America’s first central bank, the Bank of North America, was created in 1781 by Continental congressman Robert Morris, who modeled the bank after the Bank of England. The bank was formed before the Constitution was drafted and was wrought with fraud and plagued by inflation caused by the creation of baseless “fiat” currency. The bank lasted for three years. Morris’s former aide, Alexander Hamilton, became secretary of the Treasury and in 1791 headed the next attempt at a central bank by establishing the First Bank of the United States. He was strongly opposed by Jefferson and his followers. In 1811, the charter of the First Bank of the United States was not renewed.
Jefferson knew from British and European history that a central bank trading on interest could quickly become the master of a nation, noting to John Taylor in 1816 that “ . . . the other nations of Europe have tried\ and trodden every path of force or folly in fruitless quest of the same object, yet we still expect to find in juggling tricks and banking dreams, that money can be made out of nothing. . . . [B]anking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” Jefferson added, “Already they have raised up a money aristocracy. . . . The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” Jefferson believed that instituting a central bank would be unconstitutional.
“I consider the foundation of the Constitution as laid on this ground [enshrined in the Tenth Amendment]: That ‘all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.’ To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition. The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States, by the Constitution.”
Despite Jefferson’s lobbying, the financial chaos that resulted from the War of 1812 prompted Congress to issue a twenty-year charter to the Second Bank of the United States in 1816. Andrew Jackson, the first president from west of the Appalachian Mountains, denounced the central bank as unconstitutional and as “a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country.” This central bank ended in 1836, after President Jackson vetoed a congressional bill to extend its charter.
Much to bankers’ dismay, Jackson fully eliminated the national debt by the end of his two terms as president. It was probably no coincidence that America’s first assassination attempt was made on Jackson by a man named Richard Lawrence, a man who claimed to be in touch with “the powers in Europe,” who had promised to intervene if any attempt was made to punish him. Lawrence was a painter, and many speculate that at the time the lead in his paints had caused him to become mentally unbalanced and fancy himself the rightful king of England. After stalking Jackson for several weeks, on January 30, 1835, a particularly humid day, he approached the president coming from a funeral. Stepping suddenly from behind a pillar, Lawrence pulled two pistols but both misfired, most likely due to damp powder. Lawrence was swiftly wrestled to the ground by onlookers, including Congressman Davy Crockett aided by Jackson. At his trial, Lawrence was prosecuted by Francis Scott Key, author of “The Star-Spangled Banner.” The jury took only five minutes to find Lawrence insane and he spent the rest of his life in mental institutions, dying in 1861. Although many persons, including Jackson, believed Lawrence was part of a larger conspiracy, at the time there was no evidence to prove whether he was merely a lone-nut assassin or an early-day patsy somehow manipulated into attacking Jackson, an implacable enemy of the international bankers. However, it might be worth noting that in two successful presidential assassinations—those of Abraham Lincoln and John F. Kennedy— both men were attempting to thwart the international bankers— Lincoln by issuing his own money, greenbacks, and Kennedy in bypassing the Fed with U.S. notes in 1963.
“[T]here was an occasion near the close of 1910, when I was as secretive, indeed, as furtive as any conspirator. . . . I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System . . . ,” wrote Frank A. Vanderlip, one of the men who created the Fed. He went on to become president of New York’s National City Bank, a forebear of today’s Citibank.
What Vanderlip was referring to was a secretive trip on the night of November 22, 1910, by seven men who perhaps held as much as one fourth of the world’s wealth. Jekyll Island was J. P. Morgan’s fashionable hunting retreat off the coast of Georgia, and the men went under secrecy so strict that they only used first names when addressing one another and brought in new servants who were unaware of their identities.
During their week on Jekyll Island, the men worked on a plan for a banking reform that the government deemed necessary after a series of financial panics in 1879, 1893, and 1907. In fact, Princeton University president and future U.S. president Woodrow Wilson proclaimed that the solution to the financial panics laid in the appointment of “a committee of six or seven public-spirited men like J. P. Morgan to handle the affairs of our country.” Cries arose for a stable national system that could regulate banking and prevent crises and panics. Today, many researchers believe these panics were artificially created as a pretext for the “reforms.”