Mrs. Madville Times glances up briefly from her intense theological studies to forward me another quote for our plutocracy file BUT THIS QUOTE IS NOT FROM LINCOLN!
I see in the near future a crisis approaching. It unnerves me and causes me to tremble for the safety of my country. The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes.
I have two great enemies, the Southern Army in front of me & the financial institutions at the rear; the latter is my greatest foe. 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 the wealth is aggregated in the hands of a few, and the Republic is destroyed.
--NOT written by President Abraham Lincoln, Nov 21, 1864 (letter to Col. William F. Elkins)
Now I've been called a tyrannical Communist and Marxist for my occasional chastisement of the corporate giants trying to bend the state to their will. Would any of my favorite apologists for plutocracy care to level the same charges against President Lincoln?
Reminder: Money is power. Concentrating money and power in fewer and fewer hands is bad for working people and for liberty. Oh yeah, and corporations aren't people!
Quite a surprising position given that old 'honest' Abe presided over both the Legal Tender Act (1863)[see http://en.wikipedia.org/wiki/National_Banking_Act] and both National Currency Acts. The net effect of which to gradually siphon state funds into federal coffers by levying 10% taxation on all bonds not of federal issue. This had the effect of driving them out of the money supply and creating large demand for the new federal currency (greenback) which was of course backed by these same federal bonds. It was in fact his presidency which took the first steps toward central banking, largely because he had to fund a big and expensive civil war, but more ominously to subtly shift control of the money supply from local to federal hands. His 'greenbacks' resulted in widespread currency inflation and eventually the issued greenback 'dollar' was worth about 35 cents in terms of gold.
ReplyDelete(1) control of the money supply in local hands -- how would that work?
ReplyDelete(2) How did the greenbacks cause the inflation you mention?
on (1):
ReplyDeleteThe money supply was not always a federally-mandated monopoly. Prior to the Civil war / Lincoln era, states as well as federal entities, in fact even you, had every right to open a banking establishment. Even with today's technological capabilities one can see what a nightmare of complexity and opportunity for corruption that would, and in many cases did, create. Charters could be authored by state or local authorities (far easier to influence or put political pressure on, and there were no requirements nor standards -- for experience handling money, for initial investment capital, nor anything else but the whim and fancy of the issuers of the charters. And there were in fact multitudes of fly-by-night operators that would spring up, issue large amounts of bank notes for deposits, and promptly disappear with your real money, leaving you with their useless paper. So the short answer would be, largely it did NOT work. The National Banking Act came in response to this exploitation in part to help stop the abuse of the unregulated money markets... we required, and in fact wanted, a central banking authority to regulate and qualify banks and lenders.
on (2):
Issuance of the greenback was eventually made illegal, an effort headed by (note the name) Secretary of the Treasury, Salmon P. Chase - but it had also violated the norms which had heretofore guided monetary policy - the law that was later passed required an asset-backed currency, or "sound money", but prior to that, the greenback was the first currency which substituted a 'promise to pay' in the form of a claim on a federal bond (the fate of which, in reality, greatly depended on the outcome of the war!) instead of a bill or promise to redeem for a fixed amount in hard currency. As luck would have it, the greenback WAS eventually partially redeemed with gold (at 1/3 its issuance and note value), but the popular understanding is often that the bill itself was redeemable for gold, which is wholly untrue. Prior to the greenback, the requirement for a reserve provided some form of a check on the uninhibited issuance of money, and removed the direct obligation to pay the holder in hard currency. It probably did not take long to discover that one could simply continue to issue these government bonds and could thus keep the money supply churning along, producing whatever amount of money was necessary to fund your ever-growing expenditures. The fact that the greenback in 15 years lost 2/3 of its face value certainly suggests inflation, though of course this can't be proven.
Apologies for the long-winded reply; I'm going to take penance by doing something useful with the rest of the evening.