... we do not want it to be in competition w/ the FED... we want it to focus on the industries that are not so profitable (dollars wise) ... but profitable economic & social wise....
this way we will get support from the FED ...& the FED Banks ... because we would be picking up the industry that Wall St is not interested in funding ...due to lack of potential profit/s.... and the institutions that are socially needed like FireDept's, Police ... etc...
this is why I suggest a name like "Social Reserve Bank" (or something similar) .,.. to help define the purpose... job & infrastructure creation... education/research support.. etc...
But the very purpose of the Union Reserve Bank is to replace the Federal Reserve Bank by taking the national banking institution out of private hands and putting it into the hands of the People. People want to do away with the Fed, and for good reason. But there must be a viable alternative and since no one in power is going to do away with the Fed, the only alternative is to independently shift power away from the Fed until it is practically powerless and useless.
There is no such thing as starting without opposition as the opposition has always been there.
"We may congratulate ourselves that this cruel war is nearing its end. It has cost a vast amount of treasure and blood. . . . It has indeed been a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless."
Abraham Lincoln in a letter to Col. William F. Elkins dated November 21, 1864
http://occupywallst.org/forum/free-democracy-amendment/#comment-750723
"In December 1907, 1 entered the United States Senate and served there for 18 years. Within ninety days after I entered the Senate, on the 25th day of February 1908, 1 analyzed completely the Panic of 1907; showed its causes, how it could be cured, and how depressions could be prevented in the future. My text was stability in the value of money."
"I was made Chairman of the Committee on Banking and Currency of the United States Senate on March 5, 1913, and immediately drafted a Bill called the Federal Reserve Bill. In drafting this Bill I was greatly assisted by the results of four years work done by the National Monetary Commission. That Commission's report consisted of 32 volumes, and an auxiliary library of 2500 volumes. It had been established on my request from the floor of the United States Senate."
"In July 1913, Hon. Carter Glass joined me in presenting to the Senate and to the House the so-called Federal Reserve Bill which had been prepared by me the previous March, but which had been expanded, and contained provisions with which I was not entirely content. My Committee was immediately called together to take testimony on this Senate Bill, and after 3,000 pages of printed testimony had been taken, my colleagues in the Senate authorized me to write another Bill. I thereupon had the Senate strike out the Bill that had been prepared in the House and substitute the Bill which I had originally prepared. The Senate adopted the Bill written by me without a change of word. In the Bill introduced in July, in which the Hon. Carter Glass joined me, I had inserted a provision requiring that the powers of the Reserve System be employed in the service of commerce and to promote a stable price level. The meaning of this, of course, was to establish and maintain the stable value of money under mandate. This mandatory provision was stricken out in the House under the leadership of Hon. Carter Glass. I was unable to keep this mandatory provision in the Bill because of the secret hostilities developed against it, the origin of which at that time I did not fully understand."
"Under the administrations of Wilson, Harding, Coolidge and Hoover, this Act was diverted from its proper purpose on the advice of some who controlled the policies of a number of the largest banks."
"In the campaign of 1920, under the pretext of lowering the cost of living, those in charge of some of the largest banks demanded the contraction of credit and currency. This was done in spite of nine protests I had made on the floor of the Senate between January and June of 1920. Policies pursued by those in charge of the Central Federal Reserve Banks resulted in raising the value of money 80%, from an index of 60 in May 1920 to an index of 107 in June 1921."
"Again, under President Hoover, the contraction of credit took place on such a colossal scale as to force the dollar index (purchasing power) to 166. The consequence was universal bankruptcy, every bank in the United States being forced to suspend operations at the close of Hoover's services."
http://occupywallst.org/forum/free-democracy-amendment/#comment-751774
"A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the Nation, therefore, and all our activities are in the hands of a few men... We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men."
Woodrow Wilson in 1916 as quoted by former Senator Robert L. Owen (the Father of the Federal Reserve Act) in "National Economy and the Banking System," Senate Documents No. 23, p. 100, 76th Congress, 1st Session, 1939.
http://occupywallst.org/forum/free-democracy-amendment/#comment-751508
"In 1919, the Non-Partisan League, a vibrant populist organization, won a majority in the legislature and voted the bank into existence. The goal was to free North Dakota farmers from impoverishing debt dependence on the big banks in the Twin Cities, Chicago and New York."
Wall Street Is Gunning for Bank of North Dakota
"As you can well imagine, our financial elites would love to see this successful (socialist!) bank disappear. Its salary structure and local investments makes a mockery of Wall Street's casino banking system. But the bigger threat comes from the possible spread of this public banking concept to other states. Already, there are 20 or so state legislatures that are exploring state banks. Collectively, more public banks would pose an enormous threat to the $1 trillion in state and local bank deposits that now run through Wall Street."
"But elite financiers also stand to lose much more. In the 49 states without a public bank, there's no safe place to turn for loans to rebuild schools and finance other public infrastructure projects. That creates an enormous opportunity for Wall Street firms to hook localities on expensive bond programs -- like capital appreciation bonds, which can lead to repayments equaling 10 times the original loan. Investment bankers and advisers also make enormous fees by selling expensive, high-risk financial schemes to state and local governments (read an investigative report here). But such schemes are useless in North Dakota where the state bank provides the capital the state needs for a fraction of the long-term costs."
Trade Agreements: Wall Street's Weapon of Mass Destruction
"Clearly, from Wall Street's perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street's stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate "non-tariff" barriers including regulations that create "unfair" competition with state-owned financial enterprises."
"Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because "foreign bankers could claim the BND stops them from lending to commercial banks throughout the state," according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND."
We don't need to keep the Fed doing what its doing when the Union Reserve Bank is designed to automatically do the very same thing on behalf of the People rather than for private interests.
LY... I will support your efforts... and hope it works... but I would not bet 1000:1 odds that it does.... the FED has 100's of Billions behind it.... where is your 100's of Billions ?.... better to simply do what you really want... w/o the glamour & glory of beating the bad guys... better to simply win ...imo ;)
Having 100s of billions is unnecessary. As stated before, the public can initiate the establishment of the Union Reserve Bank in the 24 ballot initiative states.
ok.... but why? ... why push an unnecessary button ? ... why threaten them (the Fed) with an overthrow ? ... when IT IS NOT Necessary... If you wish ....call it the "Union Reserve Bank" .. . but don't advertise it as replacing the FED ... it will never work.... they have wayyyyy tooo much money and power .... and you don't need to... the state bank can provide for all we want w/o having to overthrow the FED... right ? .... and if we do it right.... the URB will prosper and the Fed will dwindle w/o the battle .... THINK
It's not an unnecessary button. The Fed already threatens the well-being of the country and always has as already shown above in the statements of Robert Owen. State banks are for the good of the public which is automatically a detriment to the interests of private banking. We can't have both. Either one will prevent the other from emerging or the emergence of the other will extinguish the first. They represent two diametrically opposed interests that cannot co-exist.
well... if they cannot co-exist.... then only the Fed will exist....
you do not understand the Fed.... you only understand the wrongs that you are aware of....
the Fed is only an organization that attempts to increase the greatest amount of capital in circulation worldwide without collapsing the economy... it is driven by greed... and when un-checked ... the wealth accumulates into the hands of a few...
how-ever in America the Treasury has the call to whether or not support the Fed's plans.... what we have seen over the last many years is the Treasury doing what-ever the Fed says....
Better to Control the Fed.... We the People have the power to do that... We do not have the power to abolish it...
We the People... also have the power to give the Fed some competition... with a "Social Initiative" based central bank...
Whatever the People have the power to control, they have the power to abolish. Whatever the People cannot abolish, they cannot control. The People most certainly have the power to abolish the Fed by simply chosing to establish their own state banks in the ballot initiative states and raising the demand in the other states. It is simply a matter of democratic choice that still remains in the hands of the People.
The government should be completely indepedent of the economy and vice-versa.
Wonderful thread LeoYo!
I especially like how the State run bank rewards companies who borrow with better interest rates when the companies use the funds to create jobs. Everyone wins. Truly a 'community' effort.
North Dakota’s Economic “Miracle”—It’s Not Oil North Dakota has had the nation’s lowest unemployment ever since the economy tanked. What’s its secret? by Ellen Brown posted Aug 31, 2011
In an article in The New York Times on August 19th titled “The North Dakota Miracle,” Catherine Rampell writes:
North Dakota is the only state to be in continuous budget surplus since the banking crisis of 2008.
Oil is certainly a factor, but it is not what has put North Dakota over the top. Alaska has roughly the same population as North Dakota and produces nearly twice as much oil, yet unemployment in Alaska is running at 7.7 percent. Montana, South Dakota, and Wyoming have all benefited from a boom in energy prices, with Montana and Wyoming extracting much more gas than North Dakota has. The Bakken oil field stretches across Montana as well as North Dakota, with the greatest Bakken oil production coming from Elm Coulee Oil Field in Montana. Yet Montana’s unemployment rate, like Alaska’s, is 7.7 percent.
A number of other mineral-rich states were initially not affected by the economic downturn, but they lost revenues with the later decline in oil prices. North Dakota is the only state to be in continuous budget surplus since the banking crisis of 2008. Its balance sheet is so strong that it recently reduced individual income taxes and property taxes by a combined $400 million, and is debating further cuts. It also has the lowest foreclosure rate and lowest credit card default rate in the country, and it has had NO bank failures in at least the last decade.
If its secret isn’t oil, what is so unique about the state? North Dakota has one thing that no other state has: its own state-owned bank.
Access to credit is the enabling factor that has fostered both a boom in oil and record profits from agriculture in North Dakota. The Bank of North Dakota (BND) does not compete with local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state. In 2010, according to the BND’s annual report:
Over a 15-year period the BND has contributed more to the state budget than oil taxes have.
The BND also has a loan program called Flex PACE, which allows a local community to provide assistance to borrowers in areas of jobs retention, technology creation, retail, small business, and essential community services. In 2010, according to the BND annual report:
The BND’s revenues have also been a major boost to the state budget. It has contributed over $300 million in revenues over the last decade to state coffers, a substantial sum for a state with a population less than one-tenth the size of Los Angeles County. According to a study by the Center for State Innovation, from 2007 to 2009 the BND added nearly as much money to the state’s general fund as oil and gas tax revenues did (oil and gas revenues added $71 million while the Bank of North Dakota returned $60 million). Over a 15-year period, according to other data, the BND has contributed more to the state budget than oil taxes have. The state-owned bank allows North Dakota to capitalize on its resources to full advantage.
North Dakota’s money and banking reserves are being kept within the state and invested there. The BND’s loan portfolio shows a steady uninterrupted increase in North Dakota lending programs since 2006.
According to the annual BND report:
A 19 percent return on equity! How many states are getting that sort of return on their Wall Street investments?
Timothy Canova is Professor of International Economic Law at Chapman University School of Law in Orange, California. In a June 2011 paper called “The Public Option: The Case for Parallel Public Banking Institutions,” he compares North Dakota’s financial situation to California’s. He writes of North Dakota and its state-owned bank:
He then compares the dire situation in California:
Not all states have oil, of course (and it’s hardly a sustainable basis for an economy), but all could learn from the state-owned bank that allows North Dakota to capitalize on its resources to full advantage. States that deposit their revenues and invest their capital in large Wall Street banks are giving this economic opportunity away.
Ellen BrownEllen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen is an attorney, president of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are WebofDebt.com and PublicBankingInstitute.org.
Thanks! This is a great article.
Hmmm, maybe socialism is not so scary after all.
Gotta ignore the demonization fear mongering to appreciate what might be possible.
heres a decent bit on some efforts.
http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=9978
And we should create a "new" socialist approach that avoids the mistakes of previous efforts.
The smartest thing we can do is be open to new ideas for the structure of our new economy. Cooperatives are one very important piece of that. Thanks for that interesting video.
democracy at work is a great RichardWolff effort.
http://rdwolff.com/
You probably know him.
Wolff is one of the best on the economy. Thanks.
He is. I went to see him recently here in NYC, He said he will be on prime time tv soon. Gotta see who would have his radical views.
I guess it won't by Fox, and I'd be surprised if he is allowed on network tv.
I'll be watching.
That is very cool, that you saw him. He's really a brilliant guy who is way underrated in the world of economics. Maybe he'll be on PBS? Or RT? Can't really see him on the regular networks, lol.
Oh yeah. Small intimate little radical socialist group at the Brecht Center on the west side highway in Manhattan.
He's funny, pointed, unforgiving of any pol (even dems!) of our entire capitalist system, and afterwards he hangs around and talks with the attendees.
It's like a geek fest for economics/political junkies.
You would probably love it. Are you near NY or get here at all it is only $5 and he does it almost monthly. Check his site for the schedule.
Thanks for the info. Sounds very worth it for $5.
Anytime. Always a pleasure pushing progressive/socialist lectures/solutions.
Peace
Nice post.
The idea of a public bank is as American as apple pie, and was developed by Alexander Hamilton over two hundred years ago. I would guess that later day socialist economies adopted the concept from him.
"This has been the course of England, and her examples have fearful influence on us. In copying her we do not seem to consider that like premises induce like consequences. The bank mania is one of the most threatening of these imitations. It is raising up a moneyed aristocracy in our country which has already set the government at defiance, and although forced at length to yield a little on this first essay of their strength, their principles are unyielded and unyielding. These have taken deep root in the hearts of that class from which our legislators are drawn, and the sop to Cerberus from fable has become history. Their principles lay hold of the good, their pelf of the bad, and thus those whom the Constitution had placed as guards to its portals, are sophisticated or suborned from their duties."
Thomas Jefferson in a letter to Josephus B. Stuart dated May 10, 1817
http://occupywallst.org/forum/free-democracy-amendment/#comment-749610
"There is a deliciously biting irony in the current world financial/economic breakdown crisis. For while it can be correctly argued that the current planet threatening calamity is in large part the result of a global banking dictatorship run amok, the solution lies not in eliminating strong national banks in favor of “free competition”— as the populists scream—but in establishing new sovereign banking institutions, devoted to creating credit for an industrial revival."
The reality, as it will again be imposed through reestablishment of FDR’s Glass-Steagall law, is that there are two kinds of banks, and banking systems. One kind can legitimately be called speculative, or monetarist, as defined by the British imperial dominance of the world financial system during most of the period since the British Empire’s establishment in 1763. The second kind was defined most deftly by the first Treasury Secretary of the United States, Alexander Hamilton, when he called for a National Bank that would be a “nursery for national wealth.” In the first kind, the standard for the bank’s success is the acquisition of money, or precious metals, land, and the like; in the second, the standard is the promotion of the productive powers of the nation, from its labor force to its scientific and technological platform for further development of mankind.
From: Why the Empire Destroyed The Second National Bank by Nancy Spannaus
Hamilton had simply copied the Bank of England. The government had only owned 20% of the bank while private interests had owned the remaining 80%. By the time the bank's charter had expired, 75% of the stockholders had been foreigners.
Consider how the foreign investment was used and what benefit it offered to the local community. For example, say that a transportation system was built between to communities that required one million dollars in foreign investment.
Those foreigners received their money back plus ten percent interest, but the local communities are now capable of engaging in trade which earns them one million dollars per year. Paying interest to foreigners on such an investment would be well worth it.
