Monday, November 01, 2010

Unregulated Banks

Washington's Blog has this to say about one of the underlying caused of the American Revolution:

... when Benjamin Franklin went to London in 1764, this is what he observed:

When he arrived, he was surprised to find rampant unemployment and poverty among the British working classes… Franklin was then asked how the American colonies managed to collect enough money to support their poor houses. He reportedly replied:

“We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.”

In 1764, the Bank of England used its influence on Parliament to get a Currency Act passed that made it illegal for any of the colonies to print their own money. The colonists were forced to pay all future taxes to Britain in silver or gold. Anyone lacking in those precious metals had to borrow them at interest from the banks.

Only a year later, Franklin said, the streets of the colonies were filled with unemployed beggars, just as they were in England. The money supply had suddenly been reduced by half, leaving insufficient funds to pay for the goods and services these workers could have provided. He maintained that it was "the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War." This, he said, was the real reason for the Revolution: "the colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction."

The Second Bank of the United States was killed by Andrew Jackson because it foreclosed without warning on mortgages. It earned the nickname "The Many Headed Monster" Click the link above and see if what the bank did then isn't rather similar to what we're going through now.

If this is such a recurring problem, the solution that was found by Andrew Jackson when he pulled government revenues that starved the Monster and FDR when he passed regulations that controlled how far they could go. Could be used today. At least in FDR and Andrew Jackson we had Presidents with balls.


RealityZone said...

They select so we may elect.
The Banksters are the government.
We gave up our sovereignty when we ceased to control our own currency.

P M Prescott said...

Absolutely right.