The nation eventually recovered from the panic of 1819 although many individuals did not. When Andrew Jackson ran for president in 1828 he pledged to oppose the renewal of the charter of the second Bank of the United States, due to expire in 1836. When Jackson was elected Nicholas Biddle, then president of the bank, deliberately created a recession in the hope that the American people would pressure Jackson to drop his opposition to the renewal of the bank's charter. Jackson met with many delegations of prominent Americans who came to Washington to urge him to end the recession. He told them all that they were talking to the wrong man, they should call on Biddle. Biddle is said to have expended $30 million of the bank's money on this effort, primarily in the form of non-business loans to newspaper publishers and other influential people in exchange for their support.
       Congress voted to renew the charter but Jackson vetoed it. Congress was unable to override his veto and in 1836 the bank went out of business. The nation's banking system from 1836 to the Civil War was composed solely of state chartered banks and a few privately owned banks. During the Civil War Congress passed the National Banking Act. This act made federal charters available to banks but very few banks took advantage of the federal charters until Congress enacted a tax of 10% on all bank notes issued by state banks. Following this action, which was intended to drive state-chartered banks out of business, about half of the nation's banks became national banks. With the increasing use of checking accounts bankers found that they could create money without issuing bank notes and by the 1870s deposits in state banks were roughly equal to deposits in national banks.
        In an effort to finance the war the U.S. went off the gold standard and issued bills that were not backed by gold. These became known as greenbacks and, quite naturally, their value promptly depreciated quite significantly. During the war prices rose substantially and after the war the banking industry wanted to resume the gold standard at the same value of the dollar that existed prior to the war. The nation could have resumed the gold standard at any time by adjusting the value of the dollar but this would not have resulted in the profits to the banking industry that would result from resumption of the gold standard at the prewar value of the dollar. The nation was rapidly expanding and the population was growing rapidly, primarily as a result of immigration. This growth exerted a downward pressure on prices and in 1879 the U.S. resumed the gold standard at the prewar value of the dollar.
        From the end of the Civil War to 1907 the nation experienced five bank panics. A bank panic is the name given to a situation where large numbers of bank customers lose confidence in the banks and attempt to withdraw their money. Because a fractional reserve bank is always in a state of insolvency, a bank panic results in bank failures.
        There is significant evidence to indicate that the panic of 1907 was deliberately precipitated by J.P. Morgan, then the most powerful banker in the nation, to create a public demand for "reform" of the banking industry. Some of the nation's largest banks created a citizen's organization to call for Congress to take action to "regulate" the banking industry. Congress responded by creating a National Monetary Commission to develop a way to stabilize the monetary system. This commission was chaired by Senator Nelson Aldrich, the chief representative of the financial community in the U.S. Senate. This commission was strictly window dressing. Aldrich eventually submitted a bill to essentially create what we now know as the Federal Reserve System. This plan for the Fed did not result from the activities of the National Monetary Commission. It was drawn up by seven men at a nine day secret meeting at an island off the coast of Georgia. Aldrich was one of these seven men and the rest were men who represented the Morgan interests, the Rockefeller interests, and the Rothschild interests.
        I have previously mentioned that around the end of the 19th century a few of the wealthiest Hamiltonians set out to gain political and economic control of the world. Most, or possibly all, of these people were members of the Morgan and Rockefeller spheres. The establishment of the Federal Reserve System was one of earliest objectives in their agenda. The Fed was presented as a quasi-governmental organization but it is essentially a privately owned central bank. Before the establishment of the Fed, the Morgan and Rockefeller interests already possessed a great deal of control over the nation's money and the economy in general. The establishment of the Fed institutionalized this control, made it far easier for the planners to exercise it, and enabled them to conceal the fact that they, rather than the government, actually control our monetary policies.
        Charles Lindbergh, the father of the first man to make a solo flight across the Atlantic, was a member of the House of Representatives when Congress created the Federal Reserve System. He said of this bill:
 
 

This act establishes the most gigantic trust on earth.... When the President signs this act the invisible government by the money power, proven to exist by the Money Trust investigation, will be legalized.... The money power overawes the legislative and executive forces of the Nation and of the States. I have seen these forces exerted during the different stages of this bill. The new law will create inflation whenever the trusts want inflation. It may not do so immediately, but the trusts want a period of inflation, because all the stocks they hold have gone down... Now, if the trusts can get another period of inflation, they figure they can unload the stocks on the people at high prices during the excitement and then bring on a panic and buy them back at low prices... The people may not know it immediately, but the day of reckoning is only a few years removed.

