World Bank - Part Iii

By Author: Dominans Classis
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To understand how the World Bank and International Monetary Fund evolved, you need to know the power and control the Bank of England and the Federal Reserve have in this World. As the Bank of England was paving the way for dominance over the United Kingdom, the new colonies in the United States were beginning to question this particular system. Britain began to look toward the American colonies as a way of trying to raise additional revenues of monies through additional taxation. The Bank of England was also not necessarily thrilled over the fact that the colonies had their own paper money, which was called colonial script. This money was used in the exchange of goods. It was debt free and was not backed by either gold or silver. Not only was this a successful way of doing training, but it also gave the new colonies their own sense of identity.

English: Sealing of the Bank of England Charter (1694)

Benjamin Franklin discussed this simple premise when he was visiting England right before the Revolutionary war. He attributed his success of the economy for the colonies to the fact that the script ...
... was issued in the proper apportionment to the demands of trade. It was interest-free and it had value. The Bank of England knew that if this process remained in place, it would threaten their very existence and would mean that the colonies would not be tied to them. Those in charge of the Bank of England at the time realized that they would not be able to make a profit over the American colonies.

The Bank of England was directly responsible for making sure the British Parliament passed the currency act of 1764. This made it illegal for the colonists to print their own money, and it also demanded that all taxes were to be paid in silver or gold. The impact it had on the colonies was devastating. It created the end of the age of prosperity and a depression was started. People were unemployed and extremely unhappy.

Benjamin Franklin went on to directly hold the Bank of England and the crown of being responsible for the war. He said because of having to lose the right of printing their own money, losing their identity and the total economic situation caused a war. By the start of the Revolutionary war, the colonies barely had any gold or silver left. The interesting concept is the fact that when paper money was printed, with no interest or debt tied to it, there was no inflation or depression. It also created the environment, where it created a huge threat to the international central banks.

The Bank of England certainly did not want this to continue. There was no way that they would be able to continue to make profit for them if the colonial script idea would continue and be successful. It was not long after the Revolutionary war, with the country in dire debt and in need of money that our young government succumbed to the idea of setting up a similar central bank, much like the Bank of England. Robert Morris said that he would take on this idea of setting up our centralized bank. He was supposed to raise $400,000 for the initial deposit, but that money had been spent over and over and he actually used some gold from the government that had been loaned from France. What happened next was the fact that Robert Morris and his pals loaned themselves money in order to buy up the shares of this bank. This continued until 1785, when people began to understand that the value of the American dollar had dropped significantly. Lawmakers decide not to renew this bank charter, but not before all the shareholders had a chance to make tons of money.

In 1791, the First National Bank of the United States was chartered. Again, this was modeled after the Bank of England with shareholders, many of which we will never truly know who they were. They began to loan money to the government and of course, this started 20 years of shareholders making money and the government borrowing so much money that they could never ever pay back. Thomas Jefferson, in 1798, had stated that he had wished that the federal government never had the power to borrow money. He obviously saw what was happening and understood the impact it would have on the future.

In 1811, the charter of the First National Bank was not renewed. The war of 1812 followed. Around the same time, it needs to be remembered that France was involved in a war against England and several other European countries. Napoleon was extremely distrustful of the central banks. He seemed to be one of the people who understood that when a government is dependent on banks for money, that banks become the decision-makers; not government. He also understood that the privately owned central banks would often lend money to both sides of war. This is why he actually sold off land to the United States, the Louisiana Purchase, in order to finance his war. He used this money to build an army in order to conquer Europe. The one thing that he found in each country that he invaded was the fact that the Bank of England was financing his opposition. Countries such as Prussia and Russia all fell into huge amounts of debt trying to fight off Napoleon.

It was towards the end of Napoleon's reign, that Nathan Rothschild was able to gain control of the Bank of England, when English citizens began selling their bonds as they thought that the United Kingdom had lost. This put the Rothschild family in a position of having an interest in the central banks of several European countries.

In 1816, the war ended and the Second National Bank was given its charter. This was the second attempt to provide a clearinghouse for the government to borrow money. At the time, Andrew Jackson realized that many of the shareholders were foreign bankers and threatens not to renew the charter. There was widespread panic as the president of the central bank threatened to cause a depression. The charter was not renewed, and it ran out in 1836.