That's like saying consider what benefit enslavers brought to those they had enslaved by feeding and clothing them so that they could raise families (that could furthermore be sold) or consider the benefit corporate executives provide to reduced waged workers by keeping them employed. There is never a situation in which exploiters don't 'benefit' their victims in some kind of way. Without such benefits, there wouldn't be any victims to exploit which simply wouldn't be good capitalist business. But when there are better victims to be found elsewhere, exploiters never have any problem leaving their victims high and dry even if it involves an entire national economy. Whether in Maroon colonies or in co-ops or in public citizen funded banks, people are always much better off being depended upon themselves rather than upon those to 'benefit' them for personal gain.
So this implies that you think that all interest bearing loans are exploitative. I don't think that this is the case. I think that some are but that some are not. Some expand the economy and benefit the people.
As of yet, not all workers are willing or able to develop their own co-ops. For those workers, being employed by someone else is a much better alternative to being unemployed.
I don't think all forms of employment are enslavement. Fifty years ago, about 30% of our economy was made up of factory workers without college educations who earned the equivalent of around $50k a year. This enabled them to buy their own homes and start their own businesses, increasing their independence.
No, it clearly implies I assert that both individual and collective financial independence is better than financial subjugation.
The real source of wealth and independence for a nation is its infrastructure, both public, such as transportation, power and education, as well as private, such as manufacturing. These are what the 2nd national bank was founded to promote.
Than financing, even if it is provided by foreigners, which develops a countries infrastructure making it more independent, is a good thing, if that financing is provided at a reasonable rate.
Without the independence of individuals, there is no independence. Without the independence of a national bank, there is no national independence.
Infrastructure and self employment increase the independence of individuals, both were promoted by the 2nd national bank.
Accepting investments from foreigners in no way decreased the independence of the national bank, the US government made all of its decisions independently.
Jackson had already pointed out the subversive trend of the Bank. None of the things that were being requested to be granted for the Bank's investors were either "proper" or "necessary" for the public good. They had only been for the personal good of the private investors.
And who were those private investors? -
$7 million of its stock was held by the U.S. government, 8 million by widows and orphan charities, 8 million by company owners and businessman, with 7 million held by foreigners (who had no voting power). Only $3 million was held by the very rich. The stockholders of the Bank were increasingly representative of the population itself, and thus the Bank’s capital was the people’s capital, and its profits were profits they had earned: those farmers and manufacturers had built themselves up over a generation through the very access to credit provided by the Bank. At the time, the business class understood that the Bank of the United States and other credit banks of the period were merely other names for the farms, the commerce, the factories, and the infrastructure of the country, since the banks had no funds not already lent out to those purposes; they were the representatives of the people’s property.
So do you really think that the people are infallible, and that they always elect a good president and never are deceived by propaganda?
Only a minority of $7 million in stock was held by foreigners.
As can clearly be seen, just a small number of the investors in the national bank were wealthy.
The sources that you site are those people who opposed the national bank. An interpretation of history that only looks at one side would be biased.
Jackson himself was the agent of a financial oligarchy that was made up of private bankers. That is why he opposed a public bank.
The fact of the matter is Jackson had supported reform that would have resulted in a truly public national bank that Biddle had agreed to on the condition of not raising the issue of recharter before the 1832 election. When the anti-Bank forces, both independent of Jackson's direction and upset over his lack of strong opposition to the Bank expressed in his 1831 December 6 speech, themselves voiced opposition, it was Clay and Webster who sought to push the issue without any of the agreed reforms in hopes of pushing Jackson into a corner. Biddle forsook the agreed condition he had with Jackson and chose to join Clay and Webster in pushing the issue to the center of the election and even used the financial influence of the Bank to their advantage. They failed! Pushing Jackson only pushed him into vetoing recharter while winning re-election. Unable to get a supermajority of Congress to overturn the presidential veto, the Bank was finished. Seeing from the election how the financial influence of the Bank could be used politically, Jackson, against much political opposition and without Congressional approval, sought to immediately remove the US's stock in the Bank in 1833 for which he was officially censured for violation of the Constitution. Upon doing so, Biddle, in retaliation, sought to cause a national recession with the contraction of credit to coerce Congress into pursuing the Bank recharter. Like the earlier failed plan to push Jackson into a corner, that plan backfired as well. Seeing that the Bank could be used for personal purposes to the detriment of the nation, those who had previously supported the Bank now withheld their support and the recharterment of the Bank became a lost cause. As a completely private institution, it failed miserably and came to its end by 1841. Biddle himself was arrested for fraud and although acquitted nevertheless remained embroiled in civil suits pertaining to the Bank's opperations to his dying day.
In the end, it had been Biddle's own corrupt actions that had brought about the complete demise of the Bank. Actions that showed that the Bank was indeed a national threat in the wrong hands.
It seems your main objection to the 2nd National Banks was that a proportion of its investors were foreigners or wealthy.
My opinion is that in its early years, the bank didn't function properly, but later did and was fulfilling its function to develop the economy.
We have different historical readings as to which party was corrupt, Jackson or Biddle and associates. Highly unlikely we will change each other's opinions on this.
It seems your main objection to the 2nd National Banks was that a proportion of its investors were foreigners or wealthy.
My opinion is that in its early years, the bank didn't function properly, but later did and was fulfilling its function to develop the economy.
We have different historical readings as to which party was corrupt, Jackson or Biddle and associates. Highly unlikely we will change each other's opinions on this.
My objection to any bank is the aspect of private ownership in determining the fate of other people's deposits. That becomes a much greater objection pertaining to any public institution at any level, especially at the national. When men like Clay choose to make the fate of a national institution a political issue for personal gain by pushing for investor bonuses and tax exemptions that any concerned person would find objectional and that even Biddle himself had already conceded were unnecessary, Jackson's paranoid objections became justified. Without the push to pass alterations in bills that made the Bank objectional, the Bank would not have been vetoed. Personal ambition and resentment got in the way of objective compromise turning a win/win solution into an all or nothing gamble.
If you see either of the parties as not being corrupt, then yes, we do have different historical readings.
I believe that many of the claims against Clay were just put forward by people who wanted to destroy national banking and the financial independence of America. That is, by agents of the British empire:
"Perhaps what will be most shocking to most Americans is that the essential basis for this astounding industrialization of the United States was National Banking— in specific, the operation of the Second National Bank of the United States. In a world still dominated by the British Empire of both military and financial power, the United States had to assert control over its national currency, and direct credit to essential infrastructure and industry. The Second National Bank served that purpose—and it was the opponents of that Bank, under the fraudulent populist banner of that thuggish Wall Street puppet Andrew Jackson, who slowed the industrialization process on behalf of our British imperial enemy.
The destruction of the Bank of the United States paved the way for the Civil War, and permanently deprived America of the most vital instrument for its national sovereignty."
From:
The American Industrial Revolution That Andrew Jackson Sought To Destroy
by arturo (3102) from Guangzhou, Guangdong
"By the time Congress returned in December 1833, a financial crisis was raging. For months the Kitchen Cabinet denied the reports of a mounting crisis as Bank propaganda. When it became undeniable, they told Jackson to blame the Bank for having caused the crisis. After having lied that the deposits were moved because the Bank was bankrupt, months later they would tell Jackson and the people that the Bank was too strong and was hoarding gold and silver."
From How Andrew Jackson Destroyed the United States http://www.larouchepub.com/other/2012/3949jackson_v_usa.html
Here's the actual historical situation contrary to the false claims of your source.
Since the last adjournment of Congress the Secretary of the Treasury has directed the money of the United States to be deposited in certain State banks designated by him, and he will immediately lay before you his reasons for this direction. I concur with him entirely in the view he has taken on the subject, and some months before the removal I urged upon the Department the propriety of taking that step. The near approach of the day on which the charger will expire, as well as the conduct of the bank, appeared to me to call for this measure upon the high considerations of public interest and public duty. The extent of its misconduct, however, although known to be great, was not at that time fully developed by proof. It was not until late in the month of August that I received from the Government directors an official report establishing beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money, and that, in violation of the express provisions of its charter, it had by a formal resolution placed its funds at the disposition of its president to be employed in sustaining the political power of the bank. A copy of this resolution is contained in the report of the Government directors before referred to, and how ever the object may be disguised by cautious language, no one can doubt that this money was in truth intended for electioneering purposes, and the particular uses to which it was proved to have been applied abundantly show that it was so understood. Not only was the evidence complete as to the past application of the money and power of the bank to electioneering purposes, but that the resolution of the board of directors authorized the same course to be pursued in future.
It being thus established by unquestionable proof that the Bank of the United States was converted into a permanent electioneering engine, it appeared to me that the path of duty which the executive department of the Government ought to pursue was not doubtful. As by the terms of the bank charter no officer but the Secretary of the Treasury could remove the deposits, it seemed to me that this authority ought to be at once exerted to deprive that great corporation of the support and countenance of the Government in such an use of its and such an exertion of its power. In this point of the case the question is distinctly presented whether the people of the United States are to govern through representatives chosen by their unbiased suffrages or whether the money and power of a great corporation are to be secretly exerted to influence their judgment and control their decisions. It must now be determined whether the bank is to have its candidates for all offices in the country, from the highest to the lowest, or whether candidates on both sides of political questions shall be brought forward as heretofore and supported by the usual means.
At this time the efforts of the bank to control public opinion, through the distresses of some and the fears of others, are equally apparent, and, if possible, more objectionable. By a curtailment of its accommodations more rapid than any emergency requires, and even while it retains specie to an almost unprecedented amount in its vaults, it is attempting to produce great embarrassment in one portion of the community, while through presses known to have been sustained by its money it attempts by unfounded alarms to create a panic in all.
These are the means by which it seems to expect that it can force a restoration of the deposits, and as a necessary consequence extort from Congress a renewal of its charter. I am happy to know that through the good sense of our people the effort to get up a panic has hitherto failed, and that through the increased accommodations which the State banks have been enabled to afford, no public distress has followed the exertions of the bank, and it can not be doubted that the exercise of its power and the expenditure of its money, as well as its efforts to spread groundless alarm, will be met and rebuked as they deserve. In my own sphere of duty I should feel myself called on by the facts disclosed to order a scire facias against the bank, with a view to put an end to the chartered rights it has so palpably violated, were it not that the charter itself will expire as soon as a decision would probably be obtained from the court of last resort.
Andrew Jackson's address to Congress December 3, 1833.
The main purpose of the bank was the economic development of the company, and I listed many of its accomplishments. These benefited some wealthy people but they benefited the public as well.
You didn't list any Bank accomplishments. You merely presented long lists that you claim were Bank accomplishments. Let's look at a couple of them. You listed the Cumberland Valley Railroad.
The Cumberland Valley Railroad Company was chartered by the Pennsylvania Legislature on April 2, 1831, to construct a railroad from Carlisle to a point on the Susquehanna River at or near Harrisburg. This charter expired, but it was renewed on April 15, 1835, allowing the road to be built from the Susquehanna River to Chambersburg. On June 27, 1835, Thomas Grubb McCullough was elected as the first President of the road, and in August, William Milner Roberts was selected as Chief Engineer.
The initial cost of building the road, including a bridge across the Susquehanna, was estimated before construction at $564,064, and the average annual receipts of the road at $284,617.50, calculated at 100 passengers each way per day at 3 cents per mile, and 35,000 tons of through freight and 51,950 tons of local freight, at 4½ cents per ton per mile. $642,000 was raised by local stock subscription and construction began in the Spring of 1836.
The railroad opened for travel from White Hill, near Harrisburg to Carlisle in August, 1837, and through to Chambersburg in November, 1837. The first locomotive, built by William Norris in Philadelphia, had two driving wheels, wooden spokes, and was named "Cumberland Valley,"
You also listed the Buffalo and Niagra Falls Railroad.
The Buffalo and Black Rock Railroad was chartered in 1833 and opened in 1834, operating a horse-powered line from downtown Buffalo north to Black Rock, now the east end of the International Bridge. The line was mostly built on state land next to the Erie Canal.
The Buffalo and Niagara Falls Railroad was incorporated in 1834 to take over the Buffalo and Black Rock and extend it north and northwest to Niagara Falls. Construction began in August 1836, and included a replacement of the low-quality rails of the horse-drawn line. By 1837 the extension to Tonawanda was completed, and around 1840 the rest of the way to Niagara Falls opened.
These projects that your source attributes to the Bank took place both during and after the time in which Biddle was causing a national recession.
After the bank was shut down, providing credit was supposed to have been handled by the state banks. But because of the difficulties involved in managing various currencies between states, not much was accomplished.
Do you know of economic development projects undertaken after the dissolution of the bank? If so, you haven't stated them.
Projects were going on and failing all the time as clearly seen here http://mises.org/journals/scholar/internal.pdf As shown above, you have yet to have identified anything as having been a project of the Bank.
Jackson, like Jefferson before him, opposed industrial development, preferring the system of slavery and plantations:
"The speech said that "the public lands shall cease ... to be a source of revenue," but sold at prices "barely sufficient to reimburse the United States," thus no longer being used as a tool for internal improvements and the general welfare. The land was pledged instead for the spread of slavery, as it would eventually be "surrendered to the states respectively in which it lies," namely, the slave states of North and South Carolina, Virginia, and Georgia."
As already seen in the actual speech http://occupywallst.org/forum/why-is-socialism-doing-so-darn-well-in-deep-red-no/#comment-957268 , the public lands were to be restored to the States from which they had been obtained. These states had included non-slavery states such as Massachusetts and New York and as a whole had absolutely nothing to do with an interest in spreading slavery. This is clear to anyone who simply reads the speech making it clearly dishonest to claim otherwise. The speech also put forth recommendations for the continuance of internal improvements either under the authority of the States or under a constitutional amendment to make them constitutional, and as such, had been in the hands of Congress.
To me, the claims of misconduct, as unquestionable as the author asserts them to be, are mainly the arguments of those who wanted to destroy the national bank in favor of British style speculative finance.
I see you question the accomplishments that I listed for the 2nd national bank, but I don't see that you've disproved any of them. I can ask my source, LPAC, the publishers of the material I've cited, to see if they can tell me where they got the information on the projects invested in by the bank.
LPAC is quite active in lobbying for a return to a national banking system to finance economic development projects, and is usually accurate in its historical research.
Regarding slavery, you say that a speech proves that Jackson had no interest in the spread of slavery, but I think you can find many fine speeches by neocons as well expressing that free trade policies were not intended to create sweat shop labor in China.
What system is it that you advocate? Socialism? Free trade capitalism?
If a system compatible with the Constitution can not be devised which is free from such tendencies, we should recollect that that instrument provides within itself the mode of its amendment, and that there is, therefore, no excuse for the assumption of doubtful powers by the General Government. If those which are clearly granted shall be found incompetent to the ends of its creation, it can at any time apply for their enlargement; and there is no probability that such an application, if founded on the public interest, will ever be refused. If the propriety of the proposed grant be not sufficiently apparent to command the assent of 3/4 of the States, the best possible reason why the power should not be assumed on doubtful authority is afforded; for if more than one quarter of the States are unwilling to make the grant its exercise will be productive of discontents which will far over-balance any advantages that could be derived from it. All must admit that there is nothing so worthy of the constant solicitude of this Government as the harmony and union of the people.
