The Thomas Jefferson Discussion Group
of Orlando, Florida
Meeting No. 68 - April 29, 2009
Holiday House Restaurant, Orlando, Florida
THIS MONTH'S TOPIC:
The National Bank – Then and Now:
The Conflict that was the Genesis of our Political Party System
The subject produced a conflict that helped establish a schism in President Washington’s cabinet: Alexander Hamilton, Secretary of the Treasury, in one corner, vs. Thomas Jefferson, Secretary of State, in the other. Better than a WWF steel cage match today, it was high drama in our nascent nation!
It was like two children vying for their father’s attention and approval. George Washington was persuaded more by Hamilton’s rhetoric of using the bank to help control “the beast” - the people (i.e., the mob), than by Jefferson’s warning that a central bank would give the federal government far too much power. A population in heavy debt puts the population under a "slavery" of sorts.
If abused, the federal government who has the power of controlling the money supply and spending and taxing to pay for the spending, looks more and more like a slave master. Jefferson was devastated (Note the irony: Mr. Jefferson owned over 200 slaves). Washington’s behavior was one of the principal reasons Jefferson resigned his cabinet position at the end of Washington’s first term, and it turned his opinion of Washington from one of reverence to one of apprehension and doubt. The conflict produced our two party system, namely, what should the relative power be between the federal government and the local and state governments.
I believe you don’t need a PhD in economics to understand the mess we are in today. Hamilton’s First Bank of the United States created the first monopoly of our nation’s money supply. Andrew Jackson refused to renew its charter! (Read American Lion by Jon Meacham.) After a stormy history, in 1913 the national bank became "The Federal Reserve." There are really no effective checks and balances on this “private” bank - it is really not "federal," and its charter does not require it to hold any "reserves." Do you know how to say "highly leveraged" and "run away inflation"? Social engineering, while sounding noble, can have unintended consequences even if the "engineers" are sincerely altruistic. Jefferson knew this. That is why is was so clear on the limited role he believed the federal government should play in the citizens’ lives.
Is Jefferson shaking his head somewhere saying, "I told you so"? Will the price of wheelbarrows go through the roof when everyone finds they require one to carry the dollars they need to go food shopping? Will our children and grandchildren be taxed at 80% to service the debt we have created in the past six months? With compound interest, is it even possible to service this debt, or will the government continue to keep the printing presses rolling and pay back the debt with a greatly devalued dollar? What will our lenders (e.g., China) do? Will the world even continue to lend us the money we need for all this spending? Can the dollar even survive?
There’s lots to discuss on this one and its relevance to the financial "quagmire" we find ourselves in today.
Using Thomas Jefferson and our early history as a backdrop, please consider joining us to discuss or just to listen in to: "The National Bank – Then and Now: The conflict that was the genesis of our political party system"