Saturday, 30 March 2013

USA & Australia Public v Private battle over money supply system.

National Banking: Securing the Common Good
July 2012
By Robert Barwick 

National banking is the means by which governments can direct public credit into developing the physical economy of the nation. It is the government’s responsibility to raise the living standard of its citizens, anchored upon infrastructure projects for advanced power, water, transportation and health and education systems. These cumulatively serve as a “platform” for the development of the high-technology manufacturing and agricultural industries that ensure the economy’s ability to meet human needs.

From the time that France in the 15th century emerged from the feudal dark ages of Europe as the first sovereign nation-state in modern history, good monarchs such as France’s Louis XI (142383) used their wealth and power to organise their kingdoms for the good of all their people—the “Common Good” as Louis XI called it. This was the purpose for which the American colonies launched their 1776-81 revolutionary war against the British Empire, and which they sanctified in the “General Welfare” clause specified in the Preamble to the U.S. Constitution, which governs the interpretation of any particular clauses within that constitution. Our Australian Labor Party was founded in the 1890s upon that American precedent, even taking the American instead of British spelling for “Labor” to declare their commitment to what they called the “Common Good”.

But such governments committed to the Common Good threatened the system of empires, a world order that stretched back to Babylon and even earlier, whereby a tiny ruling oligarchy controlled private monetary systems for their own benefit, and to control the masses of the population. From A.D. 1000 on, such empires were successively headquartered in Venice, Amsterdam, and then London. They wielded enormous power through privately owned central banks, stock markets, and their domination of world trade through such global, genocidal behemoths as the Dutch and British East India Companies, both of which continued Venice’s role as the hub of world trade, and its command of the world’s gold and silver bullion markets.
The American Founding Fathers overthrew that ancient oligarchical system, to establish the first republican system of government in the world, declaring the “general welfare” of all citizens as the raison d’être of the state. To establish their new government and secure the commitment to the general welfare, the Americans established the institutions of public credit and national banking as the bedrock of their republican system of government.

Alexander Hamilton

The American experience provides clear proof that the principle of national banking and public credit is inseparable from national sovereignty. Britain’s imperial rule was based on its monetary empire, centred in the privately owned Bank of England and British East India Company. The Massachusetts Bay Colony challenged this system already in 1652, by establishing its own mint to issue its own currency— the Pine Tree Shilling. Though issued in silver, that currency was not based on the value of gold or silver bullion (whose world supplies and prices were controlled by the Bank of England and the BEIC), but by the colony’s ability and intent to develop its physical economy. Typical was the Colony’s construction of the Saugus Iron Works, the world’s most advanced such industrial project at the time. The British Empire not only forbade such sovereign control over the colony’s fi nance, but revoked the Massachusetts Bay Company’s self-governing charter in 1684 and sent in a British military governor to rule the colony.

But American patriots led by Benjamin Franklin continued to advocate a sovereign currency system, as did Franklin in his 1729 A Modest Enquiry into the Nature and Necessity of a Paper-Currency. Franklin, a scientific genius hailed the world over for opening the door to man’s control over electricity, as well as a political leader, taught America’s Founding Fathers that only a sovereign system of credit could secure the political sovereignty for which they launched their revolution in 1776. General George Washington’s young aide-de-camp, and later inaugural Secretary of the Treasury, Alexander Hamilton, conceived of a system of public credit both to fi nance the war, and then to consolidate the American victory. Even as victory hung in the balance, Hamilton wrote to his key collaborator, the financier Robert Morris, about what was required to win fi rst the war, and then the peace:

“A plan must be devised, which by incorporating their means together, and uniting them with those of the public, will, on the foundation of that incorporation and union, erect a mass of credit that will supply the defect of monied capital, and answer all the purposes of cash; …in its progress, have the most benefi cial infl uence upon its future commerce, and be a source of national strength and wealth. I mean the institution of a National Bank.

“The tendency of the national bank is to increase public and private credit.... Industry is increased, commodities are multiplied, agriculture and manufactures flourish, and herein consists the true wealth and prosperity of the state….

“It is in a national bank, alone, that we can find the ingredients to constitute a wholesome, solid, and beneficial paper credit.” (From Letters to Robert Morris 1779-1781.)