Being solemnly impressed with the conviction that the extension of the power to make internal improvements beyond the limit I have suggested, even if it be deemed constitutional, is subversive of the best interests of our country, I earnestly recommend to Congress to refrain from its exercise in doubtful cases, except in relation to improvements already begun, unless they shall first procure from the States such an amendment of the Constitution as will define its character and prescribe its bounds. If the States feel themselves competent to these objects, why should this Government wish to assume the power? If they do not, then they will not hesitate to make the grant. Both Governments are the Governments of the people; improvements must be made with the money of the people, and if the money can be collected and applied by those more simple and economical political machines, the State governments, it will unquestionably be safer and better for the people than to add to the splendor, the patronage, and the power of the General Government. But if the people of the several States think otherwise they will amend the Constitution, and in their decision all ought cheerfully to acquiesce.
By the way, it was Jefferson who had called for an end to slavery and the issue had lost by one vote. But hypocrite that he was, if no one else was going to have to give up theirs, he wasn't going to give up his, at least not until he would have no further use of them in death.
W/free speech abridged, the people cannot think, they cannot understand, they cannot agree.
LeoYo wrote: "But if the people of the several States think otherwise they will amend the Constitution, and in their decision all ought cheerfully to acquiesce."
Yes, cheerfully, but they cannot share and be understood.
by arturo (3101) from Guangzhou, Guangdong
"The greatest crime ever committed within the United States was the destruction of the credit system in 1832-1836 by the hand of Andrew Jackson, by which farmers, laborers, manufacturers, and the whole expansion of the economy, were crushed, through the tyrannical usurpation of legislative power. The greatest lie ever told in the United States was that the Bank of the United States under the direction of Nicholas Biddle was destructive to the liberties and safety of the republic.
In 2012, after the world productive economy has likewise been ravaged for many years, those who purport themselves the saviors of the people turn to Jackson and his destruction of the Bank of the United States as their model, blind to the destruction and lies which made up that sorry destruction and intentional shrinkage of the economy, and its continued effects. The deadly error with this situation is not the fact that people have been duped into believing a lie, but that it represents a failure to understand the great credit system of Nicholas Biddle and the Bank of the United States, a failure to understand the powers of Congress which made this system possible, and a failure to realize its re-establishment today, for the sake of a unified national credit structure for sovereign nations."
The Credit System versus Speculation: Nicholas Biddle and the Second Bank of the United States http://larouchepac.com/node/23242
As is already known and been pointed out, it was in fact Biddle who near the end of 1833 had used the Bank to contract the national credit for more than a year initiating a widespread financial crisis to cause a nationwide recession.
"By the time Congress returned in December 1833, a financial crisis was raging. For months the Kitchen Cabinet denied the reports of a mounting crisis as Bank propaganda. When it became undeniable, they told Jackson to blame the Bank for having caused the crisis. After having lied that the deposits were moved because the Bank was bankrupt, months later they would tell Jackson and the people that the Bank was too strong and was hoarding gold and silver."
From How Andrew Jackson Destroyed the United States http://www.larouchepub.com/other/2012/3949jackson_v_usa.html
The main purpose of the bank was the economic development of the company, and I listed many of its accomplishments. These benefited some wealthy people but they benefited the public as well.
After the bank was shut down, providing credit was supposed to have been handled by the state banks. But because of the difficulties involved in managing various currencies between states, not much was accomplished.
Do you know of economic development projects undertaken after the dissolution of the bank? If so, you haven't stated them.
Jackson, like Jefferson before him, opposed industrial development, preferring the system of slavery and plantations:
"The speech said that "the public lands shall cease ... to be a source of revenue," but sold at prices "barely sufficient to reimburse the United States," thus no longer being used as a tool for internal improvements and the general welfare. The land was pledged instead for the spread of slavery, as it would eventually be "surrendered to the states respectively in which it lies," namely, the slave states of North and South Carolina, Virginia, and Georgia."
"The British Empire's interests drew on every available asset to unify the alliance of New York finance and Southern slavery into a new party, the Democratic Party, and used various means to consolidate different factions under its banner behind Andrew Jackson, winning for him the 1828 election."
"Today, most citizens find themselves defending traitors—celebrating those who brought us back into slavery to the Empire. The doctrines of both the modern Republican and Democratic parties are those of the Jackson and Van Buren administrations, doctrines upon which the United States was neither formed nor built, but under which it was destroyed.
Government must reclaim its power to legislate the creation of a financial system that provides all citizens a right to make use of their spirit of enterprise, a system of currency that gives every citizen a capability to increase his productivity, and the right to go into debt for such a purpose."
"Jackson's failure to uphold the treaty and his leaving the Cherokees submission to the despotic power of the state of Georgia led to the deaths of one fourth of the Cherokees in the forced removal. Jackson's action opened the way for subsequent removals of Native Americans throughout the South, and the Jackson Administration itself directly negotiated 70 removals, equaling 100 million acres of Native American land east of the Mississippi, making way for the spread of slavery in Tennessee, Florida, Georgia, Alabama, and Mississippi. Ronald Satz, American Indian Policy in the Jacksonian Era."
by arturo (3100) from Guangzhou, Guangdong
What do you say it is that would have made the bank acceptable? That it would have had no private investors? I believe the purpose of the bank was to finance the economic development of the US, and that is what it did.
It was only a relatively small proportion of the bank's investors who were wealthy. Many of the investors were just middle class people or funds dedicated to helping the poor.
I don't think Jackson wanted to reform the bank, though he may have said that's what he wanted. I believe he just wanted to eliminate the bank, leaving finance only in the hands of Wall Street speculators.
Unless there is something that I am missing. Do you know of Jackson doing anything to establish what you consider to be a real public bank? What projects did he finance for economic development?
Some of the economic development projects that the second national bank financed include the following:
Railroads:
Atchafalaya, Buffalo and Niagara Falls, Camden and Amboy, Camden and Woodbury, Commercial and Railroad Co. of Vicksburg, Cumberland Valley (Pennsylvania), Danville and Pottsville, Franklin (Pennsylvania), Germantown and Norristown, Grand Gulf, Lexington, Mount Carbon, New Orleans and Nashville, etc.
Canals:
Brunswick (Georgia), Canal Bank (Louisiana), Delaware and Chesapeake, Illinois and Michigan, Morris (New Jersey; large investment and special account), New Orleans (Louisiana), Sandy and Beaver (Pennsylvania), Union.
Coal:
Dauphin and Lycoming Coal Lands (Pennsylvania), Delaware Coal Co., Miners’ Bank of Pottsville (Pennsylvania), Summit Coal Co. (Pennsylvania).
Other:
Bridgewater Copper Mining Company (New Jersey), Johnstown and Ligonier Turnpike (Pennsylvania), Little Schuylkill Navigation, Railroad and Coal Company (Pennsylvania, large investment), Marietta Bridge Company (Ohio) ,New Castle Manufacturing Company (Baltimore firm producing locomotives), New Orleans Gaslight Summit and Cumberland Turnpike (Pennsylvania and Maryland), Williamsport Bridge Company.
Jackson's annual address to Congress December 7, 1830 as well as his Bank veto reveal the unresolved issues that would have made the Bank acceptable. If it had simply been an issue of Jackson being against the Bank, then non-Democrat presidents such as Tyler and Taylor would have approved it. Tyler had vetoed it twice on the same non-reformed conditions as Jackson. Look up the phrase "heading Captain Tyler" to see Clay's repeatedly failed strategy for undermining presidential rivals. The fact ever remains that regardless of what one choses to believe contrary to the historical evidence, Jackson's expressed conditions for reform exists. Henry Clay's refusal to meet with any of those conditions, not only with Jackson but with Tyler as well, also exists. Henry Clay and his backers did not want a public bank without the enrichment of private interests so he never proposed one. Had he done so and it still ended up getting vetoed, one would have evidence of presidential intent to prohibit a national bank no matter what. Instead, what exists is the presidential desire for reform and the banking establishment refusal to exclude private interests. Apparently, as the existing evidence implies, if the banking establishment couldn't have a publicly funded national bank supporting private interests, they didn't want one at all.
The Bank agenda had gone hand in hand with the internal improvement agenda which had essentially been a corporate welfare scheme. The internal improvement agenda had been a great failure due to the corruption of the private interests that had accompanied public funding. Successful internal improvements such as the National Road and the Erie Canal developed independently before, during, and after the existence of the Bank. When private interests weren't funded by the public, they were forced to either be economically successful or fail. No one was against internal improvements. What people were against was wasteful public funding of failed projects that got private interests off the hook at the people's expense.
http://www.h-net.org/reviews/showrev.php?id=6907
http://mises.org/journals/scholar/internal.pdf
"The greatest crime ever committed within the United States was the destruction of the credit system in 1832-1836 by the hand of Andrew Jackson, by which farmers, laborers, manufacturers, and the whole expansion of the economy, were crushed, through the tyrannical usurpation of legislative power. The greatest lie ever told in the United States was that the Bank of the United States under the direction of Nicholas Biddle was destructive to the liberties and safety of the republic.
In 2012, after the world productive economy has likewise been ravaged for many years, those who purport themselves the saviors of the people turn to Jackson and his destruction of the Bank of the United States as their model, blind to the destruction and lies which made up that sorry destruction and intentional shrinkage of the economy, and its continued effects. The deadly error with this situation is not the fact that people have been duped into believing a lie, but that it represents a failure to understand the great credit system of Nicholas Biddle and the Bank of the United States, a failure to understand the powers of Congress which made this system possible, and a failure to realize its re-establishment today, for the sake of a unified national credit structure for sovereign nations."
The Credit System versus Speculation: Nicholas Biddle and the Second Bank of the United States http://larouchepac.com/node/23242
by arturo (3099) from Guangzhou, Guangdong
These recommendations sound well intended, but I don't think that economic development activities continued to be carried on as they had been under the second national bank.
This leads me to believe that the real intention behind the dissolution of the bank was to end those economic development activities:
The real intention behind the dissolution of the Bank is clear:
"a system which can not continue to exist in its present form without occasional collisions with the local authorities, and perpetual apprehensions and discontent on the part of the States and the people."
"A bank of the United States is in many respects convenient for the Government and useful to the people. Entertaining this opinion, and deeply impressed with the belief that some of the powers and privileges possessed by the existing bank are unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people, I felt it my duty at an early period of my Administration to call the attention of Congress to the practicability of organizing an institution combining all its advantages and obviating these objections. I sincerely regret that in the act before me I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the Constitution of our country."
The Bank was dissolved because those advocating for it had refused to make the reforms that would have made it acceptable. That was a conscious act on their part. They had wanted it to be unacceptable so Jackson would veto it, become unpopular, and lose the election to Clay who as the new president would then have approved of the Bank in a subsequent vote on it.
What is clear is that Jackson had wanted reforms that would have made the Bank a truly public bank, his opponents did not. They had wanted the Bank to maintain exclusive privilages for wealthy private investors and were willing to risk the Bank in a gamble to win an election. Like bankers today, they had speculated and had lost. But unlike today, there was no one to bail them out of their failure. They lost it all.
What do you say it is that would have made the bank acceptable? That it would have had no private investors? I believe the purpose of the bank was to finance the economic development of the US, and that is what it did.
It was only a relatively small proportion of the bank's investors who were wealthy. Many of the investors were just middle class people or funds dedicated to helping the poor.
I don't think Jackson wanted to reform the bank, though he may have said that's what he wanted. I believe he just wanted to eliminate the bank, leaving finance only in the hands of Wall Street speculators.
Unless there is something that I am missing. Do you know of Jackson doing anything to establish what you consider to be a real public bank? What projects did he finance for economic development?
Some of the economic development projects that the second national bank financed include the following:
Railroads:
Atchafalaya, Buffalo and Niagara Falls, Camden and Amboy, Camden and Woodbury, Commercial and Railroad Co. of Vicksburg, Cumberland Valley (Pennsylvania), Danville and Pottsville, Franklin (Pennsylvania), Germantown and Norristown, Grand Gulf, Lexington, Mount Carbon, New Orleans and Nashville, etc.
Canals:
Brunswick (Georgia), Canal Bank (Louisiana), Delaware and Chesapeake, Illinois and Michigan, Morris (New Jersey; large investment and special account), New Orleans (Louisiana), Sandy and Beaver (Pennsylvania), Union.
Coal:
Dauphin and Lycoming Coal Lands (Pennsylvania), Delaware Coal Co., Miners’ Bank of Pottsville (Pennsylvania), Summit Coal Co. (Pennsylvania).
Other:
Bridgewater Copper Mining Company (New Jersey), Johnstown and Ligonier Turnpike (Pennsylvania), Little Schuylkill Navigation, Railroad and Coal Company (Pennsylvania, large investment), Marietta Bridge Company (Ohio) ,New Castle Manufacturing Company (Baltimore firm producing locomotives), New Orleans Gaslight Summit and Cumberland Turnpike (Pennsylvania and Maryland), Williamsport Bridge Company.
by arturo (3098) from Guangzhou, Guangdong 1 day ago
It's the first one that I am interested in:
"The Bank could have been made completely public with no private investors as Jackson had wanted..."
You say that it is from (Jackson's annual address to Congress December 7, 1830) but since Jackson is mentioned in the quotation, I think it must be some secondary source that is discussing Jackson's address to Congress. Can you tell me which website this is from?
LOL! That "secondary source" "discussing Jackson's address to Congress" is me. Here's the text of what I was referring to.
"The importance of the principles involved in the inquiry, whether it will be proper to recharter the Bank of the United States, requires that I should again call the attention of Congress to the subject. Nothing has occurred to lessen, in any degree, the dangers which many of our citizens apprehend from that institution, as at present organized. In the spirit of improvement and compromise which distinguishes our country and its institutions, it becomes us to inquire, whether it be not possible to secure the advantages afforded by the present bank, through the agency of a Bank of the United States, so modified in its principles and structure as to obviate constitutional and other objections."
"It is thought practicable to organize such a bank, with the necessary officers, as a branch of the Treasury Department, based on the public and individual deposites, without power to make loans or purchase property, which shall remit the funds of the Government, and the expense of which may be paid, if thought advisable, by allowing its officers to sell bills of exchange to private individuals at a moderate premium. Not being a corporate body, having no stockholders, debtors, or property, and but few officers, it would not be obnoxious to the constitutional objections which are urged against the present bank; and having no means to operate on the hopes, fears, or interests, of large masses of the community, it would be shorn of the influence which makes that bank formidable. The States would be strengthened by having in their hands the means of furnishing the local paper currency through their own banks; while the Bank of the United States, though issuing no paper, would check the issues of the State banks by taking their notes in deposite, and for exchange, only so long as they continue to be redeemed with specie. In times of public emergency, the capacities of such an institution might be enlarged by legislative provisions."
"These suggestions are made, not so much as a recommendation, as with a view of calling the attention of Congress to the possible modifications of a system which can not continue to exist in its present form without occasional collisions with the local authorities, and perpetual apprehensions and discontent on the part of the States and the people."
Text of the message in House and Senate Journals, 21st Cong., 2d Sess.; the extract here given is from the Senate Journal, 30, 31.
These recommendations sound well intended, but I don't think that economic development activities continued to be carried on as they had been under the second national bank.
This leads me to believe that the real intention behind the dissolution of the bank was to end those economic development activities:
"The impact of Jackson’s destruction of the Second Bank of the United States was spread out over years—but it was devastating. Not only did it usher in wild speculation in land and other undertakings, it withdrew a stable means of credit for long-term investments in the kind of breakthrough industries, and infrastructure, which the nation needed in order to grow. Under these circumstances, the United States went from having a positive balance with Great Britain, to going increasingly into debt, including through stalling the growth of manufactures in the United States.