        Ironically enough, Lindbergh's son, the famous aviator, would later marry Anne Morrow, the daughter of Dwight Morrow, one of the foremost members of the money trust to which the father referred. Lindbergh's prediction was deadly accurate but even he could not foresee the use to which the planners would put this ability to control the economy.
        When the Fed began operations in 1914 the U.S. was on the gold standard. The U.S. went off the gold standard during the first world war as did most of the other nations involved in the war. In Tragedy and Hope, Professor Quigley explained that after the end of the war the major money interests of the world cooperated in a plan developed by the heads of seven of the world's central banks. One of their objectives was to get these nations back on the gold standard with the same valuations of currencies that existed prior to the war. To do this, of course required that prices be returned to approximately prewar levels from their current inflated levels. Quigley listed Benjamin Strong as the representative of the Fed in this group of central bankers. Strong was the president of the New York Federal Reserve District Bank and was not the actual head of the Fed but was generally conceived to be involved in a power struggle with the Governor of the Fed and its board of governors. Quigley stated very explicitly that these heads of central banks were not themselves powerful men but figureheads who owed their positions to powerful international bankers. He said that they could be replaced at any time if the international bankers so desired. Strong, incidentally, was one of the seven men who designed the Federal Reserve System.
        According to Quigley these international bankers formed a very secretive cabal that actually wielded the power of the central banks. Quigley stated that the Rothschilds had been the preeminent members of this cabal during much of the 19th century but near the end of the 19th century they were being replaced by the Morgan firm.
        The history of Fed policies between the two world wars is extremely interesting. The story as it is related below is taken primarily from the book, Monetary History of the United States 1867-1960 by Milton Friedman and Anna Schwartz.
        At the end of the first world war prices in the U.S., which had been rising throughout the war, leveled off briefly as production of war material ceased. They then began to rise again and rose steadily through the first half of 1920. Prices rose at that time because of an increasing money supply which resulted from the Fed's policies. The Fed's discount rate was kept below the market interest rate through 1919, a policy which increased the money supply. The Fed maintained this rate at the urging of the Treasury Department for the purpose of facilitating the funding of the national debt and also to prevent a decline in the prices of government bonds while the commercial banks held large amounts of the Victory Loan which was floated in April and May of 1919. Strong urged an increase in the rediscount rate in August of 1919 to reduce the inflationary expansion of credit. The board refused this suggestion and the Fed continued to contribute to the inflation. By November of 1919 Strong was telling the board that the time for raising the rediscount rate had passed and that raising it at that time would bring on a crisis. He obviously felt that the expansion was reaching a natural limit, which would result in an economic contraction and that increasing interest rates at that point would make that contraction more severe. In spite of Strong's advice the board did raise the rate slightly in December of 1919 to 4 3/4 percent at most banks. Then, at the end of January, 1920 the board raised the rediscount rate to 6 percent. This was the largest single increase in the history of the Fed to 1960. The effect was not immediately apparent as wholesale prices continued to climb slowly until May, 1920. After that time prices began to decline, slowly at first and then precipitously until by June 1921 wholesale prices were 56 percent of what they were in May, 1920. This situation was worsened by an increase in the rediscount rate to 7 percent at the New York bank and some of the other district banks. The increase to 6 percent in January, 1920 resulted from the Fed's concern over its own falling reserves and the later increase was probably due to the same cause. The actions of the Fed throughout this cycle bear a strong resemblance to the actions of the second Bank of the United States in the years following the War of 1812.
