FEBRUARY 25, 1863 – NATIONAL BANKING ACT PASSED

1863 – NATIONAL BANKING ACT PASSED
It provided for the national chartering of banks by the federal government. This replaced state charters – many of which contained much more rigid and democratic provisions. The Act in numerous ways standardized banking across the country. The act established National Banking Associations, the office of the Comptroller of the Currency and a system of national chartered banks with control over all of them coming from Washington. The new banks were given virtaully tax free status. In doing so, it entrenched what some have called “structural fraud” of the banking system – creating money out of thin air and charting interest on it.

FEBRUARY 25, 1862 – LEGAL TENDER ACT PASSED

1862 – LEGAL TENDER ACT PASSED
A bill authorizing the issuance of $150 million non interest-bearing United States notes (commonly referred to as Greenbacks). Congress would later grant $300 million more in US notes. This was interest free US money. The adminstration of Republican President Abraham Lincoln wanted to avoid the nation going into debt borrowing money from private/corporate bankers to pay for the Civil War. Greenbacks were not bonds or notes or any other promises to pay “money” at some future time. They were money. Since they were not borrowed, they didn’t add to the national debt. What later made them inflationary was they were used to pay for war  – which didn’t produce or add anything productive to the economy to offset the added money supply. The bill contained an “Exception Clause”, which stated that Greenbacks could not be used to pay the interest on the national debt, nor to pay taxes, excises or import duties.

FEBRUARY 25, 1791 – CREATION OF THE FIRST BANK OF THE UNITED STATES

1791 – CREATION OF THE FIRST BANK OF THE UNITED STATES
A 20-year charter was issued by the federal government (very unusual at the time since most corporate charters, or licenses, were issued by states) to create the first national private bank. This was the first private institution empowered to create paper money -- with all the power and profit that goes along with it. The bank’s paper money was accepted for taxes. Eighty percent of its shares were privately owned, among these 75% were foreign owned (mostly by the English and Dutch). The bank was modeled on the Bank of England. It’s main proponent, Alexander Hamilton, argued in support: "Suppose that the necessity existed...for obtaining a loan; that a number of individuals came forward and said, we are willing to accommodate the government with this money (which we have or can raise) but in order to do this it is indispensable that we should be incorporated as a bank...and we are obliged on that account to make it a consideration or condition of the loan." In other words, Hamilton was saying the private/corporate bank will be more than happy to give the government loans if the government grants the private/corporate bank the power to create money! Jefferson, Madison and others opposed it. Jefferson said, "This institution (the Bank of England) is one of the most deadly hostility against the principles of our Constitution…suppose an emergency should occur…an institution like this…in a critical moment might overthrow the government." The bank had an enormous impact on the economy early on. Within 2 months of its creation, it flooded the market with loans and banknotes and then suddenly called in many of its loans. The result was the first US securities market crash -- what became known as the “Panic of 1792” – the first of many panics, recessions and depressions due to the private/corporate control of our money system.