By removing the national institution which was supporting nation-spanning projects in transportation, and the like, the destruction of the Bank contributed to the renewed conflict between the states, and between the “agricultural, slave-holding South” and the industrializing, trading North. With the South lacking the benefits of the industrial projects, that had been on the drawing boards prior to Jackson’s veto of the Bank’s recharter, the Southern states became increasingly easy prey to the British-backed separatists, who sought to finish off the United States as a power altogether."
From:
The American Industrial Revolution That Andrew Jackson Sought To Destroy
by arturo (3092) from Guangzhou, Guangdong
Can you tell me the source of this quotation? A link would be great if you have it.
I'm not sure what specifically you're requesting out of all I posted so I'll just repost what I posted with various cites.
The Bank could have been made completely public with no private investors as Jackson had wanted
(Jackson's annual adderss to Congress December 7, 1830)
or the Bank could have become a more independent institution in which the federal government would sell off its stock to the public, sell back the public lands acquired from the States, adjust the tariff, and pay off the debt before the end of Jackson's second term, all on the condition of not raising the issue of recharter before the election.
("Andrew Jackson and the Course of American Freedom, 1822-1832", p. 338 by Robert V. Remini, 1981)
("Banks and Politics in America, from the Revolution to the Civil War" p. 382-383 by Bray Hammond, 1957)
Clay rejected these conditions to push a recharter bill specifically designed to include exclusive privileges and benefits to be unacceptable to Jackson so that Jackson would veto it and become too unpopular for re-election.
("Andrew Jackson and the Course of American Freedom, 1822-1832", p. 342-343)
("Banks and Politics in America, from the Revolution to the Civil War" p. 385)
("The Age of Jackson" p. 127 by Arthur M. Schlesinger, 1945)
This bill had included adding millions of dollars of gratuity to the stocks of the investors, both enriching them and making the stock more unobtainable to others.
The bill had included excluding private citizens from paying off debts through notes issued from a different bank branch.
And the bill had included excluding the foreign stockholders from taxation on their stocks while collectively allowing both them and their citizen counterparts corporate title to any lands purchased by the Bank.
(President Jackson's Veto Message Regarding the Bank of the United States; July 10, 1832)
None of these exclusive privileges and benefits had been proper or necessary for the operation of the Bank but Clay had pushed them simply as a political strategy (if not sincerely wholeheartedly in favor of them), for getting Jackson out of office. And try as he might, even after both Jackson and Biddle were dead, he couldn't get any subsequent president to support a recharter of the Bank. It was his own political ambition that turned out to be the Bank's worst enemy.
It's the first one that I am interested in:
"The Bank could have been made completely public with no private investors as Jackson had wanted..."
You say that it is from (Jackson's annual address to Congress December 7, 1830) but since Jackson is mentioned in the quotation, I think it must be some secondary source that is discussing Jackson's address to Congress. Can you tell me which website this is from?
arturo (3091) from Guangzhou, Guangdong 19 hours ago
What was the acceptable compromise which you say that Clay rejected?
In my opinion, Jackson was one of the worst presidents we every had. He was a British agent, or at least a dupe, who's actions halted the development of the US and led to the Civil war. Almost any action to discredit him would have been justified.
I would say the story is not over by far. All American's lost when we lost the second national bank.
The Bank could have been made completely public with no private investors as Jackson had wanted or the Bank could have become a more independent institution in which the federal government would sell off its stock to the public, sell back the public lands acquired from the States, adjust the tariff, and pay off the debt before the end of Jackson's second term, all on the condition of not raising the issue of recharter before the election. Clay rejected these conditions to push a recharter bill specifically designed to include exclusive privileges and benefits to be unacceptable to Jackson so that Jackson would veto it and become too unpopular for re-election. This bill had included adding millions of dollars of gratuity to the stocks of the investors, both enriching them and making the stock more unobtainable to others. The bill had included excluding private citizens from paying off debts through notes issued from a different bank branch. And the bill had included excluding the foreign stockholders from taxation on their stocks while collectively allowing both them and their citizen counterparts corporate title to any lands purchased by the Bank. None of these exclusive privileges and benefits had been proper or necessary for the operation of the Bank but Clay had pushed them simply as a political strategy (if not sincerely wholeheartedly in favor of them), for getting Jackson out of office. And try as he might, even after both Jackson and Biddle were dead, he couldn't get any subsequent president to support a recharter of the Bank. It was his own political ambition that turned out to be the Bank's worst enemy.
Can you tell me the source of this quotation? A link would be great if you have it.
I believe that many of the claims against Clay were just put forward by people who wanted to destroy national banking and the financial independence of America. That is, by agents of the British empire:
"Perhaps what will be most shocking to most Americans is that the essential basis for this astounding industrialization of the United States was National Banking— in specific, the operation of the Second National Bank of the United States. In a world still dominated by the British Empire of both military and financial power, the United States had to assert control over its national currency, and direct credit to essential infrastructure and industry. The Second National Bank served that purpose—and it was the opponents of that Bank, under the fraudulent populist banner of that thuggish Wall Street puppet Andrew Jackson, who slowed the industrialization process on behalf of our British imperial enemy.
The destruction of the Bank of the United States paved the way for the Civil War, and permanently deprived America of the most vital instrument for its national sovereignty."
From:
The American Industrial Revolution That Andrew Jackson Sought To Destroy
No matter what anyone may claim or be said to have claimed, the fact ever remains that Clay had rejected an acceptable compromise for bank reform that would have avoided the veto. Clay decided to force Jackson's veto to make Jackson unpopular for re-election thereby securing Clay's bid for the presidency. He gambled. He lost. End of story. Despite this, even Biddle himself could have avoided the veto by simply remaining true to his agreement with Jackson. He didn't. He lost. Even more than Clay.
What was the acceptable compromise which you say that Clay rejected?
In my opinion, Jackson was one of the worst presidents we every had. He was a British agent, or at least a dupe, who's actions halted the development of the US and led to the Civil war. Almost any action to discredit him would have been justified.
I would say the story is not over by far. All American's lost when we lost the second national bank.
So do you think that any decision that the population makes must be valid? If this were so, than you would support the election of presidents such as George Bush, since the majority of the people were for him.
The fact is that then, just as now, the media was owned by the financial oligarchy and was used to manipulate the people into opposition of the national bank, and against their own interests.
The majority of the people weren't for George Bush. As is publicly known, after the election, Al Gore had been found to have had the majority of the votes. It was only the conservative majority of the Supreme Court that had handed the presidency to George Bush by suspending the count.
As can be clearly seen, the national bank was the financial oligarchy. The People had opposed it in favor of their own interests. The Bank was coming under the control of fewer and fewer citizens.
In another of its bearings this provision is fraught with danger. Of the twenty-five directors of this bank five are chosen by the Government and twenty by the citizen stockholders. From all voice in these elections the foreign stockholders are excluded by the charter. In proportion, therefore, as the stock is transferred to foreign holders the extent of suffrage in the choice of directors is curtailed. Already is almost a third of the stock in foreign hands and not represented in elections. It is constantly passing out of the country, and this act will accelerate its departure. The entire control of the institution would necessarily fall into the hands of a few citizen stockholders, and the ease with which the object would be accomplished would be a temptation to designing men to secure that control in their own hands by monopolizing the remaining stock. There is danger that a president and directors would then be able to elect themselves from year to year, and without responsibility or control manage the whole concerns of the bank during the existence of its charter. It is easy to conceive that great evils to our country and its institutions millet flow from such a concentration of power in the hands of a few men irresponsible to the people.
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.
Should the stock of the bank principally pass into the hands of the subjects of a foreign country, and we should unfortunately become involved in a war with that country, what would be our condition? Of the course which would be pursued by a bank almost wholly owned by the subjects of a foreign power, and managed by those whose interests, if not affections, would run in the same direction there can be no doubt. All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy.
So do you really think that the people are infallible, and that they always elect a good president and never are deceived by propaganda?
Only a minority of $7 million in stock was held by foreigners.
As can clearly be seen, just a small number of the investors in the national bank were wealthy.
The stockholders clearly were not increasingly representative of the population. If that had been the case, the population wouldn't have been against the Bank. Instead, as already pointed out,
http://occupywallst.org/forum/why-is-socialism-doing-so-darn-well-in-deep-red-no/#comment-955829
So do you think that any decision that the population makes must be valid? If this were so, than you would support the election of presidents such as George Bush, since the majority of the people were for him.
The fact is that then, just as now, the media was owned by the financial oligarchy and was used to manipulate the people into opposition of the national bank, and against their own interests.
Yes, and that's also when the top tax bracket was 90% or more, and the banks could not use govt-guaranteed deposits to gamble like they own the casino.
What do you mean that the top tax bracket was 90% or more? That 90% of their income went to paying taxes?
No, it's a stepped bracket thing. As an example, the first ten grand is tax free, next 20 grand is at 25%, next 20 grand is 35%, and it keep going up. Anything over, say 200 grand is taxed in the top bracket.
That's the system we have here in Oz. Though the % shown here is just an example.
I've heard that the US is building up a military alliance with your land of Oz to encircle China. Do you think that is the case?
We've an alliance, as in the ANZUS treaty, and have had for ages. Australia has strategic ports that the US needs for global supremacy. There are "listening" bases at Pine Gap and Exmouth, that give the US coverage of the southern hemisphere.
I can't see China ever being threatened by the US. At least I hope it never happens. China's new wealthy are holidaying in Australia, as well as investing in real estate and businesses.
The Chinese were scratching for gold and tin in our far north before the British colonised Australia.
I think that the threat to China is not from the US in itself, but rather from the financial oligarchy which is now in control of the US. That oligarchy wants to control the whole world, and China is probably its main barrier.
Over the past year, there were a number of reports coming from both China and Russia that they were facing the distinct possibility of an all out nuclear attack from the US/financial oligarchy, and that such a war would probably result from attacks on Syria or Iran.
Recently, the US has been attempting to build up shields to defend against a Russian/Chinese nuclear response, enabling the US to "win" a nuclear war.
I've often wondered about the last nation (Iran) in the neoliberal agenda in the middle east, and China's relationship with them. Russia seems to have succumbed to the oligarchy, and Putin is more or less one of them, now. Disaster capitalism is sweeping the globe.
China plans for hundreds of years into the future, so I'm guessing they've seen what's coming, and are secretly preparing for any exigencies. If a small country like Iraq presents such problems for takeover, then I really can't see the US even considering Iran at this point in time, let alone China.
Fingers crossed, of course. There are no winners in any nuclear conflict.
I think that much of Russia has succumbed to the oligarchy, but not necessarily Putin and the people who voted him into power.
Yes, the US/Israel seem a bit stymied by Iran now, but they keep hammering away at Syria, and now the Korean peninsula. I think the war mongers will keep at it until they get their war, unless we pass Glass Steagall first, depriving them of the financial power that they use to manipulate countries into war.
This is what Alexander Hamilton had developed.
"Hamilton’s financial system had then past. It had two objects. First as a puzzle, to exclude popular understanding & inquiry. Secondly, as a machine for the corruption of the legislature; for he avowed the opinion that man could be governed by one of two motives only, force or interest: force he observed, in this country, was out of the question; and the interests therefore of the members must be laid hold of, to keep the legislature in unison with the Executive. And with grief and shame it must be acknowledged that his machine was not without effect. That even in this, the birth of our government, some members were found sordid enough to bend their duty to their interests, and to look after personal, rather than public good."
"It is well known that, during the war, the greatest difficulty we encountered was the want of money or means, to pay our souldiers who fought, or our farmers, manufacturers & merchants who furnished the necessary supplies of food & clothing for them. After the expedient of paper money had exhausted itself, certificates of debt were given to the individual creditors, with assurance of payment, so soon as the U.S. should be able. But the distresses of these people often obliged them to part with these for the half, the fifth, and even a tenth of their value; and Speculators had made a trade of cozening them from the holders, by the most fraudulent practices and persuasions that they would never be paid. In the bill for funding & paying these, Hamilton made no difference between the original holders, & the fraudulent purchasers of this paper."
"Great & just repugnance arose at putting these two classes of creditors on the same footing, and great exertions were used to pay to the former the full value, and to the latter the price only which he had paid, with interest. But this would have prevented the game which was to be played, & for which the minds of greedy members were already tutored and prepared. When the trial of strength on these several efforts had indicated the form in which the bill would finally pass, this being known within doors sooner than without, and especially than to those who were in distant parts of the Union, the base scramble began. Couriers & relay horses by land, and swift sailing pilot boats by sea, were flying in all directions. Active partners & agents were associated & employed in every state, town and country neighborhood, and this paper was bought up at 5/ and even as low as 2/ in the pound, before the holder knew that Congress had already provided for it’s redemption at par. Immense sums were thus filched from the poor & ignorant, and fortunes accumulated by those who had themselves been poor enough before."
"Men thus enriched by the dexterity of a leader, would follow of course the chief who was leading them to fortune, and become the zealous instruments of all his enterprises. This game was over, and another was on the carpet at the moment of my arrival; and to this I was most ignorantly & innocently made to hold the candle. This fiscal maneuvre is well known by the name of the Assumption. Independantly of the debts of Congress, the states had, during the war, contracted separate and heavy debts; and Massachusetts particularly in an absurd attempt, absurdly conducted, on the British post of Penobscot: and the more debt Hamilton could rake up, the more plunder for his mercenaries."
"This money, whether wisely or foolishly spent, was pretended to have been spent for general purposes, and ought therefore to be paid from the general purse. But it was objected that nobody knew what these debts were, what their amount, or what their proofs. No matter; we will guess them to be 20. millions. But of these 20. millions we do not know how much should be reimbursed to one state, nor how much to another. No matter; we will guess. And so another scramble was set on foot among the several states, and some got much, some little, some nothing. But the main object was obtained, the phalanx of the treasury was reinforced by additional recruits."
"This measure produced the most bitter & angry contests ever known in Congress, before or since the union of the states. I arrived in the midst of it. But a stranger to the ground, a stranger to the actors on it, so long absent as to have lost all familiarity with the subject, and as yet unaware of it’s object, I took no concern in it. The great and trying question however was lost in the H. of Representatives. So high were the feuds excited by this subject, that on it’s rejection, business was suspended. Congress met and adjourned from day to day without doing any thing, the parties being too much out of temper to do business together. The Eastern members particularly, who, with Smith from South Carolina, were the principal gamblers in these scenes, threatened a secession and dissolution."
"Hamilton was in despair. As I was going to the President’s one day, I met him in the street. He walked me backwards & forwards before the President’s door for half an hour. He painted pathetically the temper into which the legislature had been wrought, the disgust of those who were called the Creditor states, the danger of the secession of their members, and the separation of the states. He observed that the members of the administration ought to act in concert, that tho’ this question was not of my department, yet a common duty should make it a common concern; that the President was the center on which all administrative questions ultimately rested, and that all of us should rally around him, and support with joint efforts measures approved by him; and that the question having been lost by a small majority only, it was probable that an appeal from me to the judgment and discretion of some of my friends might effect a change in the vote, and the machine of government, now suspended, might be again set into motion. I told him that I was really a stranger to the whole subject; not having yet informed myself of the system of finances adopted, I knew not how far this was a necessary sequence; that undoubtedly if it’s rejection endangered a dissolution of our union at this incipient stage, I should deem that the most unfortunate of all consequences, to avert which all partial and temporary evils should be yielded. I proposed to him however to dine with me the next day, and I would invite another friend or two, bring them into conference together, and I thought it impossible that reasonable men, consulting together coolly, could fail, by some mutual sacrifices of opinion, to form a compromise which was to save the union."