Hamilton’s plan became the Bank of North America, which was indispensable to winning the revolution. But even after signing the Treaty of Paris in 1783, the formal peace between the new American republic and Britain, the British continued their aggression through other means: by trade and currency warfare against the thirteen American colonies, all of which had been bankrupted by the war, leaving their sovereignty still in peril. But in 1789, following the ratification of the U.S. Constitution and the inauguration of the newly constituted federal government, President Washington appointed Hamilton as his Treasury Secretary, to organise a public credit system as the bedrock of the new nation.

Hamilton’s first act was to establish the public’s faith in the credit of the U.S. government by issuing an ironclad guarantee that America would honour all of the debts which its colonies had contracted to win the war, and not to just cancel them, as many had called for because their magnitude made their repayment appear impossible. Hamilton insisted, instead, that such loans were the “price of liberty”, and must therefore be honoured by the new nation. He floated new loans to pay back the original debts, but directed the newly-expanded currency of which those loans were comprised in such a fashion as to be able ultimately to extinguish them: the expansion of America’s physical economy, its infrastructure and industries, would generate the revenue to repay the debt.

Thus secured, certificates of U.S. debt became a paper currency that could be exchanged for goods and services, which the public valued equally to gold and silver coins; but supplies of the latter were limited, and they were always subject to financial warfare by the British, who controlled the value and supplies of gold and silver, as had the Dutch and Venetians before them. In three groundbreaking reports to the U.S. Congress—the January 1790 Report on Public Credit, December 1790 Report on a National Bank, and December 1791 Report on Manufactures—
Hamilton elaborated his intent to develop the physical economy of the United States as the very essence of national sovereignty.

So informed, the U.S. Congress in 1791 passed Hamilton’s legislation to establish a national bank, the First Bank of the United States. Its defining feature was that specified in his Report on Manufactures, that “the creation of a debt should always be accompanied by the means of its extinguishment,” i.e., that public credit would be harnessed to develop the physical economy of the new nation. Less than twelve months after its establishment, Hamilton in December 1791 reported to Congress on the beneficial impact the bank had already had.

“Industry in general seems to have been reanimated,” he said, and “there appears to be in many parts of the Union a command of capital, which till lately, since the revolution at least, was unknown”.

By securing the national debt upon an expansion of the real physical economy of infrastructure, and of agriculture and industry, Hamilton explained that that apparently huge debt had become a “public blessing”, in that its certificates served as a reliable, expanded money supply. They were as “good as gold”, and so facilitated a still further expansion of the new nation’s physical economy.

The British Empire Strikes Back:
Aaron Burr and Wall Street

Humiliated by its defeat and panicked that America’s republican constitutional and public credit principles would unleash similar revolutions on the European continent and around the world, the British Empire schemed to crush America’s sovereignty from within and without. One of their chief agents was Aaron Burr, who established the private Bank of Manhattan in 1799 on Wall Street— already then a hub of British-backed private financiers and slave- and opium traders—to attack Hamilton’s national banking policies.3

In 1804, the expert marksman Burr assassinated Alexander Hamilton in a provoked duel. Soon thereafter, Burr wrote to the British Ambassador to Washington to offer his services to split up the United States by organising sectional rebellions, for which he was tried for treason in 1807. He fled to Britain, where he stayed in the home of Jeremy Bentham, Lord Shelburne’s chief intellectual hired gun and the British East India Company’s ideologist.

In 1811, Britain’s agents in the USA ensured that the 20-year charter of the First Bank of the United States was not renewed. Then came the War of 1812, in which Britain invaded and burned down Washington, D.C. before being defeated once again.

In the absence of a national bank, the British once again launched all-out trade and financial warfare against the American republic, as Bentham’s associate Henry Brougham (later Baron Brougham and Vaux) bragged of this warfare in a famous speech in the House of Commons on 9 April 1816, which included Britain’s “free trade” dumping of every conceivable product upon America, even at a loss, to wipe out America’s domestic manufactures: “Every thing that could be shipped was sent off; all the capital that could be laid hold of was embarked. … it was well worth while to incur a loss upon the fi rst exportation, in order, by the glut, to stifle in the cradle those rising manufactures in the United States, which the war [of 1812] had forced into existence contrary to the natural course of things.” The “natural course of things” meant that the British planned to keep America as merely a weak raw materials producer for the Empire—precisely as they have done to Australia today.