        In the spring of 1921 Strong opposed reducing the rediscount rate. He noted that bank deposits had declined considerably, wholesale prices had fallen drastically, retail prices had fallen moderately but wages had changed little. In view of these facts he urged that the rediscount rate should not be reduced until wages had fallen so that the economy would stabilize at the lower level of prices and wages. This is, of course, the final stage of the now familiar banking cycle so profitable to the big money interests. The board did not heed Strong's advice and it lowered the interest rate in May of 1921. Since wages had not fallen appreciably at this time the Fed's action contributed substantially to the general prosperity of the 1920s. With the relatively greater purchasing power of these wages, plus some favorable non-monetary conditions, this reduction of interest rates did much to trigger the subsequent non-inflationary expansion and prosperity that characterized most of the balance of this decade.
        From the middle of 1921 industrial production began to increase sharply while wholesale prices and the money supply increased moderately until approximately the middle of 1923. From that point until the end of 1929 wholesale prices changed little, perhaps falling slightly during the period. The stock of money grew fairly steadily until early in 1928. This increase resulted mainly from increased bank deposits in spite of the fact that these years were marked by an unusual number of bank failures. In the years from 1915 through 1920 a total of 500 banks failed in the nation. From 1921 through 1929 a total of 6,000 banks failed in the U.S. Most of the banks that failed were small banks in small towns and most were in agricultural areas. The bulk of these failures were probably caused by a combination of depressed farm prices and transportation improvements that, in effect, subjected the small town banks to competition from nearby larger banks. Nevertheless the fact that bank deposits were increasing despite the failure of 6,000 banks is a clear indication that some banks were expanding their business quite rapidly.
        All of the people in positions of any prominence in the banking business were aware that a very sizeable part of the bank loans being made, particularly in the last two or three years of this period, were being used to finance speculation in corporate stocks. The board of the Fed refused to raise the rediscount rate in an effort to curb such borrowing for speculative purposes.
        Benjamin Strong died in October of 1928 but the struggle between the New York bank and the board continued. When the board finally approved an increase in the rediscount rate in August of 1929 the New York bank believed the time for such action may already have passed. They did not have to wait very long for the event that proved them right, the stock market crash of 1929. The policies of the board that led almost inevitably to the beginning of the Great Depression were almost identical to their policies in 1919 and 1920 that contributed greatly to the severity of the recession of 1920-1921. In 1929 the situation in the nation was different in two respects. The first was that by 1929 the board had persisted in its expansionist policies for a much longer period of time. The second, and more important, difference was that when the economy began to contract in 1929 the Fed made no attempt to slow the decrease of the money supply. The 1920s saw a huge increase in peacetime industrial production. The mushrooming success of many types of businesses led to speculation in stock prices that fed on itself and drove stock prices far above their intrinsic worth. This speculation was possible partly because of an overexpansion of the money supply and this meant that a lot of middle class Americans joined in the speculation stampede. Their dollars competed with huge pools of money controlled by the Wall Street interests. Many of the latter had withdrawn their money from the market before the crash. Some of them may simply have been smart enough to read the signs while some of them almost certainly had previous knowledge of the Fed's intentions. The stock market crash of 1929 was a catastrophic event in the personal lives of many Americans but it also marked very precisely the point at which the efforts of the masters began to change virtually every aspect of our society.
        The money trust, as Lindbergh referred to it, had done exactly what he had said it would do but this was only the first step in a definite plan. After the economy began its downward slide in 1929 the Fed continued a tight money policy that converted a relatively small economic correction to the Great Depression of the thirties. Friedman and Schwartz summed up the early years of this depression in the following manner:
 
 

The monetary collapse from 1929 to 1933 was not an inevitable consequence of what had gone before. It was a result of the policies followed during those years. As already noted, alternative policies that could have halted the monetary debacle were available throughout those years. Though the Reserve System proclaimed that it was following an easy-money policy, in fact it followed an exceedingly tight policy.

        Although these authors contended that Fed policies created and maintained the depression of the 1930s they attributed those policies to ineptitude on the part of those in control of the Fed rather than a deliberate intention to create that depression.