"The discussion took place. I could take no part in it, but an exhortatory one, because I was a stranger to the circumstances which should govern it. But it was finally agreed that, whatever importance had been attached to the rejection of this proposition, the preservation of the union, & of concord among the states was more important, and that therefore it would be better that the vote of rejection should be rescinded, to effect which some members should change their votes. But it was observed that this pill would be peculiarly bitter to the Southern States, and that some concomitant measure should be adopted to sweeten it a little to them."
"There had before been propositions to fix the seat of government either at Philadelphia, or at Georgetown on the Potomac; and it was thought that by giving it to Philadelphia for ten years, and to Georgetown permanently afterwards, this might, as an anodyne, calm in some degree the ferment which might be excited by the other measure alone. So two of the Potomac members (White & Lee, but White with a revulsion of stomach almost convulsive) agreed to change their votes, & Hamilton undertook to carry the other point. In doing this the influence he had established over the Eastern members, with the agency of Robert Morris with those of the middle states, effected his side of the engagement, and so the assumption was passed, and 20. millions of stock divided among favored states, and thrown in as pabulum to the stock-jobbing herd. This added to the number of votaries to the treasury and made its Chief the master of every vote in the legislature which might give to the government the direction suited to his political views."
"I know well, and so must be understood, that nothing like a majority in Congress had yielded to this corruption. Far from it. But a division, not very unequal, had already taken place in the honest part of that body, between the parties styled republican and federal. The latter being monarchists in principle, adhered to Hamilton of course, as their leader in that principle, and this mercenary phalanx added to them ensured him always a majority in both houses: so that the whole action of the legislature was now under the direction of the treasury. Still the machine was not compleat. The effect of the funding system, & of the assumption, would be temporary. It would be lost with the loss of the individual members whom it had enriched, and some engine of influence more permanent must be contrived, while these myrmidons were yet in place to carry it thro’ all opposition. This engine was the Bank of the U.S. All that history is known; so I shall say nothing about it. While the government remained at Philadelphia, a selection of members of both houses were constantly kept as Directors, who, on every question interesting to that institution, or to the views of the federal head, voted at the will of that head; and, together with the stockholding members, could always make the federal vote that of the majority. By this combination, legislative expositions were given to the constitution, and all the administrative laws were shaped on the model of England, & so passed. And from this influence we were not relieved until the removal from the precincts of the bank, to Washington."
Thomas Jefferson in "Anas" dated February 4, 1818
http://occupywallst.org/forum/free-democracy-amendment/#comment-748866
Ah yes, the old Jefferson-Hamilton debate. The fact is that...
"the Madison-Jefferson grouping was determined to deprive the newly formed Federal government of the power over money and credit, in effect, leaving the new nation under the control of the British Empire in terms of its economy. The battle came to a climax around the question of the establishment of the Bank of the United States.
Thomas Jefferson and James Madison attempted to sabotage the creation of the Bank—which had been approved by Congress in 1791—by arguing that the U.S. government did not have the right to establish corporations, and that such a bank was unnecessary to the functioning of the nation. In response, Hamilton wrote his "Opinion on the Constitutionality of the National Bank," in which he set forth the powers of the new sovereign nation..."
Step Three: Issue Hamiltonian Credit for National Projects http://www.larouchepub.com/other/2011/3837lar_steps_ham_credit.html
That is Jefferson wanted to leave the US dependent on the British empire, the remnants of which Wall Street is still a part today, by depriving it of the capacity to produce its own money.
Hamilton preferred an independent United States with the capacity to produce its own money. Re-establishing such a bank, to finance economic development projects, is essential to US economic recovery today.
Hamilton created a national bank that was overwhelmingly in private hands, the majority of which turned out to be foreigners.
No foreigner could be on the board of directors or own stock that had voting rights. The government did not need to own the majority of the shares, but only to control a majority of the voting shares.
There are only so many models for banks, so every bank in certain respects is like all others, some more like some than like others. But that is only the appearance. The key question is what is the purpose of the bank and does the bank fulfill that purpose.
As Michael Kirsch has documented in the course of the his extensive articles, the Second National Bank in the first few years was under incompetent leadership. Only when Nicholas Biddle became its director did the bank actually function as it was chartered to do. Then, especially under the Presidency of John Quincy Adams the economy grew rapidly and new technologies, especially of infrastructure, were rapidly developed. Those new technologies were canals and railroads.
And yet the Second Bank of the United States was brougt to an end because of its subversive nature.
President Jackson's Veto Message Regarding the Bank of the United States; July 10, 1832
VETO MESSAGE.
WASHINGTON, July 10, 1832.
To the Senate.
The bill " to modify and continue " the act entitled "An act to incorporate the subscribers to the Bank of the United States " was presented to me on the 4th July instant. Having considered it with that solemn regard to the principles of the Constitution which the day was calculated to inspire, and come to the conclusion that it ought not to become a law, I herewith return it to the Senate, in which it originated, with my objections.
A bank of the United States is in many respects convenient for the Government and useful to the people. Entertaining this opinion, and deeply impressed with the belief that some of the powers and privileges possessed by the existing bank are unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people, I felt it my duty at an early period of my Administration to call the attention of Congress to the practicability of organizing an institution combining all its advantages and obviating these objections. I sincerely regret that in the act before me I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the Constitution of our country.
The present corporate body, denominated the president, directors, and company of the Bank of the United States, will have existed at the time this act is intended to take effect twenty years. It enjoys an exclusive privilege of banking under the authority of the General Government, a monopoly of its favor and support, and, as a necessary consequence, almost a monopoly of the foreign and domestic exchange. The powers, privileges, and favors bestowed upon it in the original charter, by increasing the value of the stock far above its par value, operated as a gratuity of many millions to the stockholders.
An apology may be found for the failure to guard against this result in the consideration that the effect of the original act of incorporation could not be certainly foreseen at the time of its passage. The act before me proposes another gratuity to the holders of the same stock, and in many cases to the same men, of at least seven millions more. This donation finds no apology in any uncertainty as to the effect of the act. On all hands it is conceded that its passage will increase at least so or 30 per cent more the market price of the stock, subject to the payment of the annuity of $200,000 per year secured by the act, thus adding in a moment one-fourth to its par value. It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners. By this act the American Republic proposes virtually to make them a present of some millions of dollars. For these gratuities to foreigners and to some of our own opulent citizens the act secures no equivalent whatever. They are the certain gains of the present stockholders under the operation of this act, after making full allowance for the payment of the bonus.
Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people. It is due to them, therefore, if their Government sell monopolies and exclusive privileges, that they should at least exact for them as much as they are worth in open market. The value of the monopoly in this case may be correctly ascertained. The twenty-eight millions of stock would probably be at an advance of 50 per cent, and command in market at least $42,000,000, subject to the payment of the present bonus. The present value of the monopoly, therefore, is $17,000,000, and this the act proposes to sell for three millions, payable in fifteen annual installments of $200,000 each.
It is not conceivable how the present stockholders can have any claim to the special favor of the Government. The present corporation has enjoyed its monopoly during the period stipulated in the original contract. If we must have such a corporation, why should not the Government sell out the whole stock and thus secure to the people the full market value of the privileges granted? Why should not Congress create and sell twenty-eight millions of stock, incorporating the purchasers with all the powers and privileges secured in this act and putting the premium upon the sales into the Treasury?
But this act does not permit competition in the purchase of this monopoly. It seems to be predicated on the erroneous idea that the present stockholders have a prescriptive right not only to the favor but to the bounty of Government. It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class. For their benefit does this act exclude the whole American people from competition in the purchase of this monopoly and dispose of it for many millions less than it is worth. This seems the less excusable because some of our citizens not now stockholders petitioned that the door of competition might be opened, and offered to take a charter on terms much more favorable to the Government and country.
But this proposition, although made by men whose aggregate wealth is believed to be equal to all the private stock in the existing bank, has been set aside, and the bounty of our Government is proposed to be again bestowed on the few who have been fortunate enough to secure the stock and at this moment wield the power of the existing institution. I can not perceive the justice or policy of this course. If our Government must sell monopolies, it would seem to be its duty to take nothing less than their full value, and if gratuities must be made once in fifteen or twenty years let them not be bestowed on the subjects of a foreign government nor upon a designated and favored class of men in our own country. It is but justice and good policy, as far as the nature of the case will admit, to confine our favors to our own fellow-citizens, and let each in his turn enjoy an opportunity to profit by our bounty. In the bearings of the act before me upon these points I find ample reasons why it should not become a law.
http://occupywallst.org/forum/free-democracy-amendment/#comment-755697
Andrew Jackson was one of the worst presidents we ever had. He worked quite directly for the English empire against the interests of the newly emerging United States and its national bank:
"The destruction of the nation's credit bank had nothing to do with helping the poor, or with machinations of the bank's directors, as the Jackson Administration claimed, but was instead aimed at eliminating growth in all areas of national economy and facilitating an aristocracy of wealth, disabling those who depended on borrowed capital from the Bank to participate in the nation's growth, in favor of wealthy landowners and New York-Boston speculators.
All of these policy shifts were inseparable from the spread of slavery and promotion of British trade interests, just as the horrific removal of the Native Americans from the Southern states facilitated the same."
From:
How Andrew Jackson Destroyed the United States http://www.larouchepub.com/other/2012/3949jackson_v_usa.html
Clearly, not the case at all. Jackson had opposed the foreign interests of the bank, the majority of whom had been British.
By documents submitted to Congress at the present session it appears that on the 1st of January, 1832, of the twenty-eight millions of private stock in the corporation, $8,405,500 were held by foreigners, mostly of Great Britain. The amount of stock held in the nine Western and Southwestern States is $140,200, and in the four Southern States is $5,623,100, and in the Middle and Eastern States is about $13,522,000. The profits of the bank in 1831, as shown in a statement to Congress, were about $3,455,598; of this there accrued in the nine western States about $1,640,048; in the four Southern States about $352,507, and in the Middle and Eastern States about $1,463,041. As little stock is held in the West, it is obvious that the debt of the people in that section to the bank is principally a debt to the Eastern and foreign stockholders; that the interest they pay upon it is carried into the Eastern States and into Europe, and that it is a burden upon their industry and a drain of their currency, which no country can bear without inconvenience and occasional distress. To meet this burden and equalize the exchange operations of the bank, the amount of specie drawn from those States through its branches within the last two years, as shown by its official reports, was about $6,000,000. More than half a million of this amount does not stop in the Eastern States, but passes on to Europe to pay the dividends of the foreign stockholders. In the principle of taxation recognized by this act the Western States find no adequate compensation for this perpetual burden on their industry and drain of their currency. The branch bank at Mobile made last year $95,140, yet under the provisions of this act the State of Alabama can raise no revenue from these profitable operations, because not a share of the stock is held by any of her citizens. Mississippi and Missouri are in the same condition in relation to the branches at Natchez and St. Louis, and such, in a greater or less degree, is the condition of every Western State. The tendency of the plan of taxation which this act proposes will be to place the whole United States in the same relation to foreign countries which the Western States now bear to the Eastern. When by a tax on resident stockholders the stock of this bank is made worth 10 or 15 per cent more to foreigners than to residents, most of it will inevitably leave the country.
Thus will this provision in its practical effect deprive the Eastern as well as the Southern and Western States of the means of raising a revenue from the extension of business and great profits of this institution. It will make the American people debtors to aliens in nearly the whole amount due to this bank, and send across the Atlantic from two to five millions of specie every year to pay the bank dividends.
http://occupywallst.org/forum/free-democracy-amendment/#comment-755698
The interest paid to investors alone is not the main issue, but rather what were the results of the projects that were developed in America.
The businesses and their projects that the US bank made loans to were profitable, benefiting their local economies. They developed much needed infrastructure for those areas. Money paid to foreign investors was what was left over from the profits that were made in America.
The main issue was the drain on the economy from foreign debt.
The debts were paid off with a portion of the profits, this means a portion of the profits stayed within the American economy, expanding it.
The national debt had only been paid off once in history; under Andrew Jackson in 1835.
"It seems to me to be our policy that the public lands shall cease as soon as practicable to be a source of revenue, and that they be sold to settlers in limited parcels at a price barely sufficient to reimburse to the United States the expense of the present system and the cost arising under our Indian compacts. "
-One of the main problems that our government faces now is lack of revenue. Infrastructure generates such revenue by improving the efficiency of the economy.
"it promotes a mischievous and corrupting influence upon elections by holding out to the people the fallacious hope that the success of a certain candidate will make navigable their neighboring creek or river, bring commerce to their doors, and increase the value of their property. It thus favors combinations to squander the treasure of the country upon a multitude of local objects, as fatal to just legislation as to the purity of public men."
The conventional history of these issues is published by the financial oligarchy which opposes the reestablishment of a national bank in America today.
The subject is a speech that you yourself had referred me to and is publicly available for all to read for themselves in its entirety. A financial oligarchy has nothing to do with it.
Jackson himself was the agent of a financial oligarchy that was made up of private bankers. That is why he opposed a public bank.
It means that I don't try to misrepresent history by selectively taking things out of their contexts.
The conventional history of these issues is published by the financial oligarchy which opposes the reestablishment of a national bank in America today.
"He (Biddle) addressed the fallacious argument of usurpation by foreign monied influence who owned stock in the bank, but were forbidden from partaking in its direction:
[The bank's] shares rise in value till foreigners, desirous of placing their funds beyond the insecurity of Europe, send over their money and purchase its stock. In the first place, our citizens gain the additional price, and this foreign money is lent by the bank to individuals, who, after employing it in the improvement of the soil, the establishment of manufactures, and in the advancement of every branch of the national industry, return it to the bank, who send to foreigners the interest; that is, the surplus which our citizens have earned with it, above their own income from its employment."
The Credit System versus Speculation: Nicholas Biddle and the Second Bank of the United States
That is, the interest was paid.
Some saw this matter quite differently:
"On December 4, 1832, after his famous veto of the Bank of the United States and upon being re-elected to a second term, President Andrew Jackson was handed a speech to deliver as his fourth annual address to Congress...
The public mask of Jackson’s first administration fell away: the requests of the radical states-rights groups, the wealthy landowners, and slave holders of the Southern states would be granted, while the interests of manufacturing, internal improvements, and national independence, were thrown aside.
The speech said that “the public lands shall cease to be a source of revenue,” but sold at prices “barely sufficient to reimburse the United States,” thus no longer being used as a tool for internal improvements and the general welfare. The land was pledged instead for the spread of slavery, as it would eventually be “surrendered to the states respectively in which it lies,” namely, the slave states of North and South Carolina, Virginia, and Georgia.
Congress was told to stop promoting internal improvements, unless a majority of slave owners, who amounted to 4% of the free population, voted to ratify an amendment that bestowed on Congress additional power. The speech claimed that the states were not benefiting equally—echoing the radical “states-rights” cry that federal road, canal, and rail projects could give the government the power to emancipate slaves. To end all support for existing projects underway, it called for measures to “dispose of all stocks now held by it in corporations.”
