Article I, Section 8 of The Constitution of the United States gave the federal government broad financial powers in the field of public finance, including the power to "lay and collect taxes, duties, imposts and excises, and to borrow money, pay debts, coin money, and regulate the value thereof." Apparently, few men, if any, have understood the meaning of these powers better than Alexander Hamilton, the first Treasury Secretary of the United States.

When Hamilton came to his post as Treasury Secretary in 1789, the government debt totaled approximately $56 million dollars in war bonds issued during the Revolutionary War, most of which had been bought and resold to speculators. A debate raged between those, like Hamilton, who argued that the entire debt should be paid in full, and those, like Thomas Jefferson, who argued that the only the foreign portion of the debt, totaling approximately $12 million dollars, should be paid in full. The remainder of the debt should be fully honored only in cases where the original purchaser held the debt in question. Speculators who repurchased debt, often unscrupulously, should be paid only the repurchase price they paid, plus interest. While this argument is compelling, it is the opinion of this writer, that Hamilton was right. As Hamilton argued, "…the credit of the United States will quickly be established on the firm foundation of an effectual provision for the existing debt." Hamilton understood that though many speculators were unscrupulous, and much of the debt was resold to these speculators under the economic distress of a just war and its aftermath, this was not true in all cases, and it would not benefit the infant government of the United States to attempt to make a distinction. Moreover, the Constitution provided, quite simply, that "all debts contracted and engagements entered into before the adoption of that Constitution shall be as valid against the United States under it, as under the confederation." Finally, Hamilton wisely recognized that the debt, if it were honored, would provide an immediate economic stimulus, since the debt paper itself would then become a fluid source of credit already in circulation.

However, as the old, worn out cliché goes, you can't get blood out of a turnip. The United States was in debt for a good reason. It didn't have any money, and, in order to carry out Hamilton's policy, it would be necessary to get some. Thus, Hamilton's first step was to use power of the federal government under Article I, Section 8 of the Constitution, to impose the first United States tariff in May of 1789. Free trade advocates, then, as now, cried foul. Many of the same unscrupulous speculators holding United States debt, and demanding payment, were among those short-sighted, bohemian fools who cried the loudest. Nonetheless, a 5% tariff was imposed on most imports, and certain products, such as steel and textiles, were given higher tariffs to deflect foreign competition. As with any good tariff, this was a great boon to domestic producers, and served to rapidly expand the physical economy of the United States, thereby creating the conditions within which the public credit could be fully restored.

A mere tariff, however, was not sufficient. Hamilton immediately recognized that the United States would need a place to deposit its revenue. It would need a place to disperse the payment of the debt, and, since it was a nation with national economic interests, it would need a National Bank. Thomas Jefferson and the bohemians were opposed to the idea. Jefferson foolishly argued that a National Bank would be unconstitutional, and that it would "break down the most ancient and fundamental laws of the several states such as those against mortmain, the laws of alienage, the rules of descent, the acts of distribution, the laws of escheat and forfeiture, and the laws of monopoly." Hamilton, on the other hand, calmly argued that a National Bank has "a natural relation to the power of collecting taxes--to that of regulating trade--[and] to that of providing for the common defense…" The dispute eventually reached the Supreme Court where the wise and jurisprudent chief justice of the Supreme Court, John Marshall, guided by the Preamble of the United States Constitution, ruled in favor of the National Bank, in the case of McCullough v. Maryland. The Preamble, it was noted, provides for the "general Welfare." This is a principle of natural law adapted at the founding of the United States which many typical, modern, free trade bohemians, sunken to a dangerous level of historical and general illiteracy, mistake for some kind of "liberal" or even "communist" subversion. So much for them.

The First National Bank of the United States began business in 1791 with a 20-year charter, and $10 million in capital. It was a great success. As Treasury Secretary, Alexander Hamilton was able to issue a new series of 30-year bonds at 6% interest, in order to repay the Revolutionary war debt at face value. With branches in all major seaports and commercial centers, the National Bank competed with state banks for deposits and loan customers, and immediately redeemed state bank notes collected by the federal government, in exchange for specie. By 1809 its specie-to-banknote ratio was a healthy 40%, and the bank was making a steady profit with low-interest loans to both public and private business. It also prevented several bank runs by transferring funds to banks in need of temporary liquidity.

