FINAL WARNING: Financial Background
by law. In 1775, paper money had been issued to finance the war, and
independent state legislatures passed laws requiring citizens to accept
it as legal tender. Since it was created from nothing, and not backed by
any precious metal, inflation developed. By the end of the war, it took
500 paper dollars to get one silver dollar. Our forefathers wrote in
Article I, Section 10, of the U.S. Constitution: “No State shall enter into
any treaty, alliance or confederation; grant letters of marque and
reprisal; coin money; emit bills of credit; make any thing by gold and
silver coin a tender in payment of debts; pass any bill of attainder, ex
post facto law, or law impairing the obligation of contracts, or grant
any title of nobility.”Alexander Hamilton, an Illuminist, and agent of European bankers, had
immigrated to the colonies in 1772 from the British colony of Nevis, on
the Leeward Islands in the British West Indies. He married the
daughter of Gen. Philip Schuyler, one of the most influential families of
New York. In 1789 he was appointed Secretary of the Treasury.
Hamilton and Robert Morris successfully convinced the new Congress
not to take this power literally, enabling the Bank of North America to
be established in 1781, which was similar to the Bank of England. At
the time, America had a foreign debt of $12,000 (in money borrowed
from Spain, France, Holland, and private interests in Germany), and a
domestic debt of $42,000.In 1790, Hamilton, who favored Central Banking, urged the Congress to
charter a privately owned company to have the sole responsibility of
issuing currency, in order to handle the country’s financial situation.
His Plan called for Congress to create a Central Banking system, with
a main office in Philadelphia, and smaller branches located in
important cities throughout the country. It would be used to deposit
government funds and tax collections, and to issue bank notes to
increase the money supply needed to finance the country’s growth.
This Bank of the United States would have a capital stock plan of $10
million, with 4/5’s to be owned by private investors, and 1/5 by the U.S.
Government. It would be administered by a President, and 25 Board of
Directors, with 20 to be elected by the stockholders, and 5 appointed
by the government.Central Banking was initiated by international banker William Paterson
in 1691, when he obtained the Charter for the Bank of England, which