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The Money Matrix of the New World Order
By Phillip Tilley
AuthorHouse Copyright © 2007 Phillip Tilley
All right reserved.
Chapter One A Brief History of Money in America
In the beginning there was nothing, and there still is! Before the US was the US, it was thirteen British colonies along the east coast of North America. It was a desperate situation as far as money was concerned. The colonists were always short of official British coins for conducting every day commerce. A diverse variety of money substitutes were used throughout the colonies, but they all shared a common accounting basis in British pounds, shillings, and pence.
Essentially, the money supplies of the colonies fell into five major groups.
1) The official British coins, which were scarce. 2) Furs and wampum, which were traditional currencies used by the Indians. Trade with the Native tribes was essential for the survival of the colonists. These items had real value to the Indians. Furs could be made into clothing, or traded to others for goods they needed. Wampum, made from a type of clam shell, was used as jewelry. Holes were drilled in the middle and they were made into beads, which were strung together in lengths of about eighteen inches and sometimes as long as six feet. These were tied into a loop called a hank. The Narragansett tribe specialized in manufacturing Wampum beads. They were put out of business when the colonists, using steel drills opened a factory in New Jersey and increased Wampum production a hundred times faster. Wampum remained in use until after the Civil War. 3) Cash crops. The natural commodities of rice, tobacco, beans, wheat, indigo, and corn also had real value. They could be stored for later use, eaten, smoked, or used as dye in clothes. Certain areas of the Southern colonies used tobacco as money for almost two hundred years. 4) Spanish pieces of eight. Also known as the Spanish milled dollar, were silver, a precious metal and had real value. These coins were sometimes sawed into eight pieces, like a pie. Each piece was called a bit. Cut in half, gave you two halves of the coin, worth four bits each. The half coin cut in half again gave two quarter pieces of the coin worth two bits each. That is why today, you may hear someone refer to a quarter as two bits. The Spanish had beaten the British colonists to the new world, or North America, by over a hundred years. This allowed them to conquer the Aztec tribe in what is now Mexico, and grab control of the substantial gold and silver in the region. As far as silver coins were concerned, the Spanish pieces of eight had cornered the market for over three hundred years. Because of there wide availability, they were accepted as legal tender everywhere. When the US did decide to coin their own money, the dollar was based on the Spanish piece of eight in exact size and weight. 5) Paper currency. In 1690, the Massachusetts Bay colony issued the first paper money in North America. They were called "bills of credit," and promised redemption in gold or silver. Since gold and silver have real value, so did the bills of credit, and they were accepted as legal tender. Other colonies followed Massachusetts in issuing paper money.
In 1727, Virginia made "tobacco notes" legal tender. This paper money was backed by a quantity of tobacco on deposit at public warehouses. Since tobacco had real value, so did the tobacco notes, and were readily accepted until about 1800.
It wasn't long before banks began to issue paper money in the form of loans. The loans were secured with a mortgage on the land owned by the borrowers. These were known as land banks. Since the money was backed by land, which has real value, these bills of credit had real value and were accepted as legal tender.
The British were not happy with the colonists printing and using paper money. They began to restrict the colonies right to issue paper money, and in 1764 issued a complete ban on paper money in the colonies. The British stranglehold over the colonies with the ban on paper money was a major factor in causing the colonies to revolt.
When the Revolutionary War broke out, the newly formed government did not have any money. They financed the war with paper money, backed by the "faith of the continent." In May of 1775 the first issues were printed of the "Continental" dollar bill. They were to be redeemable in 300,000 Spanish pieces of eight. That soon rose to 9,000,000, and as the war drug on, more and more were printed.
In all hundreds of millions were printed period. By the spring of 1780, the Continental was worth only two cents on the dollar. They were soon worthless, giving rise to the saying "Not worth a Continental." It was the first fiat currency in the new world; fiat being worthless or backed by nothing of real value.
The two dollar bill was first issued in June 1776. The Continental Congress authorized the issuance of 49,000 two dollar bills as bills of credit for the defense of America. They were backed by Spanish silver.
After the war was over, financial chaos gripped the newly formed United States. Individual state banks began to issue money. This lead Congress to establish the "dollar" as the new national currency.
In 1792, Congress passed the Coinage Act, establishing a Mint, and regulating the coins of the United States. The "dollar" was established as the unit of measure to be the value of the Spanish milled dollar, or pieces of eight already in circulation. All gold and silver coins struck at the Mint were legal tender. However, due to a shortage of gold and silver bullion, pieces of eight were also accepted as legal tender starting in 1797 and remained as such for fifty years. In 1835 the Mint began coining its own silver dollars. In 1857, Congress repealed the legal tender status of all foreign currency, making the US silver dollar, and gold the only official money of account, or legal tender.