In disguise, Burr snuck back into the United States during that war to continue Britain’s financial and political subversion of the young republic. With no national bank, and after five years of financial chaos pivoted upon British economic warfare, the U.S. government in 1816 chartered the Second Bank of the United States along virtually identical lines to the first. It stabilised the financial system, and provided the means for an extraordinary economic development program of steel manufacturing, railroads and canals, called “internal improvements”.

National banking, combined with Hamilton’s other major policy initiative of high tariff protection to foster manufacturing, became known worldwide as the “American System”, in opposition to the “British System” of free trade and privately controlled “central banks”.

In 1832, future president Abraham Lincoln based his election campaign for the Illinois legislature on his support for the American System. “I am humble Abraham Lincoln,” he said.

I am in favour of a national bank, the internal improvement system, and a high protective tariff.”

Elected president in 1860, on the eve of the British-sponsored Confederacy’s declaration of succession and resultant civil war, Lincoln revived the American policy of public credit by issuing the famous “greenbacks” to finance the war, following the refusal by Wall Street financiers to make loans to the U.S. government to suppress the Confederate rebellion. In the midst of that existential crisis for the American republic, Lincoln delivered his immortal Gettysburg Address, in which he dedicated the site where the Union had won a crucial battle against the Confederacy, to the purpose for which he was leading that war: to ensure the continuance of the American System, that

government of the people, by the people, for the people, shall not perish from the earth.”

As the British had feared, the American System inspired people all over the world to desire sovereignty, including among Britain’s own colonial dominions. In Australia, the Rev. Dr. John Dunmore Lang enthusiastically championed American-style republicanism in his 1852 book, Freedom and Independence for the Golden Lands of Australia. To head off this potential, the British fabricated a democratic reform which they called “responsible government” (actually, a parliamentary façade of handpicked members of the British-created “squattocracy”), behind which the oligarchy’s private control over the financial system remained intact.
This was the typical British system, as summarised by in 1852 by British Chancellor of the Exchequer and future prime minister William Gladstone: “The hinge of the whole situation was this: the government itself was not to be a substantive power in matters of Finance, but was to leave the Money Power supreme and unquestioned.”

National Banking in Australia:
the Commonwealth Bank

Many other nations took their lead from the United States and employed various forms of public credit institutions for directing economic development;

Australia went so far as to establish a dedicated, Hamiltonian-style national bank—the Commonwealth Bank of Australia. In two distinct phases, from its inception in 1911 to 1923, and then from 1942-49, the Commonwealth Bank proved the power of national banking: it directed the public credit of Australia into the development of great infrastructure and crucial industries, including the Trans-Australian Railway; it financed Australia’s participation in WWI; and it financed the miraculous war-time economic mobilisation of WWII which transformed Australia from an agrarian backwater into an agro-industrial powerhouse, including the postwar great Snowy Mountains Scheme. Just as in the United States, the rise and fall of the Commonwealth Bank is the story of Australia’s battle for national sovereignty.

The American-inspired patriots of colonial Australia who fought for nationhood knew that national banking was the determining issue. Australia’s labour movement was born out of the bloody 1890 maritime and shearers’ strikes against the London banks, pastoral houses and shipping companies that controlled the colonial economy, and whose stranglehold would unleash the devastating crash of 1893. Already in 1891, NSW’s Labor Electoral League, one of the components which would form the Australian Labor Party, enshrined a commitment to national banking in its electoral platform, alongside a demand for “The federation of the Australasian colonies upon a national as opposed to an imperialistic basis….”

It was the expatriate American ALP politician King O’Malley who gave the Labor Party its deep appreciation of the workings and the signifi cance of national banking. In 1908 O’Malley convinced the federal Labor Party conference held in Brisbane to adopt a detailed national banking proposal in its fighting platform. In a five-hour speech in Federal Parliament the following year, O’Malley emphasised the importance of a national bank for Australia’s sovereignty:

We are legislating for the countless multitudes of future generations, who may either bless or curse us. … We are in favour of protecting, not only the manufacturer, but also the man who works for him. ... I propose the institution of a government national bank for managing the finances of the Commonwealth and the States. … Cannot honourable members see how important it is that we should have a national banking system … —a system that will put us beyond the possibility of going as beggars to the shareholders of private banking corporations? The movement of the money volume is the vital monetary problem—the master-key to the financial situation. Through the control of this movement prices may be made to rise or fall or remain substantially steady. … Such power is an attribute of sovereignty … and ought to belong to none but the sovereign people exercised through … Parliament and Government in the interests of the whole people.”