With funds from the National Bank, Hamilton directed construction of the Cape Henry lighthouse at the entrance of Chesapeake Bay in 1792. In a broad strategy of providing for the common defense, the Corps of Artillerists and Engineers was created in 1795 to direct fortification construction, including Fort McHenry in Baltimore Harbor. However, in 1796 when three of six naval frigates were completed with federal funds available at the bank, loud protests were heard from Albert Gallatin, the arch-bohemian congressional opposition leader and anti-National Bank, Jefferson ally. In the fashion of a modern day, self-described "conservative", Gallatin preferred to "balance the budget" and pay newly acquired debts as a priority.

In spite of Gallatin's efforts, the nation progressed. In 1801, for example, Congress appropriated $500,000 for the building of six additional warships and the completion of yards, docks and wharves. This was the year, however, that Jefferson was inaugurated as the third President of the United States, and the self-same Albert Gallatin was appointed Treasury Secretary. Gallatin, like a Newt Gingrich of our time, announced that the primary goal of the regime would be to pay the debt. Previously appropriated funds were returned to the Treasury. Ship construction was halted. Yards, docks, and forts fell into disrepair and ruin, and budgets to the navy were drastically cut. Gallatin's friends in the British Empire took the opportunity to begin a series of maritime atrocities that eventually led to the War of 1812. As a prelude to the crowning atrocity of the War of 1812--the burning down of the White House--the charter of the First National bank was allowed to expire without renewal in 1811. Undisciplined state banking greatly increased the number of bank notes in circulation, causing an average yearly inflation of 13.3% from 1812-1815. As the nation's finances fell into disarray, the British nearly reversed the noble mission of the American Revolution with torches, cannons and guns.

Fortunately, under the leadership of the great congressional opponent of Albert Gallatin, Henry Clay, a second National Bank was chartered in 1816 with the same responsibilities as the first. Like the first, it too was given a twenty-year charter. It's full potential, however, was not realized until the 1825-1829 administration of one of the United States greatest presidents, John Quincy Adams. With the classically educated Nicholas Biddle as President of the National Bank, and Henry Clay as Secretary of State, the United States under the presidency of John Quincy Adams enjoyed perhaps the ablest administration in its history. Adams, recognizing the vital importance of transportation for economic development and national security, immediately assigned the Army to begin developing America's first railroads. A whole complex of government led activities with private cooperation was initiated to build up the country. For example, in 1827, the Federal Government apportioned a total of approximately 2 million acres of land to states, including Ohio, Indiana and Illinois to build railroads, as well as canals. The following year, great projects of economic development such as the Chesapeake & Ohio Canal, and the Baltimore & Ohio Railroad began construction. As a result, the nation enjoyed an unparalleled level of prosperity.

By this time, however, the heirs of Thomas Jefferson and Albert Gallatin had degenerated and grown in influence to the point where Andrew Jackson, an ill-tempered, brutish enemy of the National Bank was inaugurated as President of the United States in 1829. Jackson vetoed a bill to re-charter the National Bank in 1832, and, unfortunately, was subsequently reelected. Arguing that the National Bank was actually private, and too powerful, Jackson instructed his Treasury Secretary, Roger B. Taney--who, as chief justice of the Supreme Court, later issued the infamous Dred Scott ruling--to remove the National Bank deposits and place them in private, state-chartered banks controlled largely by allies of the British crown. The National Bank was allowed to expire in 1836. The immediate result was massive inflation, economic depression, and eventually, civil war. For his part, shortly before he died, Andrew Jackson said one of his only regrets in life was not being able to shoot Henry Clay. So much for Andrew Jackson.

When Abraham Lincoln was inaugurated in March of 1861, he found the Treasury bankrupt. The nation was in its deepest economic depression ever, and it was at war with itself. Drawing on his profound grasp of the principles of classical tragedy, Lincoln formulated a masterful plan to avoid a tragic end to the American temple of liberty and beacon of hope. Volumes have been written on the many aspects of Lincoln's brilliant statecraft, but here we focus on the subject at hand--national banking. First, before he could accomplish his mission, Lincoln would need an infusion of funds, i.e. specie, into the Treasury, as an aggregate for future expansion of credit. Unfortunately, the immediate source of specie was the state controlled Associated Banks, which were under the control of a British asset, August Belmont. Lincoln was therefore compelled to issue rather usurious government bonds in exchange for specie. Belmont was a willing buyer, and he immediately resold all United States government debt to his British masters.