Here's what that section of the speech was actually about.
Among the interests which merit the consideration of Congress after the payment of the public debt, one of the most important, in my view, is that of the public lands. Previous to the formation of our present Constitution it was recommended by Congress that a portion of the waste lands owned by the States should be ceded to the United States for the purposes of general harmony and as a fund to meet the expenses of the war. The recommendation was adopted, and at different periods of time the States of Massachusetts, New York, Virginia, North and South Carolina, and Georgia granted their vacant soil for the uses for which they had been asked. As the lands may now be considered as relieved from this pledge, it is in the discretion of Congress to dispose of them in such way as best to conduce to the quiet, harmony, and general interest of the American people. In examining this question all local and sectional feelings should be discarded and the whole United States regarded as one people, interested alike in the prosperity of their common country.
It can not be doubted that the speedy settlement of these lands constitutes the true interest of the Republic. The wealth and strength of a country are its population, and the best part of that population are cultivators of the soil. Independent farmers are every where the basis of society and true friends of liberty.
In addition to these considerations questions have already arisen, and may be expected hereafter to grow out of the public lands, which involve the rights of the new States and the powers of the General Government, and unless a liberal policy be now adopted there is danger that these questions may speedily assume an importance not now generally anticipated. The influence of a great sectional interest, when brought into full action, will be found more dangerous to the harmony and union of the States than any other cause of discontent, and it is the part of wisdom and sound policy to foresee its approaches and endeavor if possible to counteract them.
Of the various schemes which have been hitherto proposed in regard to the disposal of the public lands, none has yet received the entire approbation of the National Legislature. Deeply impressed with the importance of a speedy and satisfactory arrangement of the subject, I deem it my duty on this occasion to urge it upon your consideration, and to the propositions which have been heretofore suggested by others to contribute those reflections which have occurred to me, in the hope that they may assist you in your future deliberations.
It seems to me to be our policy that the public lands shall cease as soon as practicable to be a source of revenue, and that they be sold to settlers in limited parcels at a price barely sufficient to reimburse to the United States the expense of the present system and the cost arising under our Indian compacts. The advantages of accurate surveys and undoubted titles now secured to purchasers seem to forbid the abolition of the present system, because none can be substituted which will more perfectly accomplish these important ends. It is desirable, however, that in convenient time this machinery be withdrawn from the States, and that the right of soil and the future disposition of it be surrendered to the States respectively in which it lies.
The adventurous and hardy population of the West, besides contributing their equal share of taxation under our impost system, have in the progress of our Government, for the lands they occupy, paid into the Treasury a large proportion of $40,000,000, and of the revenue received therefrom but a small part has been expended among them. When to the disadvantage of their situation in this respect we add the consideration that it is their labor alone which gives real value to the lands, and that the proceeds arising from their sale are distributed chiefly among States which had not originally any claim to them, and which have enjoyed the undivided emolument arising from the sale of their own lands, it can not be expected that the new States will remain longer contented with the present policy after the payment of the public debt. To avert the consequences which may be apprehended from this cause, to pub an end for ever to all partial and interested legislation on the subject, and to afford to every American citizen of enterprise the opportunity of securing an independent freehold, it seems to me, therefore, best to abandon the idea of raising a future revenue out of the public lands.
In former messages I have expressed my conviction that the Constitution does not warrant the application of the funds of the General Government to objects of internal improvement which are not national in their character, and, both as a means of doing justice to all interests and putting an end to a course of legislation calculated to destroy the purity of the Government, have urged the necessity of reducing the whole subject to some fixed and certain rule. As there never will occur a period, perhaps, more propitious than the present to the accomplishment of this object, I beg leave to press the subject again upon your attention.
Without some general and well-defined principles ascertaining those objects of internal improvement to which the means of the nation may be constitutionally applied, it is obvious that the exercise of the power can never be satisfactory. Besides the danger to which it exposes Congress of making hasty appropriations to works of the character of which they may be frequently ignorant, it promotes a mischievous and corrupting influence upon elections by holding out to the people the fallacious hope that the success of a certain candidate will make navigable their neighboring creek or river, bring commerce to their doors, and increase the value of their property. It thus favors combinations to squander the treasure of the country upon a multitude of local objects, as fatal to just legislation as to the purity of public men.
If a system compatible with the Constitution can not be devised which is free from such tendencies, we should recollect that that instrument provides within itself the mode of its amendment, and that there is, therefore, no excuse for the assumption of doubtful powers by the General Government. If those which are clearly granted shall be found incompetent to the ends of its creation, it can at any time apply for their enlargement; and there is no probability that such an application, if founded on the public interest, will ever be refused. If the propriety of the proposed grant be not sufficiently apparent to command the assent of 3/4 of the States, the best possible reason why the power should not be assumed on doubtful authority is afforded; for if more than one quarter of the States are unwilling to make the grant its exercise will be productive of discontents which will far over-balance any advantages that could be derived from it. All must admit that there is nothing so worthy of the constant solicitude of this Government as the harmony and union of the people.
Being solemnly impressed with the conviction that the extension of the power to make internal improvements beyond the limit I have suggested, even if it be deemed constitutional, is subversive of the best interests of our country, I earnestly recommend to Congress to refrain from its exercise in doubtful cases, except in relation to improvements already begun, unless they shall first procure from the States such an amendment of the Constitution as will define its character and prescribe its bounds. If the States feel themselves competent to these objects, why should this Government wish to assume the power? If they do not, then they will not hesitate to make the grant. Both Governments are the Governments of the people; improvements must be made with the money of the people, and if the money can be collected and applied by those more simple and economical political machines, the State governments, it will unquestionably be safer and better for the people than to add to the splendor, the patronage, and the power of the General Government. But if the people of the several States think otherwise they will amend the Constitution, and in their decision all ought cheerfully to acquiesce.
This act authorizes and encourages transfers of its stock to foreigners and grants them an exemption from all State and national taxation. So far from being "necessary and proper" that the bank should possess this power to make it a safe and efficient agent of the Government in its fiscal operations, it is calculated to convert the Bank of the United States into a foreign bank, to impoverish our people in time of peace, to disseminate a foreign influence through every section of the Republic, and in war to endanger our independence.
The several States reserved the power at the formation of the Constitution to regulate and control titles and transfers of real property, and most, if not all, of them have laws disqualifying aliens from acquiring or holding lands within their limits. But this act, in disregard of the undoubted right of the States to prescribe such disqualifications, gives to aliens stockholders in this bank an interest and title, as members of the corporation, to all the real property it may acquire within any of the States of this Union. This privilege granted to aliens is not "necessary" to enable the bank to perform its public duties, nor in any sense "proper," because it is vitally subversive of the rights of the States.
The Government of the United States have no constitutional power to purchase lands within the States except "for the erection of forts, magazines, arsenals, dockyards, and other needful buildings," and even for these objects only "by the consent of the legislature of the State in which the same shall be." By making themselves stockholders in the bank and granting to the corporation the power to purchase lands for other purposes they assume a power not granted in the Constitution and grant to others what they do not themselves possess. It is not necessary to the receiving, safe-keeping, or transmission of the funds of the Government that the bank should possess this power, and it is not proper that Congress should thus enlarge the powers delegated to them in the Constitution.
The old Bank of the United States possessed a capital of only $11,000,000, which was found fully sufficient to enable it with dispatch and safety to perform all the functions required of it by the Government. The capital of the present bank is $35,000,000-at least twenty-four more than experience has proved to be necessary to enable a bank to perform its public functions. The public debt which existed during the period of the old bank and on the establishment of the new has been nearly paid off, and our revenue will soon be reduced. This increase of capital is therefore not for public but for private purposes.
The Government is the only "proper" judge where its agents should reside and keep their offices, because it best knows where their presence will be "necessary." It can not, therefore, be "necessary" or "proper" to authorize the bank to locate branches where it pleases to perform the public service, without consulting the Government, and contrary to its will. The principle laid down by the Supreme Court concedes that Congress can not establish a bank for purposes of private speculation and gain, but only as a means of executing the delegated powers of the General Government. By the same principle a branch bank can not constitutionally be established for other than public purposes. The power which this act gives to establish two branches in any State, without the injunction or request of the Government and for other than public purposes, is not "necessary" to the due execution of the powers delegated to Congress.
The bonus which is exacted from the bank is a confession upon the face of the act that the powers granted by it are greater than are "necessary" to its character of a fiscal agent. The Government does not tax its officers and agents for the privilege of serving it. The bonus of a million and a half required by the original charter and that of three millions proposed by this act are not exacted for the privilege of giving "the necessary facilities for transferring the public funds from place to place within the United States or the Territories thereof, and for distributing the same in payment of the public creditors without charging commission or claiming allowance on account of the difference of exchange," as required by the act of incorporation, but for something more beneficial to the stockholders. The original act declares that it (the bonus) is granted " in consideration of the exclusive privileges and benefits conferred by this act upon the said bank, " and the act before me declares it to be "in consideration of the exclusive benefits and privileges continued by this act to the said corporation for fifteen years, as aforesaid." It is therefore for "exclusive privileges and benefits" conferred for their own use and emolument, and not for the advantage of the Government, that a bonus is exacted. These surplus powers for which the bank is required to pay can not surely be "necessary" to make it the fiscal agent of the Treasury. If they were, the exaction of a bonus for them would not be " proper."
Some saw this matter quite differently:
"On December 4, 1832, after his famous veto of the Bank of the United States and upon being re-elected to a second term, President Andrew Jackson was handed a speech to deliver as his fourth annual address to Congress...
The public mask of Jackson’s first administration fell away: the requests of the radical states-rights groups, the wealthy landowners, and slave holders of the Southern states would be granted, while the interests of manufacturing, internal improvements, and national independence, were thrown aside.
The speech said that “the public lands shall cease to be a source of revenue,” but sold at prices “barely sufficient to reimburse the United States,” thus no longer being used as a tool for internal improvements and the general welfare. The land was pledged instead for the spread of slavery, as it would eventually be “surrendered to the states respectively in which it lies,” namely, the slave states of North and South Carolina, Virginia, and Georgia.
Congress was told to stop promoting internal improvements, unless a majority of slave owners, who amounted to 4% of the free population, voted to ratify an amendment that bestowed on Congress additional power. The speech claimed that the states were not benefiting equally—echoing the radical “states-rights” cry that federal road, canal, and rail projects could give the government the power to emancipate slaves. To end all support for existing projects underway, it called for measures to “dispose of all stocks now held by it in corporations.”
Not necessarily a bad thing, if it serves the public good.
It never does. That's why a public bank is necessary for the public good.
Under Nicholas Biddle, the National Bank developed roads and waterways, highly beneficial to the public in those primitive times.
"On January 3rd 1811, on the eve of the decision to dissolve the Bank of the United States, a 24 year old Nicholas Biddle, serving as a state representative at Lancaster, PA, who had been promoting canal building and public education in the state unsuccessfully, rose to challenge a resolution to dissolve the Bank of the United States. Surprising the committee, he spoke instead with hours of prepared study on the subject, reviewing the history of the Bank, and challenging party rhetoric against the bank that it was unconstitutional and served the monied aristocracy. He outlined the system of public credit which it had made possible, and warned of the effects which would ensue, following its demise.
To my mind no principle of national economy is clearer, than that the most natural way of protecting the poorer classes of a society is by a [national] bank: an institution...which enables the farmer to reserve his crops for a better market, instead of sacrificing them for his immediate wants; and by loans, at a moderate rate of interest, relieves every class of society from the pressure of usury. As to a monied aristocracy, is it not obvious that the funds of a bank are of all other kinds of property the least calculated to promote the influence which is feared? An extensive proprietor of land may oppress his tenantry; the holder of mortgages may influence and control a whole neighborhood; but a large stockholder in a bank sees interposed between him and his debtors an association of individuals whose private feelings are merged in the passion of pecuniary gain.
He addressed the fallacious argument of usurpation by foreign monied influence who owned stock in the bank, but were forbidden from partaking in its direction:
[The bank's] shares rise in value till foreigners, desirous of placing their funds beyond the insecurity of Europe, send over their money and purchase its stock. In the first place, our citizens gain the additional price, and this foreign money is lent by the bank to individuals, who, after employing it in the improvement of the soil, the establishment of manufactures, and in the advancement of every branch of the national industry, return it to the bank, who send to foreigners the interest; that is, the surplus which our citizens have earned with it, above their own income from its employment."
From: The Credit System vs Speculation: Nicholas Biddle & the Second Bank of the United States By Michael Kirsch
A public bank can have private stock holders and serve the public good if it is under the control of the government.
A public bank doesn't need private stockholders for the public good when it can be funded by government bonds and the taxes of the private citizens. A public bank only needs private stockholders when it is ultimately designed to serve the interests of the private stockholders.
LY... arturo is speaking Facts.... check out http://www.stlouisfed.org/ ... and see how the Fed is already being re-made.... also ... think about our real problems .... jobs.... for not only America... but the world....
I see nothing wrong with putting private money to work for the public good. The US national bank was designed to serve the public good, its opponents were proponents of the British empire. They wrote much propaganda about the national bank for the purpose of suppressing the development of the US.
"Jackson’s controllers, such as Van Buren and Kentucky newspaper man Amos Kendall, actually created the Democratic Party machine which mobilized to destroy the Bank of the United States (BUS), based on accusations and lies which were all ultimately proven to be false. But the lies, sent out through the party press, did generate the partisan fervor—supplemented by a generous dose of payoffs and other corruption—that could be used to ram through policies that ripped apart the nation. Jackson’s controllers then used that popularity to usurp the powers of the Congress, and take the first steps toward a dictatorship of the Executive branch, while declaring that he represented the “will of the people.”
The largest of those lies was that the BUS was a merely a tool of the rich and of foreigners. The reality, as Kirsch documents through the words of contemporaries, is that it provided the credit for rapid industrial and infrastructure expansion in the 1820s, expansion which benefitted the common laborer, small entrepreneur, and free landholder. To the contrary, the Jackson- Van Buren anti-Bank measures were to the benefit of the slaveholders and Wall Street—a fact attested to by dozens of letters from organizations around the country opposing the shutdown of the Bank’s operations, many of which Kirsch quotes.
One way Jackson got around the opposition was, of course, distributing the spoils, and opening up opportunities for hundreds of state banks to be set up, allegedly “freed” of regulation by the National Bank. But this program resulted in hyperinflation and ruin, as the international financial powers moved in to take control, and ruin spread across the land. Ultimately, the Jackson-Van Buren operation so destroyed the nation’s credit that the United States not only went through the Depression-Crash of 1834-37, but lost control of its own credit, and was increasingly ruled by the British Empire, through the imposition of the restrictive gold standard and free trade. Then came the Civil War, which was only won due to the extraordinary leadership of pro-National Bank Abraham Lincoln. Kirsch’s paper is now posted on www.larouchepac. com, and produced in pamphlet form in the weeks ahead."