O’Malley triumphantly proclaimed the precedent for his proposed new national bank. “I am the Hamilton of Australia”, he declared. “He was the greatest financial man who ever walked the earth, and his plans have never been improved upon. … The American experience should determine us to establish a national banking system which cannot be attacked.”

Labor vs. the Money Power

To force the ALP caucus to implement the national banking policy, over the opposition of Melbourne’s British-controlled Collins Street banks, O'Malley formed what he called the “Torpedo Brigade” among Labor MPs. O’Malley and his allies pushed through the Commonwealth Bank Act in December 1911, and O’Malley personally handpicked Denison Miller to run the new national bank, exhorting him, “You have a chance to make history, Brother Miller, Australian history, which will become world history. Think the matter over deeply. And accept the job. Decide to make history— I’m sure you’re the man to do it.” In his 1962 book, The Great Bust, former New South Wales Treasurer and later NSW Prime Minister Jack Lang documented the terror which Miller and the Commonwealth Bank had struck into the British oligarchy, until Miller’s untimely death in 1923:

In Australia the war had been financed by the then newly established Commonwealth Bank. It had found all the money to keep the armies abroad, and also to finance the producers at home. It had financed the Commonwealth Shipping Line deal for Hughes. Denison Miller had gone to London after the war had finished and had thrown a great fright into the banking world by calmly telling a big bankers’ dinner that the wealth of Australia represented six times the amount of money that had been borrowed, and that the Bank could meet every demand because it had the entire capital of the country behind it. The Bank had found £350 million for war purposes. A deputation of unemployed waited on him after he arrived back from London at the head office of the Commonwealth Bank in Martin Place, Sydney. He was asked whether his bank would be prepared to raise another £350 million for productive purposes. He replied that not only was his bank able to do it, but would be happy to do it. Such statements as these caused a near panic in the City of London. If the Dominions were going to become financially independent of the City of London, then the entire financial structure would collapse.”

Lang went on to describe the City of London’s intention to bridle the Commonwealth Bank, by creating a supranational banking structure that would take control over the finances of all nations, constituting a de facto world government. The subjugation of the banking system of Europe today, under the European Stability Mechanism (ESM) demanded by London and related financiers, is a dead ringer for the process exposed by Lang:

Basically it was a problem of banking. Some formula had to be devised which would enable such local institutions as the Commonwealth Bank of Australia to be drawn into the City of London’s net. The financial experts studied the problem deeply. Out of their deliberations emerged the plan to centralise the control of all banking throughout the Empire by channeling it directly into the supervision by the Bank of England. The Bank of England was to become the super Bankers’ Bank. … The Bank of England took up the idea of Empire control most enthusiastically. It was even decided to aim at a World Bank, to be run by the League of Nations, which would control the credit of the world. The grand idea was that one single Board of Directors would make the decisions which would determine the economic policy of the world. The bankers were to be the supreme rulers. Naturally, the Governor of the Bank of England expected to be at the apex of the system. If, for example, the Bank of England could control the Commonwealth Bank of Australia there should be no impediment in the way of controlling the government of the country as well. … The death of Miller removed at a critical moment the one man capable of defending the citadel of Australian fi nancial independence.”

Notwithstanding the remarkable accomplishments of the Commonwealth Bank, its mere twelve years of operation, before private financiers seized control of it following Miller’s death, were not enough for the Bank to break the British monetary stranglehold on Australia. Frank Anstey, one of O'Malley’s former Torpedo Brigade members and the mentor of future prime minister John Curtin, showed in his 1921 book, The Money Power, that the issue was understood to be national sovereignty:

Australia is a mere appendage of financial London, without distinct economic existence. ... London is, so far, the web centre of international finance. In London are assembled the actual chiefs or the representatives of the great financial houses of the world. The Money Power is something more than Capitalism. ... These men constitute the Financial Oligarchy. No nation can be really free where this financial oligarchy is permitted to hold dominion, and no ‘democracy’ can be aught but a name that does not shake it from its throne.”