Once Lincoln's Treasury acquired an adequate aggregate of specie, Lincoln, on December 3, 1861, elaborated his policy: A nationally regulated banking system, and a national currency. Combined with a massive increase in tariffs, and large-scale government construction of railroads and industry, Lincoln elaborated a plan of national salvation against a British directed plan of national destruction at the hands of the Confederate South. Moreover, Lincoln instructed patriotic banker Jay Cooke to launch a widespread and extremely successful campaign to sell low interest government bonds to the public. This served the dual purpose of expanding the Treasury's supply of specie, as well as creating conditions whereby purchasers of government bonds had an immediate interest in the national cause. Belmont subsequently exposed his treason by completely suspending the transfer of any specie from any Associated Bank to any governing body or individual allied with the Union, but, as history shows, it was too late for the British and their Confederate allies.

Lincoln consolidated his fiscal policy with the National Currency Act of 1863, and the National Bank Act of 1864, which established such things as the Comptroller of the Currency. During the Civil War, $400 million dollars worth of federal "greenbacks" were printed and issued directly into the national war and development effort. Moreover, in order to move the nation toward a uniform currency, state bank notes were taxed ten percent. Greenbacks were considered by the public to be better than gold simply because they earned interest, and were fully backed by the economic might of the Union, which rapidly transformed the United States into the greatest industrial superpower the world had ever seen, even though it was divided, and at war.

Following the assassination of Abraham Lincoln through a conspiracy hatched in the British Army-occupied colony of Canada, for which 14 people were convicted, and 5 were hanged, the British banking establishment made their policy clear. They wanted Lincoln's greenbacks called in and burned, the United States debt they owned to be paid off immediately in gold, and private, state-banks to once again have free reign. A few well placed British agents in the Andrew Johnson administration, including Special Commissioner on the Revenue, David Ames, and Treasury Secretary Hugh McCullough, nearly succeeded in implementing the British policy, which surely would have destroyed American industry. While Ames and McCullough did succeed in contracting the money supply, and significantly drying up investment, they failed to defeat Lincoln allies in the Congress, such as the great American System economist, Henry Carey, in their repeated attempts to take down the Lincoln tariff, and open up the markets to British free trade. However, finally, in 1875, following a series of British manipulated economic crises and blackmailings in the United States, the so-called Specie Resumption Act was imposed on the nation. Specie resumption further contracted the nation's money supply by restricting its circulation to the equivalent amount of gold on deposit at the Treasury. Furthermore, as the British demanded, all debts were payable in specie, whereas the Lincoln policy had wisely been to allow only the interest to be paid in specie.

The immediate effect was recurrent economic depression followed by a series of cyclical banking panics, the most serious of which occurred in 1893. These panics were all primarily attributable to the foolish restrictive money supply policy begun in 1875. Each year, when the nation's farmers would harvest their crops, they would deposit their earnings at a local bank. Local banks would then redeposit these earnings in larger banks primarily in New York. New York banks would then invariably speculate with the money. When it was time to plant, the farmers would go to the local bank to withdraw their funds. In anticipation, the local banks would go to the New York Banks to reclaim their liquidity. Too often, the New York banks were unable to redeem these funds because they had gambled them away on the markets. Depositors would run to the banks in a panic, unsuccessfully attempting to claim their funds. Economic depression would follow. In spite of these cycles of depression which recur to the present day, the nation was able to scratch out some impressive gains when the heirs of Hamilton and Lincoln were able to subdue the worst excesses of free trade economics. The administration of William McKinley, in which the celebrated McKinley tariff was the centerpiece, is a fine example.

However, as the nation reeled from its most severe panic ever in 1907, rather than returning the nation to sound national banking of the sort instituted by Hamilton and his heirs, the United States illustrious leaders opted for the adoption of a British bred monster: The Federal Reserve. The Federal Reserve, adopted in 1913, is the subject of many criticisms, many of which are valid; still more of these criticisms are invalid, and give critics of conspiracy theory a rich source of epithet. Many opponents of the Federal Reserve, for example, sunken to a level of degeneracy worse than the level of Andrew Jackson supporters of old, lump the Federal Reserve together with the first and second national banks as examples of government excess. However, there are clear differences not only in the express powers of the Federal Reserve relative to the national banks, but also in their respective intentions.