As Jackson had said,
If we must have a bank with private stockholders, every consideration of sound policy and every impulse of American feeling admonishes that it should be purely American. Its stockholders should be composed exclusively of our own citizens, who at least ought to be friendly to our Government and willing to support it in times of difficulty and danger. So abundant is domestic capital that competition in subscribing for the stock of local banks has recently led almost to riots. To a bank exclusively of American stockholders, possessing the powers and privileges granted by this act, subscriptions for $200,000,000 could be readily obtained. Instead of sending abroad the stock of the bank in which the Government must deposit its funds and on which it must rely to sustain its credit in times of emergency, it would rather seem to be expedient to prohibit its sale to aliens under penalty of absolute forfeiture.
http://occupywallst.org/forum/free-democracy-amendment/#comment-755701
And who was Andrew Jackson to say such a thing? -
Jackson operated as a tool of traitors, such as Alexander Hamilton's assassin Aaron Burr, and Burr's close collaborator and partner Martin Van Buren, who exercised their control with the utmost secrecy, in order to avoid any popular blowback. The "war hero" Jackson suited their purposes just fine, to dupe the population into cheering on its own demise.
Time to Save America from Andrew Jackson's Treason
http://www.larouchepub.com/other/2012/3948free_us_jackson.html
He was someone who had valued citizen control of the nation's wealth over mainly British foreigners to say such a thing.
Go to a search engine and type in "Burr Jackson treason", and see what you get. Do you know who Aaron Burr was? He was one of America's arch-traitors and Jackson was a close associate of his.
Andrew Jackson was something like George W. Bush in his times. Basically corrupt, not too smart, and easily manipulated by financial interests.
What is "actual history" to you? That history which is published by companies which are owned by the financial oligarchy?
History to me is what reflects the actual sources, not ideological agenda based publications.
The sources that you site are those people who opposed the national bank. An interpretation of history that only looks at one side would be biased.
Adams was one of the best presidents ever had by the US:
"With the election of John Quincy Adams to the Presidency in 1824, the growing independence and influence of the United States became an existential threat to the interests of the British Empire. President Adams gave his unrestrained support to internal improvements and protection for industrial and westward development. The Adams Administration worked closely with the new president of the Bank of the United States, Nicholas Biddle, to make the financial system a tool for these policies.3 Under its intended operation—as it had been earlier during Alexander Hamilton’s direction in 1791- 1801—the Bank was the means to implement the powers of Congress. It was the legislated act to create a system of future payments on credit, making possible the long and short term investments associated with roads, canals, rail, and new manufactures. The system of future payments was the linchpin for economic stability and growth, creating a regulated national currency that promoted productive value rather than individual monetary profit."
How did Jackson win the 1828 election? -
"The British Empire’s interests drew on every available asset to unify the alliance of New York finance and Southern slavery into a new party, the “democratic party,” and used various means to consolidate different factions under its banner, behind Andrew Jackson, winning him the 1828 election.
While the controlling elements of this new party were Van Buren’s New York bankers and John Randolph’s Southern slave plantation aristocracy, the majority of democratic party members and voters in the 1828 election were not aware of this fact. They voted for Jackson because of his legacy as a military hero in a war against the British: because he was “anti-federalist”; because he campaigned as a pro-free trade candidate to Southern slave owners and as a pro-nationalist candidate to Northern workers; and because he promised government jobs to all who would support him. In addition, the people were riled up with alarmist, populist slogans against President Adams as “monarchical,” and a spendthrift."
From: The Myth of Andrew Jackson is Hereby Destroyed
Jackson supported the same free trade policies which made slaves of Africans then, which makes slaves of Chinese workers under free trade policies today.
Read actual history, not "Myth". Jackson's win was a carry over from the 1824 election.
What is "actual history" to you? That history which is published by companies which are owned by the financial oligarchy?
Some pleasant hagiograhpy. They'll probably write similar things about George Bush some day. However, the facts behind the scene were quite different:
"Amos Kendall was Jackson’s main speechwriter, and had worked in Kentucky for years, with a newspaper owner named Francis Blair, to build and control a political party, by developing the art of seducing drunken mobs to demand populist measures that would end up destroying the interest of themselves and the public. Kendall ran Jackson’s Kentucky campaign before moving to Washington, and becoming Jackson’s main writer, whose speeches echoed Kendall’s long practice in manipulating mobs.
Also essential was Edward Livingston, a central figure in Aaron Burr’s treason schemes in New York and Louisiana, and, second to Burr, the most prominent American agent of British intelligence strategist, Jeremy Bentham; Reuben M. Whitney, a merchant who lived in Canada throughout the War of 1812, smuggling gold into Canada to be used to buy weaponry to use against Americans in the war, and who later spied on Nicholas Biddle as a bank director; and Roger Taney, a Tory against the second war with Great Britain in 1812, from an aristocratic slaveholding family of Maryland.
These are the men who directed and controlled the messages and actions of Andrew Jackson. This was the group of largely unofficial advisors, managing Jackson’s mind, his passions, and his psychology. Jackson himself and his own changing private views were of little importance to understanding the actions and effects of the administration.
From: The Myth of Andrew Jackson is Hereby Destroyed
The fact is that there are no "facts behind the scenes" concerning Jackson's election. He should've been president in 1824 and when that didn't happen due to what had appeared to have been a "corrupt bargain" between Adams and Clay, the People including Vice-President Calhoun, strongly supported his election in 1828.
Adams was one of the best presidents ever had by the US:
"With the election of John Quincy Adams to the Presidency in 1824, the growing independence and influence of the United States became an existential threat to the interests of the British Empire. President Adams gave his unrestrained support to internal improvements and protection for industrial and westward development. The Adams Administration worked closely with the new president of the Bank of the United States, Nicholas Biddle, to make the financial system a tool for these policies.3 Under its intended operation—as it had been earlier during Alexander Hamilton’s direction in 1791- 1801—the Bank was the means to implement the powers of Congress. It was the legislated act to create a system of future payments on credit, making possible the long and short term investments associated with roads, canals, rail, and new manufactures. The system of future payments was the linchpin for economic stability and growth, creating a regulated national currency that promoted productive value rather than individual monetary profit."
How did Jackson win the 1828 election? -
"The British Empire’s interests drew on every available asset to unify the alliance of New York finance and Southern slavery into a new party, the “democratic party,” and used various means to consolidate different factions under its banner, behind Andrew Jackson, winning him the 1828 election.
While the controlling elements of this new party were Van Buren’s New York bankers and John Randolph’s Southern slave plantation aristocracy, the majority of democratic party members and voters in the 1828 election were not aware of this fact. They voted for Jackson because of his legacy as a military hero in a war against the British: because he was “anti-federalist”; because he campaigned as a pro-free trade candidate to Southern slave owners and as a pro-nationalist candidate to Northern workers; and because he promised government jobs to all who would support him. In addition, the people were riled up with alarmist, populist slogans against President Adams as “monarchical,” and a spendthrift."
From: The Myth of Andrew Jackson is Hereby Destroyed
Jackson supported the same free trade policies which made slaves of Africans then, which makes slaves of Chinese workers under free trade policies today.
Burr was responsible for getting Jackson elected:
"Burr wrote (Nov. 20, 1815) to his son-in-law, former South Carolina Governor Joseph Alston, that Monroe's expected nomination by Jefferson's party must be prevented; that Jefferson had taught a cabal of Virginians schemes to keep political control of the United States; and that "the moment is extremely auspicious for breaking down this degrading system." The remedy?
'...There is a man in the United States of firmness and decision. It is your duty to hold him up to public view: that man is Andrew Jackson. Nothing is wanting but a respectable nomination, made before the proclamation of the Virginia caucus, and Jackson's success is inevitable.'
The universally despised Burr cautioned that his own hand should not be seen as behind this project: "I could wish to see you prominent in the execution of it. It must be known to be your work" (emphasis in original)."
Here is what Mathew Carey, who worked with Benjamin Franklin in his publishing business said about ending the 2nd national bank:
"Many people believe that the struggle for the destruction of the Bank of the United States, is a war of the middle and poorer classes of society, against the rich; and that if it should be successful, the interests of the former will be promoted at the expense of the latter. Fatal error! Should the enemies of the Bank triumph, the interests of the middle and poorer classes will be laid prostrate for the advantage of the overgrown capitalists, who will be able to possess themselves of the property of the distressed, at thirty or forty per cent below its value." Mathew Carey, Letters to Dr. Adam Seybert Dec 5th-17th 1810, Published January 8th, 1811.
What were the result of Jackson ending the 2nd National Bank? -
"The greatest crime ever committed within the United States was the destruction of the credit system in 1832-1836 by the hand of Andrew Jackson, by which farmers, laborers, manufacturers, and the whole expansion of the economy, were crushed, through the tyrannical usurpation of legislative power. The greatest lie ever told in the United States was that the Bank of the United States under the direction of Nicholas Biddle was destructive to the liberties and safety of the republic."
Was Jackson considered corrupt? -
"Steered by his British controllers, the manipulable Jackson both founded the political party system, and ripped apart the American credit system, most importantly by destroying the Second Bank of the United States. These actions amounted to treason, and led directly to the Civil War, as Congressman and former President John Quincy Adams pointed out at the time."
Time To Free Americans from Andrew Jackson's Treason!
http://www.larouchepub.com/other/2012/3948free_us_jackson.html
Jackson was elected on his own merits. He certainly wasn't elected in 1829 based upon anything written in 1815! Nor was there to be any comment made on the ending of the 2nd Bank in 1811, six years before it had even existed! And he certainly didn't have British controllers.
During the American Revolutionary War, Jackson, at age thirteen, joined a local militia as a courier. His eldest brother, Hugh, died from heat exhaustion during the Battle of Stono Ferry, on June 20, 1779. Jackson and his brother Robert were captured by the British and held as prisoners; they nearly starved to death in captivity. When Jackson refused to clean the boots of a British officer, the officer slashed at the youth with a sword, leaving Jackson with scars on his left hand and head, as well as an intense hatred for the British. While imprisoned, the brothers contracted smallpox.
Robert Jackson died on April 27, 1781, a few days after their mother Elizabeth secured the brothers' release. After being assured Andrew would recover, Elizabeth Jackson volunteered to nurse prisoners of war on board two ships in Charleston harbor, where there had been an outbreak of cholera. She died from the disease in November 1781, and was buried in an unmarked grave. Jackson became an orphan at age 14. Following the deaths of his brothers and mother during the war, Jackson blamed the British for his losses.
Some pleasant hagiograhpy. They'll probably write similar things about George Bush some day. However, the facts behind the scene were quite different:
"Amos Kendall was Jackson’s main speechwriter, and had worked in Kentucky for years, with a newspaper owner named Francis Blair, to build and control a political party, by developing the art of seducing drunken mobs to demand populist measures that would end up destroying the interest of themselves and the public. Kendall ran Jackson’s Kentucky campaign before moving to Washington, and becoming Jackson’s main writer, whose speeches echoed Kendall’s long practice in manipulating mobs.
Also essential was Edward Livingston, a central figure in Aaron Burr’s treason schemes in New York and Louisiana, and, second to Burr, the most prominent American agent of British intelligence strategist, Jeremy Bentham; Reuben M. Whitney, a merchant who lived in Canada throughout the War of 1812, smuggling gold into Canada to be used to buy weaponry to use against Americans in the war, and who later spied on Nicholas Biddle as a bank director; and Roger Taney, a Tory against the second war with Great Britain in 1812, from an aristocratic slaveholding family of Maryland.
These are the men who directed and controlled the messages and actions of Andrew Jackson. This was the group of largely unofficial advisors, managing Jackson’s mind, his passions, and his psychology. Jackson himself and his own changing private views were of little importance to understanding the actions and effects of the administration.
From: The Myth of Andrew Jackson is Hereby Destroyed
Go to a search engine, simply type in either "Aaron Burr" or "Andrew Jackson" and see what you get.
Even critics of Jackson didn't consider him corrupt. Had he been easily manipulated by financial interests, he wouldn't have ended the 2nd Bank. As for Burr,
Jefferson issued an order for Burr's arrest, declaring him a traitor even before an indictment. Burr read this in a newspaper in the Territory of Orleans on January 10, 1807. Jefferson's warrant put Federal agents on his trail. He turned himself in to the Federal authorities twice. Two judges found his actions legal and released him. Jefferson's warrant, however, followed Burr, who then fled toward Spanish Florida; he was intercepted at Wakefield, in Mississippi Territory (now in the state of Alabama) on February 19, 1807, and confined to Fort Stoddert after being arrested on charges of treason.
Burr was treated well at Fort Stoddert. For example, in the evening of February 20, 1807, Burr appeared at the dinner table, and was introduced to Frances Gaines, the wife of the commandant, Edmund P. Gaines and the daughter of Judge Harry Toulmin, the man responsible for the legal arrest of Burr. Mrs. Gaines and Burr played chess that evening and continued this entertainment during his confinement at the fort.
Burr's secret correspondence with Anthony Merry and the Marquis of Casa Yrujo, the British and Spanish ministers at Washington, was eventually revealed. It had been to secure money and to conceal his real designs, which were to help Mexico to overthrow Spanish power in the Southwest, and to found a dynasty in what would have become former Mexican territory. This was a misdemeanor, based on the Neutrality Act of 1794 passed to block filibuster expeditions like those questionable enterprises of George Rogers Clark and William Blount. Jefferson, however, sought the highest charges against Burr.
In 1807, on a charge of treason, Burr was brought to trial before the United States Circuit Court at Richmond, Virginia. His defense lawyers included Edmund Randolph, John Wickham, Luther Martin and Benjamin Gaines Botts. Burr was arraigned four times for treason before a grand jury indicted him. This was surprising since the only physical evidence presented to the Grand Jury was Wilkinson's so-called letter from Burr which proposed the idea of stealing land in the Louisiana Purchase. During the Jury's examination it was discovered that the letter was written in Wilkinson's own handwriting – a "copy," he said, because he had "lost" the original. The Grand Jury threw the letter out, and the news made a laughingstock of the General for the rest of the proceedings. The trial, presided over by Chief Justice of the United States John Marshall, began on August 3.
Article 3, Section 3 of the United States Constitution requires that treason either be admitted in open court, or proved by an overt act witnessed by two people. Since no two witnesses came forward, Burr was acquitted on September 1, in spite of the full force of the Jefferson administration's political influence thrown against him. In acquitting him, the jury apparently tried to give something like the Scottish verdict of not proven. Immediately afterward, he was tried on a more appropriate misdemeanor charge, but was again acquitted.
Burr was responsible for getting Jackson elected:
"Burr wrote (Nov. 20, 1815) to his son-in-law, former South Carolina Governor Joseph Alston, that Monroe's expected nomination by Jefferson's party must be prevented; that Jefferson had taught a cabal of Virginians schemes to keep political control of the United States; and that "the moment is extremely auspicious for breaking down this degrading system." The remedy?
'...There is a man in the United States of firmness and decision. It is your duty to hold him up to public view: that man is Andrew Jackson. Nothing is wanting but a respectable nomination, made before the proclamation of the Virginia caucus, and Jackson's success is inevitable.'
The universally despised Burr cautioned that his own hand should not be seen as behind this project: "I could wish to see you prominent in the execution of it. It must be known to be your work" (emphasis in original)."
Here is what Mathew Carey, who worked with Benjamin Franklin in his publishing business said about ending the 2nd national bank:
"Many people believe that the struggle for the destruction of the Bank of the United States, is a war of the middle and poorer classes of society, against the rich; and that if it should be successful, the interests of the former will be promoted at the expense of the latter. Fatal error! Should the enemies of the Bank triumph, the interests of the middle and poorer classes will be laid prostrate for the advantage of the overgrown capitalists, who will be able to possess themselves of the property of the distressed, at thirty or forty per cent below its value." Mathew Carey, Letters to Dr. Adam Seybert Dec 5th-17th 1810, Published January 8th, 1811.