In 1848 gold was discovered in California and bullion to mint coins with became plentiful.
The Civil War started in 1861. Wars are expensive. Up to that point, the US government collected revenues with excise taxes (also known as consumption or sales taxes), tariff s (taxes on imports), land sales, and borrowing.
President Lincoln wanted to get loans to pay for the war. The New York bankers wanted exorbitant interest rates, as much as 36%. The banks also insisted on being paid in gold. This would have bankrupted the government, which was unacceptable.
Since the coinage act of 1792 gave Congress the power to coin money and regulate its value, President Lincoln asked Congress to print paper currency instead. This idea was hotly debated, as some representatives believed that to be unconstitutional. War, however, caused the rule to be bent. Congress created the legal tender act of 1862, authorizing the Federal Government to issue paper money.
The National Banking act of 1863 established for the first time in America, a single common paper currency. They were known as Greenbacks, and they put an end to all the privately owned bank notes.
The Greenbacks were redeemable for gold, and were legal tender. Since they were backed by gold, which has real value, they were readily accepted. Greenbacks were the first paper money issued by the US Treasury.
In July 1862, the economy was so bad, and money was so scarce, Congress authorized the use of postage stamps as money. Copper coins were melted down and used for cannons and cartridge cases. People used postage stamps as small change. Stamps were not made to be passed around as currency, and they wore out rather quickly. After the Civil War ended, so did the practice of using stamps as currency.
In 1873, the American dollar coin was legislated out of existence. America was virtually on the "Gold standard," with gold, and Greenbacks backed by gold as legal tender.
Then, in 1878, the richest silver discover in America occurred at the Comstock mines in Northern Nevada. A million dollars of silver were being mined each week. A market for the silver had to be created or the bustling Nevada economy would collapse.
Congress enacted the Bland-Allison act in 1878. This required the US Treasury to purchase between 2-4 million dollars worth of silver bullion each month, and coin in into silver dollars. Thus, the Morgan silver dollar was born. Morgan dollars were 90% silver and 10% copper. Between 1878 and 1904 over 500 million silver dollars were minted.
By the turn of the century, huge gold deposits were discovered in Australia, Alaska, and South Africa. This huge increase in gold supplies stimulated the world economy, and by 1900 America was officially on the Gold Standard. No silver dollars were minted between 1905 through 1920.
On December 23rd, 1913, during the Christmas break, taking advantage of the absence of Congressmen opposed to the creation of a fiat monetary system, the Federal Reserve act was passed. The Democratic Party hotly opposed the act using the same argument against President Lincoln in 1862, that only Congress has the power to coin money and regulate its value. The Federal Reserve, also known as the "Fed," is a privately run banking enterprise that prints currency backed by credit lines. Money created out of thin air and really backed by nothing. Thomas Jefferson had warned not to let a private bank have control of your money.
In 1914 WWI broke out in Europe. By 1917, America joined the war. On November 11th, 1918, an armistice was signed bringing an end to the war. In 1921 with the war over, the Peace silver dollar was minted. They continued to be minted through 1935.
On October 24th, 1929 the crash of the stock market occurred. The nation fell into financial chaos. When President Roosevelt took office in 1933, his first official action was to declare a bank holiday. For the next four days, the world's largest economy was left bankless as the financial system was formed.
Congressmen Louis T. McFadden suggested that the Federal Reserve deliberately triggered the stock market crash of 1929, in order to eventually force passage of the emergency banking relief act of March 9th, 1933 which suspended the Gold Standard.
The citizens' banks of Tenino Washington failed on 12/05/31. This created a shortage of money in the area. Merchants had to drive thirty miles over narrow and rough roads to get change. For most, it was too difficult a trip to make. The local chamber of commerce met, and decided to have the local newspaper print the first wooden money in America. The wooden money was valued at 25 cents.
Blaine, Washington issued wooden nickels in 1933. Other places in the Pacific Northwest also issued wooden money after that. Some were rectangular, like the Tenino wooden money, and some were round like coins, like the Blaine wooden nickels. Most of the wooden money had an expiration date printed on it. They were worthless after that date, or if they were broken, and some were fragile. That is where we get the saying, "Don't take any wooden nickels!"
Franklin Delano Roosevelt was elected president in the 1932 election. On February 15th, 1933, he was nearly assassinated in Miami. Major General Smedly Darlington Butler informed Congress of the plot for a Coup D'ètat to overthrow the government. General Butler said it was sponsored by big money interests.