Indeed, when Miller died in 1923 the London banks directed the Australian government to hand control of the bank to a board of private businessmen, who promptly turned off the tap of public credit. During the Great Depression, the privately controlled board of the Commonwealth Bank refused to follow a government directive to issue credit for public works— a plan to alleviate the 30 per cent unemployment, on the successful model being applied by U.S. President Franklin D. Roosevelt. This defiance of government policy, by the board of the bank, caused such a scandal that in 1936 a Royal Commission was established to investigate banking in Australia. The commission found that the government should be the ultimate authority over the banking system, findings ignored by the Lyons-Menzies governments.

In a 1937 speech to the Labor Party’s election campaign launch in Fremantle, WA ALP leader John Curtin reiterated Anstey’s 1921 warning that there could be no Australian sovereignty without government control over the nation’s finances. Curtin demanded restoration of the Commonwealth Bank’s original charter, and that the Bank be freed from the vice of private financiers and put back under government control:

If the Government of the Commonwealth deliberately excluded itself from all participation in the making or changing of monetary policy it cannot govern except in a secondary degree.”

In 1939, on the eve of the war, the aging King O’Malley again went to bat to re-establish the Commonwealth Bank under its original purpose and charter, as opposed to its domination and speculative misuse by private fi nanciers. In his pamphlet Big Battle, O’Malley insisted that the individual rights people believed were theirs could not be guaranteed without sovereign control over credit, and that the purpose of national banking was to facilitate the creation of tangible, physical wealth, as opposed to the inevitably disastrous “fog wealth” of private banking speculation:

“Permanent wealth is produced by the slow process of industry, combined with skill and the manipulation of capital. Fog wealth is produced by the rapid process of placing one piece of paper in the possession of a bank as a collateral security for two pieces of paper. Some of the enormous quantity of paper which is being created now will sooner or later collapse. But with the Commonwealth Bank capable of sustaining legitimate credits, there can come no panic which will again destroy the market value of intrinsic values, ruin debtors, deprive workers of work, and produce general distress. Oh! Would that I possessed the power to arouse the Australian people to the imperative importance of reviving the Commonwealth Bank!”

After the War

The Commonwealth Bank was indeed revived by John Curtin and Ben Chifley during and immediately after WWII, with stunning success. But the British Crown’s Privy Council overturned Chifley’s bank nationalisation legislation, which had been passed by both houses of Parliament in 1949, and soon Labor was out of power for the next 23 years. During that period Prime Minister Sir Robert Menzies, a professed admirer of Hitler and Mussolini during the 1930s and a notorious lackey of the anglophile Melbourne financier Sir Staniforth Ricketson, finished off what was left of the Commonwealth’s function as a national bank.4 He established the Reserve Bank as an independent central bank with control over the nation’s finances, and appointed as its first governor a British-educated Fabian, H.C. “Nugget” Coombs. As Minister of Post-War Reconstruction, Coombs had ripped up most of Labor’s grand postwar reconstruction plans. He gloated of the globalist control over banking when he said of himself, “I am a member of the international freemasonry of central bankers.”

Remnants of a public credit policy continued to exist in Australia, through the Commonwealth Development Bank, the Australian Industry Development Corporation (AIDC), and the various state banks, which enabled the federal and state governments to direct lending into farming, manufacturing and small business. In 1981, under the direction of a cabal of investment bankers centred in Hill Samuel Australia (later renamed Macquarie Bank), a subsidiary of the City of London’s Hill Samuel & Co., Ltd., the Committee of Inquiry into the Australian Financial System (the Campbell Committee) demanded sweeping banking deregulation, including the elimination of all such public credit institutions. To its eternal shame, it was the Labor Party, under Fabian traitors Bob Hawke and Paul Keating, that delivered on the City of London’s demands upon assuming power in 1983.

Keating deregulated the banks, exposing Australia to the predations of foreign banks; fl oated the dollar; amalgamated unions to bust their bargaining power; annihilated manufacturing by slashing tariffs (to “enhance competition”); and privatised major public assets, including the Commonwealth Bank. As revealed in Keating: the Inside Story, by John Edwards, Keating declared his intention to dismantle every aspect of the advanced agro-industrial economy that “old” Labor governments had used public credit to build up, proposing that Australia’s economic future should be almost solely that of a raw materials exporter, with whatever shards of manufacturing might manage to hang on with low or no tariffs: “Minerals, wool and wheat—that’s our long suit. And we have to make secondary industry competitive.” Three decades after Keating began this assault on Australia’s economic sovereignty, his intention for Australia has been realised.

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