What were the result of Jackson ending the 2nd National Bank? -
"The greatest crime ever committed within the United States was the destruction of the credit system in 1832-1836 by the hand of Andrew Jackson, by which farmers, laborers, manufacturers, and the whole expansion of the economy, were crushed, through the tyrannical usurpation of legislative power. The greatest lie ever told in the United States was that the Bank of the United States under the direction of Nicholas Biddle was destructive to the liberties and safety of the republic."
Was Jackson considered corrupt? -
"Steered by his British controllers, the manipulable Jackson both founded the political party system, and ripped apart the American credit system, most importantly by destroying the Second Bank of the United States. These actions amounted to treason, and led directly to the Civil War, as Congressman and former President John Quincy Adams pointed out at the time."
Time To Free Americans from Andrew Jackson's Treason!
http://www.larouchepub.com/other/2012/3948free_us_jackson.html
agreed .... .... check out http://www.stlouisfed.org/
Interesting, is there anything particular there you would suggest taking note of?
Thanks Leo. That was really interesting, and the intiative to recreate these state owned banks puts yet more pressure on the corrupt system that is now in place
~Odin~
The question of Socialism
http://www.truth-out.org/news/item/15680-the-question-of-socialism-and-beyond-is-about-to-open-up-in-these-united-states
In compliment & a deserved bump
Public banking is the most effective action we could support to hurt the criminal banksters who crashed the world economy and put us into indentured servitude.
Thanks Excellent post.
Agreed... Great post...
now... if we can get similar banks in every state... and unite them.... supporting them with a new "Social Reserve Bank" .... (as opposed to alliance with the FED) .... new job creation... ( focusing on less-bottom-line-profits.... and more on social and infrastructure prosperity) .... will flourish like never before ...
added... missed LeoYo's "Union Reserve Bank" .... ;) same concept
And let us not forget the Lakota Nation which is out there too. Good to know at least some people in North America are still thinking straight and free.
Why does the ND example have ANYTHING to do with the fed?.
Is the ND bank REPLACING anything that the fed does.?
I like the idea of the state bank but I think this is funded by OIL profits.
Where would Wisconsin or Oregon or Mississippi get the money to fund a "state" bank?
Pertaining to the 'OIL profits', the Bank of North Dakota was founded in 1919. Oil wasn't discovered in North Dakota until 1951. The industry boomed for a while after 1978. Nevertheless, agriculture remains the largest industry in North Dakota.
Boomed for a while? It's booming right now. It even has it's own wiki entry.
http://en.wikipedia.org/wiki/North_Dakota_oil_boom
Pertaining to your first two questions.
Political Football Over Disaster Relief: Another Argument for Public Banking
Friday, 04 January 2013 09:17 By Ellen Brown, Truthout | Op-Ed
http://truth-out.org/opinion/item/13701-political-football-over-disaster-relief-another-argument-for-public-banking
Post-Sandy and post-Katrina "disaster relief" has been characterized by more profit-taking by big business than relief to families and small businesses. The Bank of North Dakota demonstrated it doesn't have to be that way after flooding devastated Grand Forks in 1997.
In a shameless display of putting politics before human needs, Congress began 2013 still scrapping over a $60 billion Hurricane Sandy relief bill fully nine weeks after the disaster hit. And if the Katrina experience is any indication, the bill may not bring adequate relief to struggling and displaced homeowners even when it is finally passed.
The damage wrought by Sandy to New York and New Jersey coastal areas was similar in scale to that to New Orleans from Hurricane Katrina in 2005. Just two weeks after Katrina hit, Congress approved $62.3 billion in emergency appropriations, along with numerous subsequent emergency funding requests to cover the damages, which topped $100 billion. Yet as noted on the Occupy Sandy Facebook page, federal relief funds post-Katrina were gutted in favor of "privatizing and outsourcing relief, making room for predatory lenders, disaster capitalists, and gentrification developers." According to a report by Strike Debt, the vast majority of FEMA's resources and efforts are spent on public assistance programs that provide infrastructure restoration. Individual victims of disaster are for the most part just offered personal loans - loans that have many features of predatory subprime lending.
Disaster victims are now being expected to shoulder relief expenses that used to be shared publicly. Most people believe they are covered by their insurance policies or by the Federal Emergency Management Agency (FEMA), but many disaster victims have found that their insurance policies include obscure provisions that exclude coverage, and the only aid that FEMA gives to individuals is the opportunity to take on more debt.
It is a failing of our austerity-strapped federal disaster relief system that it can offer little real help to individuals; and it is a failing of our private, for-profit insurance system that the legal duty of management is to extort as much money as possible from customers while returning as little as possible to them, in order to maximize shareholder profits.
Most Sandy Victims Are Left Stranded
The report by Strike Debt was based on observations made at a community meeting in Midland Beach, Staten Island, on November 18, 2012, as well as on interviews with FEMA and Small Business Association (SBA) representatives, volunteer workers, local business owners, and residents throughout New York City. According to the report, there are three main sources of financial support being offered to Sandy victims: insurance, grants, and loans. Federal support is available only once private insurance has been exhausted. In many cases, residents who believed they had insurance that would cover the Sandy disaster are finding that, for a variety of reasons involving the fine print in the policies, their claims are being denied. Difficult-to-understand clauses allow insurers to deny coverage depending on such things as whether the storm was officially classified as a hurricane or a tropical storm.
For federal aid programs, according to the report: • Victims are required to first apply for loans before qualifying to apply for FEMA aid, placing the economic cost of the disaster on the individual victim.
• Aid programs favor those who can take on debt, further exacerbating pre-existing inequalities among residents.
• Federal programs are inflexible and fail to meet even basic individual and community needs.
• Relief options are not clearly communicated or well understood. Policies are so complex that even lawyers are confused.
Except for temporary living costs, FEMA grants are accessible only after the homeowner, renter or business applies for an SBA loan. If the applicant qualifies for a loan, he or she is not likely to be provided further FEMA aid. Disaster loans are made through FEMA on the basis of credit history, and favorable interest rates are available only if the applicant cannot get credit elsewhere. That means favorable interest rates are offered only if an applicant cannot qualify for credit through a commercial bank. When the banks got in trouble themselves, the Fed dropped the Fed funds rate (the rate at which they borrow from each other) to nearly zero. But no such relief is extended to disaster victims.
There is no FEMA money for small businesses other than loans, and businesses have difficulty taking on debt when they don't know when they will be able to reopen. The small business application is reported to be at least 30 pages long, and is often difficult to complete because flooding has destroyed much of the required paperwork.
Many homeowners were strained by mortgages that were underwater prior to the storm, and their properties have now depreciated to the point of having no market value at all. They have no choice but to try to rebuild, but how can they take on more debt? The focus on lending, says the report, moves money from the victims of disaster into the hands of loan servicers, who make enormous profits off these loans.
A Better Model: Disaster Relief in North Dakota
That is the state of disaster relief in most parts of the country, but one state has developed a different model – North Dakota. North Dakota is the only state in the union to have its own state-owned bank. The Bank of North Dakota (BND) has a mandate to serve the public interest, and it has no shareholders other than the state itself. That gives it wide-reaching flexibility in emergencies, allowing it to act quickly to catalyze and coordinate resources.
The BND's emergency capabilities were demonstrated in 1997, when record flooding and fires devastated Grand Forks, North Dakota. The town and its sister city, East Grand Forks on the Minnesota side of the river, lay in ruins. Floodwaters covered virtually the entire city and took weeks to fully recede. Property losses topped $3.5 billion. The response of the state-owned bank was immediate and comprehensive, demonstrating a financial flexibility and public generosity that no privately-owned bank could match. Soon after the floodwaters swept through Grand Forks, the BND was helping families and businesses recover. Led by then-president and CEO John Hoeven (future North Dakota governor and US senator), the bank quickly established nearly $70 million in credit lines – to the city, the state National Guard, the state Division of Emergency Management, the University of North Dakota in Grand Forks, and for individuals, businesses and farms. It also launched a Grand Forks disaster relief loan program and allocated $5 million to help other areas affected by the spring floods. Local financial institutions matched these funds, making a total of more than $70 million available.
Besides property damage, flooding swept away many jobs, leaving families without livelihoods. The BND coordinated with the US Department of Education to ensure forbearance on student loans; worked closely with the Federal Housing Administration and Veterans Administration to gain forbearance on federally-backed home loans; established a center where people could apply for federal/state housing assistance; and worked with the North Dakota Community Foundation to coordinate a disaster relief fund, for which the bank served as the deposit base. The bank also reduced interest rates on existing Family Farm and Farm Operating programs. Families used these low-interest loans to restructure debt and cover operating losses caused by wet conditions in their fields.
To help finance the disaster recovery, the BND obtained funds at reduced rates from the Federal Home Loan Bank. These savings were then passed on to flood-affected borrowers in the form of lower interest rates.
The city was quickly rebuilt and restored. As a result, Grand Forks lost only 3% of its population between the 1997 floods and 2000, while East Grand Forks, right across the river in Minnesota, lost 17% of its population.
Bringing Real Security to Communities
Just as we can rely on our local public fire department to be there for emergencies, so a public bank can be relied on to lend a true helping hand when private banks, insurers, and FEMA may not. Unlike private insurers that are prone to withdrawing coverage on obscure technicalities, a publicly-owned bank is not beholden to shareholder profit-seeking; and unlike federal disaster relief agencies, a public bank is not dependent on a penny-pinching Congress for funds. Like private banks, it has the ability to create money in the form of bank credit on its books, and it has access to very low interest rates. But private banks have a business model that requires them to take advantage of these low rates to extract as much debt service as the market will bear. A public bank can pass these low rates on to disaster victims and local governments.
When the biggest private banks needed an emergency bailout, trillions of dollars in nearly-interest-free money came flooding their way. Why? As Sen. Dick Durbin said of Congress in 2009, "Wall Street owns the place.” The private banking industry also owns all twelve branches of the Federal Reserve. If we the people want the sort of security in emergencies that is available to Wall Street banks, we need to own some banks ourselves.
Just as Occupy Sandy has pre-empted the official rescue agencies through community organizing, so a Public Bank of New York or New Jersey could pre-empt the vulture Wall Street banks and finance the state's own rebuilding. Twenty states have now introduced bills of various sorts to establish their own banks. For more information on the campaign in your state, see here.
This piece was reprinted by Truthout with permission or license.
If we keep talking about this, North Dakota might find it's getting a regime change, whether it wants one or not.
Would the Frackers want that? It might change their status.
I'm not up with fracking in ND, DK.
But if word gets out about the success of localised banking, as opposed to centralised criminal bankstering, there might be a new type of "bank run" happening shortly.
Everyone should go local Bank or Credit Union. The money stays in the community.
When I look at the history of the fed res in both of our countries, I strongly agree with you. Sure, there is a need for an international investment arm of the federal govt, but to hand this over to a handful of self-interested, countryless cronies is asking for trouble.
Bensdad has posted an article that I think more fully addresses the issue of North Dakota's oil and its bank.
http://occupywallst.org/forum/why-is-socialism-doing-so-darn-well-in-deep-red-no/#comment-960075
Considering that you began this post by saying:
"Why is financial socialism still alive in North Dakota? Why haven't the North Dakotan free-market crusaders slain it dead?"
I find it strange that you would link to the paper:
"THE ROLE OF PRIVATE TRANSPORTATION IN AMERICA’S 19th-CENTURY “INTERNAL IMPROVEMENTS” DEBATE"
in support of an argument against public financing of infrastructure development. That paper seems to suggest that public financing is horrendously wasteful, and that financing through private capital is much cost effective since it is profit oriented.
What is it that you advocate, private or public financing for infrastructure?
by arturo (3112) from Guangzhou, Guangdong
To me, the claims of misconduct, as unquestionable as the author asserts them to be, are mainly the arguments of those who wanted to destroy the national bank in favor of British style speculative finance.
The claims of misconduct were not arguments. As already seen, they were a matter of official report made known to all of Congress.
"It was not until late in the month of August that I received from the Government directors an official report establishing beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money, and that, in violation of the express provisions of its charter, it had by a formal resolution placed its funds at the disposition of its president to be employed in sustaining the political power of the bank."
I see you question the accomplishments that I listed for the 2nd national bank, but I don't see that you've disproved any of them. I can ask my source, LPAC, the publishers of the material I've cited, to see if they can tell me where they got the information on the projects invested in by the bank.
One need not disprove what hasn't been established. For example, you listed the Cumberland Valley Railroad.
The initial cost of building the road, including a bridge across the Susquehanna, was estimated before construction at $564,064, and the average annual receipts of the road at $284,617.50, calculated at 100 passengers each way per day at 3 cents per mile, and 35,000 tons of through freight and 51,950 tons of local freight, at 4½ cents per ton per mile. $642,000 was raised by local stock subscription and construction began in the Spring of 1836.
Funding for the Cumberland Valley Railroad had been raised by local stock subscription and by February of 1836, the charter of the Bank of the United States had expired after which it had become a private corporation in Pennsylvania that had failed miserably in the following five years. Thus, you have yet to show how the Cumberland Valley Railroad, which had been funded by local stock subscription and had begun construction after the Second Bank of the United States had expired, had somehow been a Bank accomplishment.
Regarding slavery, you say that a speech proves that Jackson had no interest in the spread of slavery, but I think you can find many fine speeches by neocons as well expressing that free trade policies were not intended to create sweat shop labor in China.
What system is it that you advocate? Socialism? Free trade capitalism?
Regarding slavery, I never said Jackson had no interest in slavery. I pointed out the simple observable fact that contrary to the claim of your source, the dishonestly quoted sections of his speech had nothing to do with the issue of spreading slavery.
Regarding the link, I find it strange that you would ignore the fact that I had presented it in reply to you as a source of information on the history of the internal improvements that had been going on with and without the Bank yet now you pretend that I have somehow linked it to the initial article I had posted.
As for what I advocate, you have only to read http://occupywallst.org/forum/free-democracy-amendment/ to know that.
The Report of the Committee of Investigation into the Bank’s affairs, lists investments of the bank, you can find some of them around page 58:
http://books.google.com/books?id=hKM7AAAAYAAJ&pg=PA63&lpg=PA63&dq=report+of+the+board+of+directors+of+the++bank+of+the+united+states+nicholas+biddle&source=bl&ots=_KvJvK5_UZ&sig=PwIKYP4VEs0LDtDnGuAFm64wMX0&hl=en&sa=X&ei=30pzUbfgLofP0gGJ94HoCA&ved=0CD8Q6AEwAzgK
A list of investments is not a list of accomplishments, especially when the list pertains to the investments of the bank's final failing five years when it was no longer the national bank.
Oh well, you still support support the idea of having a public bank today, though without private investment. That's better than what we have now, so good luck with promoting the idea.
Thank you.
At least we can agree on that.
This should be a much bigger story, another example of media missing the boat.
You realise dont you that red=socialism?
Red is used to represent a lot of things including the Republican Party that dominates North Dakota.
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Nope.
Red = the GOP.
Look on any election map.
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