[color="#008080"][size="4"]Part V[/size][/color][size="4"][color="#008080"][size="2"] (of XVIII)[/size] :[/color][/size][color="#008080"][size="4"] The American Revolution[/size][/color]
By the mid 1700th the British Empire was nearing its height of power around the world. But Britain had fought 4 costly wars in Europe since the creation of their privately owned central bank, The Bank of England. To finance this wars, the British parliaments had borrowed heavily from the bank. By the mid 1700th the governments debt in Britain was 140 million pounds ââ¬â a staggering sum for those days.
Consequently, the British government embarked on a program of trying to raise revenues from their American colonies in order to make their interest payments to the bank.
But in America it was a different story. The scourge of a privately owned central bank had not yet hit.
In the mid 1700th, pre-Revolutionary America was still relatively poor. There was a severe shortage of precious metal coins to trade for goods.
Benjamin Franklin was a big supporter of the colonies printing their own paper money. The American colonies began to issue their own money, called Colonial Scrip. Colonial scrip was just paper money, debt-free money, printed in the public interest and not backed by gold or silver coins. In other words, it was a totally fiat currency. It provided a reliable medium of exchange and it also helped to provide a feeling of unity between the colonies.
One day, officials of The Bank of England asked Franklin how he would account for the new found prosperity of the colonies.
Franklin replied:
[indent][font="Courier New"]"That is simple. In the Colonies we issue our own money. It is called the Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."
[/font][/indent]
The Bank of England realised that America had learned the secret of money and that genie had to be returned to its bottle as soon as possible.
As a result, the Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money and ordered them to pay all future taxes in gold or silver coins. In other words, it forced the colonies on a gold or silver standard.
For those who still believe that a gold standard is the answer for America's current monetary problems, look what happened to America after that.
Writing in his auto-biography, Franklin said:
[indent][font="Courier New"]"In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."
[/font][/indent]Franklin claims that this was even the basic cause for The American Revolution.
[indent][font="Courier New"]"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction.
The inability of the colonists to get the power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War."
[/font][/indent]
By the time the first shots were fired in Lexington, Massachusetts, on April 19, 1775, the colonies had been drained of gold and silver coins by British taxation. As a result, the continental government had no choice but to print money to finance the war. At the start of the revolution, the US money supply stood at $12 million. By the end of the war it was nearly 500 million.
As a result the currency was virtually worthless.
Colonial Scrip had worked because just enough was issued to facilitate trade.
Today, those who support a gold back currency point to this period of revolution to demonstrate the evils of a fiat currency. But remember, the same currency had worked so well 20 years earlier during times of peace before The Bank of England had the parliament outlaw it.
Next, we will see how the Money Changers got their foothold into America.
Stay tuned...
By the mid 1700th the British Empire was nearing its height of power around the world. But Britain had fought 4 costly wars in Europe since the creation of their privately owned central bank, The Bank of England. To finance this wars, the British parliaments had borrowed heavily from the bank. By the mid 1700th the governments debt in Britain was 140 million pounds ââ¬â a staggering sum for those days.
Consequently, the British government embarked on a program of trying to raise revenues from their American colonies in order to make their interest payments to the bank.
But in America it was a different story. The scourge of a privately owned central bank had not yet hit.
In the mid 1700th, pre-Revolutionary America was still relatively poor. There was a severe shortage of precious metal coins to trade for goods.
Benjamin Franklin was a big supporter of the colonies printing their own paper money. The American colonies began to issue their own money, called Colonial Scrip. Colonial scrip was just paper money, debt-free money, printed in the public interest and not backed by gold or silver coins. In other words, it was a totally fiat currency. It provided a reliable medium of exchange and it also helped to provide a feeling of unity between the colonies.
One day, officials of The Bank of England asked Franklin how he would account for the new found prosperity of the colonies.
Franklin replied:
[indent][font="Courier New"]"That is simple. In the Colonies we issue our own money. It is called the Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."
[/font][/indent]
The Bank of England realised that America had learned the secret of money and that genie had to be returned to its bottle as soon as possible.
As a result, the Parliament hurriedly passed the Currency Act of 1764. This prohibited colonial officials from issuing their own money and ordered them to pay all future taxes in gold or silver coins. In other words, it forced the colonies on a gold or silver standard.
For those who still believe that a gold standard is the answer for America's current monetary problems, look what happened to America after that.
Writing in his auto-biography, Franklin said:
[indent][font="Courier New"]"In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."
[/font][/indent]Franklin claims that this was even the basic cause for The American Revolution.
[indent][font="Courier New"]"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction.
The inability of the colonists to get the power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War."
[/font][/indent]
By the time the first shots were fired in Lexington, Massachusetts, on April 19, 1775, the colonies had been drained of gold and silver coins by British taxation. As a result, the continental government had no choice but to print money to finance the war. At the start of the revolution, the US money supply stood at $12 million. By the end of the war it was nearly 500 million.
As a result the currency was virtually worthless.
Colonial Scrip had worked because just enough was issued to facilitate trade.
Today, those who support a gold back currency point to this period of revolution to demonstrate the evils of a fiat currency. But remember, the same currency had worked so well 20 years earlier during times of peace before The Bank of England had the parliament outlaw it.
Next, we will see how the Money Changers got their foothold into America.
Stay tuned...