On April 5th, 1933, Roosevelt issued Presidential Executive Order 6120, making it illegal to horde gold. The order read: "All persons are hereby required to deliver on or before May 1st, 1933, all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28th, 1933. Until otherwise ordered any person becoming the owner of any gold coin, gold bullion, or gold certificate after April 28th 1933, shall, within three days of receiving thereof, deliver the same to the Federal Reserve bank or member bank. Upon receipt of gold coin, gold bullion, or gold certificates deliver to it, the Federal Reserve Bank or member bank will pay therefore an equivalent amount of any other form of coin or currency coined or issued under laws of the United States."
Essentially, this order called for the surrender of all private gold holdings. Believing it to be a temporary measure arising out of the "national emergency" of the Great Depression, most citizens complied and exchanged their gold for paper money.
It is understandable that people at the time thought they were doing the right thing. Gold could no longer be used as legal tender. The exchange value of paper money was greater than the value of gold content of the coins.
On August 28th, 1933, President Roosevelt issued another Proclamation. It read: "After thirty days from the date of this order, no person shall hold in his possession or retain any interest, legal or equitable, in any gold coin, gold bullion, or gold certificates situated in the United States and owned by any person subject to the jurisdiction of the United States, accept under license therefore issued pursuant to this Executive order."
The Gold Reserve act on January 30th, 1934 established penalties for anyone who violated these orders. It read: "Any gold withheld, acquired, transported, melted or treated, imported, exported, or earmarked, or held in custody, in violation in this act, shall be forfeited to the United States, and in addition any person failing to comply with their provision of this act or of any such regulations or licenses, shall be subject to a penalty equal to twice the value of the gold in respect to such failure occurred."
All the gold in the United States was now in the hands of the Treasury. The words, "redeemable for gold" were removed from the paper money. America was officially off the Gold Standard. Paper money could still be redeemed for silver. And since silver has real value, the paper money had real value.
On December 7th, 1941, Pearl Harbor Naval Base was attacked by Japan sending America into WWII. In order to conserve nickel for the war effort, silver was used to mint nickels from 1942 through 1945. The need for copper was so great that in 1943 pennies were minted out of zinc.
As WWII drew near an end, 730 delegates from all forty four Allied Nations met at the New Hampshire resort town of Breton Woods. A system of rules, institutions, and procedures were established to regulate the International Political Economy. Known as the Breton Woods Agreement, they essentially set up the World Bank, and the International Monetary Fund.
This established an exchange rate for currency between nations. Since the currencies were to be redeemable in gold, in 1946 America was back on the Gold Standard as far as foreign governments were concerned. It was still illegal for American citizens to own gold. It was also the first negotiated "monetary order" in world history.
On June 4th, 1963, seeking to head off a financial crisis, President John F. Kennedy issued Executive Order 11110. This order required the Treasury to begin printing and issuing silver certificates backed by the remaining silver in the Treasury's vault.
This was not unusual, as silver certificates had been issued by the Treasury for over a hundred years. What was unusual was the sheer magnitude, nearly 4.3 billion dollars! President Kennedy wanted to stop paying the Federal Reserve banks (they print Federal Reserve notes, then loan them to the US government with interest). This was a return to the Constitution that states that only Congress shall coin and regulate money.
Kennedy was at odds also with Congress, which had earlier that day, June 4th 1963, passed a Congressional act to abolish silver certificate legislation. President Kennedy's Executive order 11110 was never implemented. On November 22nd, 1963, Kennedy was assassinated.
1964 was the last year US silver coins were issued. In 1965 they were replaced with copper nickel slugs. The coinage act of 1965 was designed to reduce or eliminate the amount of silver used in US coins.
In March 1964, the redemption of silver certificates in silver dollars was halted by the Secretary of the Treasury. On June 24th, 1967, Congress passed the silver certificate act of 1967. It said: "Silver certificates shall be exchangeable for silver bullion for one year following the enactment of the act." In June 1968 all redemption for silver was halted.
The only paper money that remained in circulation was Federal Reserve notes. This is the point at which US currency became a true fiat currency. All legislative ties to specie or the "money of account" of the US were severed.
On August 15th, 1971, President Nixon issued Proclamation number 4074. It stated that after that date, not even foreign central banks could convert their paper dollars for gold. America was off the Gold Standard for good and the Breton Woods system collapsed. By this point, all economically developed countries' currencies were fixed to the US dollar.
Excerpted from The Money Matrix of the New World Order by Phillip Tilley Copyright © 2007 by Phillip Tilley. Excerpted by permission.
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