The Federal Reserve was never intended to "promote the general Welfare" as the Preamble of the United States Constitution demands of government. Rather, it was intended to serve the narrow interests of what Franklin Delano Roosevelt called the "economic royalists." Conspiracy theorists will be happy to know that for this reason, and others, particularly the Federal Reserve's usurpation of Congress's express constitutional authority to "coin money and regulate the value thereof," the Federal Reserve is unconstitutional.

Initially, the Federal Reserve was created simply to provide a source of liquidity to prevent banking panics--at the expense of the public. Thus it was merely a bail out mechanism for Wall Street and other speculators. To the present day, when speculative excesses result in the equivalent of gambling losses, the Federal Reserve is there to provide cover. The speculators need not worry too much. The public will ultimately pay for the bulk of these losses in income tax collected through the Federal Reserve's twin monster--the Internal Revenue Service. By 1922, however, the Federal Reserve had been transformed into something Andrew Jackson, were he honest, would have legitimately feared. This was the year that "open market" operations were discovered.

Saddled by their own incompetence and resulting economic slowdown, Federal Reserve banks began to purchase government securities on the "open market" in order to increase their earnings. The proceeds from these purchases were then deposited primarily in commercial banks in New York. What this amounted to was little more than a shell game which increased liquidity for the speculators, and further aggravated the long-standing restrictive credit policy of the 1875 Specie Resumption Act. That is, as more liquidity was made available for speculation, less was available for productive activity. Meanwhile, government debt grew, and the taxpayer was required to pay for all of it. The Great Depression followed.

When Franklin Delano Roosevelt became the 32^nd President of the United States during the depths of the Great Depression, he evaluated the state of the union in his first inaugural address as follows:

Already, before he was inaugurated, Roosevelt allowed it to be leaked that he was thinking about having the Treasury take control of the Federal Reserve, and have it operate like a national bank. The response delivered to Roosevelt came in the form of a hail of gunfire on February 15, 1933, as the President elect concluded a short speech in Miami. The assassin's arm was deflected by a brave woman in the crowd, and bullets instead struck five other men near Roosevelt, including Chicago Mayor Anton Cermak, who died three weeks later. Speculation that Mayor Cermak was, in fact, the intended target, is answered by the fact that America's most celebrated military figure at the time, Maj. Gen. Smedly Butler, bravely revealed before Congress in 1934, that he had subsequently been the intended agent of an intense and well-funded Wall Street and J.P. Morgan campaign to affect an actual overthrow of the Roosevelt administration using primarily forces from within the populist, disgruntled mass of war veterans. Similar attempts had already succeeded in Europe. The primary motive for revolt was to be Roosevelt's abandonment of the gold standard, which became official on June 5, 1933. This move had particularly enraged the British/Wall Street nexus, as it loosened the grip of the British on United States credit which they enjoyed since the era of Specie Resumption. Roosevelt's abandonment of the gold standard was also a tactical maneuver against a British directed currency war that had recently resulted in the mass transfer of several hundred tons of United States Treasury gold deposits to British banks. J.P. Morgan, meanwhile, was made by Roosevelt to be the target of a highly publicized Senate Banking Committee investigation of the practices and power of the New York commercial banks. The committee soon discovered that Morgan, as a direct agent of the Bank of England, had effectively controlled those who made U.S. financial policy for more than three decades, as well as much of the leadership of both political parties, and the federal bench! The depths of this corruption were fathomless. It was also revealed that Morgan had provided substantial financial support for Mussolini's fascist Italy.

Early in his administration, Franklin Roosevelt repeatedly threatened to abolish the Federal Reserve, and to create a National Bank on constitutional principles, as some of his advisors recommended. However, the snakes within Roosevelt's administration, such as Treasury Secretary Woodin, recommended a truce with Wall Street in exchange for a loosening of credit for such projects as the Tennessee Valley Authority. It was perhaps Roosevelt's greatest failure, among a number of well-known successes, that he capitulated to these snakes and left the nation's finance in a condition where it is now on the verge of collapse. Today, following the highly destructive 'controlled disintegration', 'post-industrial', speculator-friendly policies of Federal Reserve Chairmen Paul Volcker and Alan Greenspan, the national debt stands at approximately $6 trillion dollars. This is not productive debt. It was not extended for the creation of physical wealth in infrastructure development, industrial expansion, or the like. Rather it was pyramided, many times over, as part of what is easily the worst orgy of financial speculation in history over the last 30 odd years. However, it is not too late to reverse the damage. The United States requires changes which only Alexander Hamilton, Henry Clay, and Abraham Lincoln had the courage to make in the past.