Founders

"I sincerely believe... that Banking Establishments are More Dangerous than Standing Armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."

-Thomas Jefferson, 1816, American Revolutionary

Thomas Jefferson distilled the spirit of America in a single document, our Declaration of Independence. As the framework of the nation emerged from the ashes of the civil war, Jefferson saw the United State adopt their first Central Bank, and opposed the policy vigorously within the cabinet of President George Washington. He would later write of the Bank:

"[The] Bank of the United States... is one of the most deadly hostility existing, against the principles and form of our Constitution... An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?"

-Thomas Jefferson to Albert Gallatin, 1803

He then went on to propose abolition of the Central Bank, in favor of allowing the people's Department of the Treasury to offer the nation the same services as the banks:

"In order to be able to meet a general combination of the banks against us in a critical emergency, could we not make a beginning towards an independent use of our own money, towards holding our own bank in all the deposits where it is received, and letting the treasurer give his draft or note for payment at any particular place, which, in a well-conducted government, ought to have as much credit as any private draft or bank note or bill, and would give us the same facilities which we derive from the banks?"

-Thomas Jefferson to Albert Gallatin, 1803

Years later, when the nation was embattled in another war with Britain, Jefferson observed the private central banks bringing the nation to the brink of disaster. A year after the British captured Washington D.C. Jefferson told Virginia Senator John W. Eppes:

"Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. It is the only fund on which they can rely for loans; it is the only resource which can never fail them, and it is an abundant one for every necessary purpose. Treasury bills, bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation will take the place of so much gold and silver, which last, when crowded, will find an efflux into other countries, and thus keep the quantum of medium at its salutary level. Let banks continue if they please, but let them discount for cash alone or for treasury notes."

-Thomas Jefferson to John W. Eppes, 1813.

Worried by the Government's interest being usurped again by the Banks he went on to write:

"Instead of funding issues of paper on the hypothecation of specific redeeming taxes (the only method of anticipating, in a time of war, the resources of times of peace, tested by the experience of nations), we are trusting to tricks of jugglers on the cards, to the illusions of banking schemes for the resources of the war, and for the cure of colic to inflations of more wind."

-Thomas Jefferson to M. Correa de Serra, 1814

Jefferson knew that financial sovereignty was necessary for the success of a functioning democracy. The Treasury should not borrow money from private banks to print money, it should simply print money, and allow the representatives of the people to control the economy for the common good, and not for the private interests of bankers.

His ideas lost to the incorruptible avarice of the Bankers, and America followed the disastrous Bank of the United States by establishing quickly the Second Bank of the United States. The scourge of the central banks would continue to cripple the interests of the people of the United States for generations, and eventually a champion emerged, to battle the evils of the Banking establishments on behalf of the people of the United States. That Champion, and the subject of our next post, was Andrew Jackson.

*Quotes taken from The Writings of Thomas Jefferson. Memorial Edition (Lipscomb and Bergh, editors) 20 Vols., Washington, D.C., 1903-04.