The Story of Real Money (Entry 276)
In the same month that Alexander Dallas was appointed Secretary of the Treasury, Congress sent him an inquiry about the state of the nation’s credit worthiness, whereupon the Secretary responded with a lengthy reply and a plan for the creation of a 2nd BUS. It was October of 1814 and mid-term elections around the nation were in full-swing. Alexander’s response set into motion several months’ worth of congressional debate that ended with no decision.
Although the debate was tumultuous, it was not about whether a 2nd BUS should be created, but rather the form that it should take in order to achieve its intended goals. Principal among the issues were a uniform currency, the resumption of specie redemption, and the repayment of war debt.
By the spring of 1815 it became clear to everyone that the war had ended, Madison withdrew his support for the bank, and Congress agreed to pause further discussion about its creation until the aftermath of the war was clearly understood. The newly elected 14th Congress had yet to convene, and there would be a change of guard.
Once again, Congress and the President had made it clear to one another that the “necessary and proper” clause of the US Constitution was open for interpretation, and that if we, the People did not rise to force our government to honor the principles to which Congress and their president were constitutionally bound, then “necessary and proper” might very well become “convenient and efficacious”, and pandora’s box would be opened still again.
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
US Constitution, Article I, Section 8, § 18
Although the hesitancy on the part of Congress and the President demonstrated clearly that all was not lost, Congress continued to stumble on the competing notions of “necessary” and “proper”.
For, after several failed attempts throughout the year of 1815 to persuade America’s large port-city banks outside of New England to resume the redemption of specie — what was critical to the interests not only of the international merchant community, but also the US Government —, Alexander Dallas encouraged President Madison to urge the newly convened 14th Congress to pick up the mantle of a 2nd BUS once again, and the word “proper” was substituted with the word “efficacious”.
I suppose you could call it 19th century post-modernism, but post-modernism has never been very modern, for leaders have sought, since time immemorial, to persuade their peers with fanciful and deceptive oratory that sparks the imagination, excites the spirit, and renders reason unto havoc through the subtle, and not so subtle change of the meaning of words.
In any case, it was now December 4th 1815, and Christmas was rapidly approaching. Nearly a year had past since the 13th Congress had placed on hold further consideration of a 2nd BUS; and once again, President Madison approached Congress to express the “need” for legislation on the 2nd BUS. President Madison’s primary objective was the introduction of a uniform national currency. If the bank legislation could not achieve this objective, he would continue to veto whatever was laid before him.
Cambitas-sine-nominé was not on the agenda, however. It was still not understood, or dutifully ignored, because it was not a path for the few to “get rich quick” at the expense of the many. Indeed, those who understood and rejected it surely believed that the many were benefiting from the counterfeit that they were producing. Indeed, they looked around the world and saw that those countries with central banks were thriving, as if counterfeit currency were the reason for their success, and not the budding industrial revolution unleashed by the 17th and 18th century Enlightenment.
The bankers were now in charge in Great Britain, and the people were being pushed aside, but the brutality of the industrial revolution was only beginning to be felt. For, we humans are creatures of habit, and although a very adaptive specie, we need time to put aside our old habits in favor of new, else chaos reign, and we become the pawns of those who believe that they know what is best for all of humanity. The WEF is real, but, in principle, it is as old as the Druid priests of prehistoric England and humanity itself.
It was either cambitas (hard money) with cambitas-sine-nominé (a one-to-one paper reflection of the real thing) or inflationary cambitas-ex-nihilo (soft money), a virus that will out, no matter how sophisticated one’s attempt at genetic engineering might be. For, in the end, one cannot cultivate a lie, and not expect it to grow.
And, for just how long do you believe that you can pretend that your lie is the truth, until it becomes so preponderant and so destructive that its falsehood becomes obvious to everyone, and everything for which you have ever stood is brought into question? This is, of course, where we are today, but once again, let us not jump ahead.
It would take another four months before Congress could agree on a plan that the President would accept, and on April 10th 1816 the 2nd BUS was signed into law. Unfortunatley, the US Government had once again assumed for itself the undelegated right of incorporation of public-private entities — a matter that if properly settled would have required an amendment to the US Constitution. It was never put to a vote as an amendment, for the likely reason that it would never have passed.
In an effort to compel everyone who did business with the US Government to play the two-faced, counterfeit game of fractional-reserve banking established by the British parliament in 1694 and promoted right here at home by Roger Morris and Alexander Hamilton toward the end of our War of Independence from the British empire, Congress passed a joint resolution on April 30th announcing that, after February 20th 1817, the US Government would no longer recognize banknotes issued by State-chartered banks that did not honor specie redemption. Furthermore, Congress insisted that all other payments made to the US Government would be made in specie, 2nd BUS banknotes, or Treasury notes.
The 2nd BUS opened its doors on May 10th 1816, and once again counterfeit (falsehood) and cambitas (truth) would circulate throughout the American economy as one and the same, “indivisible” with liberty and “justice” for all.
Many of the US Government’s debt obligations required payment in specie after the war’s conclusion, and the war was finally over. So, even before the February 20th 1817 deadline Alexander Dallas, once again, appealed to the US banking industry to begin specie redemption. This time, however, he limited his request to only small denominated banknotes of 5 dollars-specie or less. Little came of his exhortation. It was clear; most American banks simply did not have the specie necessary to honor his request. Gresham’s law had prevailed still again.
In October of 1816 Alexander Dallas retired in exhaustion and died several months later on January 16th 1817. He was replaced by William H. Crawford (1772 - 1834), President Madison’s Secretary of War at the time of Alexander’s death.
The 2nd BUS got off to a very bad start.
In liberty, or not at all,
Roddy A. Stegemann, First Hill, Seattle 98104
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