        With all due respect to these two great economists I cannot accept their contention that the people in charge of the Fed simply did not know what they were doing. In the paragraph quoted these two authors said that the Fed claimed to be following an easy money policy while, in actuality, it followed a tight policy. This discrepancy between what the Fed claimed to be doing and what it actually did could hardly have resulted from ineptitude. Most of the people who controlled the Fed's policies came from Morgan's sphere of influence and many had been part of the Morgan firm or other leading banking firms. J.P. Morgan was noted for a policy of seeking out the most intelligent young men he could find and bringing them into his business where they were taught the banking business by men who were arguably among the most knowledgeable bankers in the world. The operations of these banks bore very little resemblance to the operations of normal commercial banks. Their clients were nations, large corporations, and super wealthy individuals. In most commercial banks the chief, and usually the sole objective, of bankers is to make a profit for the bank. At J.P. Morgan, a few of the other largest U.S. banking firms, and their foreign counterparts it would probably be no exaggeration to say that their primary objective was to control the monetary supply, and consequently the economy, of nations. The exercise of this control led inevitably to huge profits for the banks concerned. Most of the people in control of the Fed were the heirs to the knowledge accumulated by more than 200 years of experience in banking matters at the highest level and the economic situation in the U.S. in the 1920s was essentially the same as it had been at many times in the past.
        Even beyond the facts cited above there is another reason why I simply cannot accept the contention that these people did not know what they were doing. The events in the U.S. during the years 1923 to 1930 closely paralleled those in the years 1919 to 1921. In 1921 the Fed had dealt with an economic downturn by increasing the money supply and the nation entered a long period of prosperity. Had the Fed been honestly attempting to promote the best interests of the nation it would have taken action to increase the money supply in 1930 as it had in 1921.
        Throughout the 1920s until his death Benjamin Strong was at odds with the board of governors of the Fed over monetary policies. Strong's objective was to reduce prices to a level that would permit resumption of the gold standard. It is virtually a certainty that the Morgan firm and a few others called the tune to which both the Treasury Department and the Fed's board of governors danced during those years and Strong was unquestionably a Morgan man so why were the two factions at odds over monetary policy? The only explanation that makes sense to me is that Strong was pursuing the traditional objectives of upper echelon bankers while the board was being led to pursue the policies of the planners. These policies were intended to create a catastrophic depression and delay any recovery from it until the planners wanted the economy to recover.
        Before proceeding to examine the Fed's policies in the 1930s it is necessary to consider a few other developments of the 1920s. During WWI President Woodrow Wilson asked Bernard Baruch to "mobilize" the industrial capabilities of the nation to more effectively prosecute the war. The agency formed for this purpose was known as the War Industries Board or WIB. Without congressional authorization Baruch organized many of the nation's businesses on an industry-wide level. His organization prescribed prices and wages and allotted raw materials. The nation accepted this as a necessary wartime measure. As Baruch himself later pointed out many of the businessmen concerned welcomed the opportunity to conduct their businesses in a non-competitive environment. This was hardly surprising since they were being offered the advantages of a monopoly at a time when there was a great demand for their products. When the war ended so did the WIB.
        Baruch urged the creation of a peacetime equivalent of the WIB but met with little success. About forty different industries did form trade groups in the 1920s. Essentially these groups attempted to do the same things the WIB had done but only within specific industries. They were intended to create a monopoly situation by bringing all, or most, of the businesses who would normally compete with each other under the umbrella of an organization that would control prices and production for the whole industry. The first of these was the American Construction Council, formed in May of 1922. The original proposal for this project came from Herbert Hoover, who was then Secretary of Commerce in the Harding administration. The first president of the ACC was Franklin D. Roosevelt. When Hoover was elected president he eliminated all of these trade groups, saying they were probably illegal organizations and that no government could regulate them in the interests of the public.
        Baruch employed a man named Hugh Johnson whose job consisted chiefly of developing a specific plan for government control of the economy along the lines of the old WIB and putting it in a form that would be more acceptable to the American people. The essentials of this plan were outlined in speeches made by John J. Raskob, a vice president of General Motors and of DuPont, during Al Smith's campaign in 1928. This plan later became the basis for the National Recovery Agency created after the election of FDR in 1932. It basically created a welfare state, eliminated anti-trust regulations and created a monopolistic structure of businesses that was under the control of the government.
        This plan originated with the big business interests, as did most of the rest of FDR's new deal policies. As long as the economy was prosperous the American people wanted no part of them. In the depths of the depression many Americans accepted them as a way out of the economic morass. Now we can see the manifestation of the power of the planners. If the American people would not accept fascist or socialist policies the masters would create an economic crisis and present their ideas as the solution to the problem they had created.
        Franklin Roosevelt had always been a part of the Wall Street coterie and after he was elected president he promoted the agenda of the planners and brought many of their representatives into his administration. At the same time he continually presented himself to the American people as the champion of the common man and claimed to be standing up to the Wall Street financial interests, which he depicted accurately as the oppressors of the people. He won immense popularity among the people even as he promoted the agenda of the planners that was intended to deprive the American people of their rights.
        In 1933 Congress formally adopted, at least for domestic use, strictly fiduciary currency with no backing whatsoever. Had this currency circulated in common with specie or specie backed currency, its value would quickly have approached zero. To prevent this from happening Congress made it illegal for American citizens to own gold except in the form of jewelry or gold needed for industrial use. This experiment was so successful that when, decades later, Americans were permitted to buy and own gold the nation's fiduciary currency was unaffected by the change.
        By 1937 the nation was beginning to recover from the depression and the Fed promptly reduced the money supply, which cut the recovery short. The outbreak of WWII quickly ended the depression. Had it not been for the advent of the war, the depression would probably have been continued until the policies of the planners, some of which were socialist and some of which were fascist, had become firmly entrenched as national policy.
        Following WWII we have seen nearly continuous inflation. This has been helpful to the masters in pursuit of their long-term objectives, given the nature of the political system in the nation over the last 40 years. The rate of inflation has generally been low but during the 1970s it increased drastically. This brought suggestions that wage and price controls were needed to control inflation. Since the planners have the ability to control the rate of inflation it seems reasonable to assume that this was another attempt to tighten the authority of government over the lives of individuals in the guise of promoting the public welfare. When this effort failed the masters were left with the problem of accelerating inflation and an increasingly inflationary psychology. The Fed possessed the power of ending inflation at any time but the use of its raw power to do this would have created a very serious economic disruption. Ronald Reagan enabled them to eliminate runaway inflation without a serious depression. I do not know whether Ronald Reagan was a tool of the masters or simply a good man with good ideas that appealed to the American people and was useful to the planners for that reason. Personally I am inclined to believe that the latter was the case. In any case after Reagan's election a Democrat-controlled Congress uncharacteristically passed substantial tax cuts and reduced or eliminated much government regulation of business. Both of these actions favored economic expansion and public confidence in Reagan went a long way toward eliminating the public expectation of continuing rampant inflation. Even these factors would not have been sufficient in themselves to slow the rate of inflation drastically without a serious disruption to the economy. The factor that really permitted this to occur was the spending by the federal government of huge amounts of borrowed money. This had the effect of putting into circulation large amounts of saved money which aided economic expansion.
        During the last couple of decades the nation's largest banks began making large loans to foreign nations and directly to industries in foreign nations. When the foreign nations are unable to repay these loans the U.S. government is pressed to get them off the hook either directly or through the World Monetary Fund. The banks that made the loans are, of course, the true beneficiaries of such relief. When Congress balked at paying Mexico's loans President Clinton contributed $40 billion from a special fund intended for international currency stabilization. It remains to be seen what will transpire in the current Asian crisis. Several of the largest industries in Korea have bank debts that total more than five times the value of their assets. Quite a bit of this debt is owed to U.S. banks and even more to banks in Japan, a nation that has serious economic problems of its own. Why did these banks make such loans? The only logical answer is that they had the capability to create a lot more money than they could lend to good borrowers and depended on the U.S. government, as well as other governments, to make good on these loans if they were not repaid. The governments involved would claim that it was necessary to aid the debtors in order to avoid economic collapse. Isn't this a beautiful way to transfer a few hundred billion dollars from American taxpayers to the vaults of these bankers?
        The switch to a strictly fiduciary currency in 1933 is decried by many conservatives as a very bad policy. Admittedly it has made possible the nearly continuous inflation we have experienced for more than forty years but in fact a properly managed fiduciary currency could be a huge boon to the American people. Properly managed it could be used to eliminate inflation and deflation and to deprive bankers of control of our money which is equivalent to a great deal of control over our economic future.