How Benjamin Franklin Caused the Revolutionary War
"Men don't change. The only thing new in the world is the history you don't know." - Harry S. Truman.
Our American story begins calmly enough, by the mid 1700s, the Colonies were well established and fairly prosperous, there was full employment, no income tax, and prices were generally stable. Benjamin Franklin wrote, "There was abundance in the Colonies, and peace was reigning on every border. It was difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread." U.S. Representative, Charles Binderup, Unrobing the Ghosts of Wall Street, July 5, 1941.
When Franklin traveled to London in 1763, he saw a completely different situation. "The streets are covered with beggars and tramps," he wrote. He asked his friends how England, with all its wealth, could have so much poverty among its working classes. They replied that England had too many workers! The well-to-do were overburdened with taxes, and could not pay more to relieve the poverty of the unemployed workers. In a meeting with merchants and bankers at the British Board of Trade, members asked Franklin how the American Colonies managed to collect enough money to support their poor. Franklin replied, "That is simple. In the Colonies, we issue our own money. It is called 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." Both quotes from Charles Binderup, Ibid. "It passed through no banker's hands, but was loaned to the people direct, thus saving banking toll and banking restriction of volume; nor are there any panics or fluctuations recorded. Thomas Powell, M.P., of England, who had acted as governor and commander-in-chief of all provinces, in a book written by him in 1768, says in regard to this colonial system of money: 'I will venture to say that there never was a wiser or better measure, never one better calculated to serve the uses of an increasing country, and never was a measure more steadily pursued or more faithfully executed for forty years together than the loan office in Pennsylvania, formed and administered by the assembly of the province.'" Samuel Leavitt, Our Money Wars, 1894.
"Gold and silver are not intrinsically equal value with iron. Their value rests chiefly on the estimation they happen to be in among the generality of nations. Any other well-founded credit is as much an equivalent as gold and silver. Paper money, well-founded, has great advantages over gold and silver; being light and convenient for handling large sums, and not likely to have its volume reduced by demands for exportation." Benjamin Franklin.
"A legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. When your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bares the endless burden of unpayable debt and usury." Attributed to Benjamin Franklin - Ellen Brown and Reed Simpson, Web of Debt, 2008. The "endless burden" of debt-based money issued by banks hits the economic nail on the head. The difference is that a government can "spend" money into existence without debt. It enters the economy and circulates endlessly, facilitating trade. Banks, however, by their very nature, can only "lend" money and then they demand it back, with interest, actually decreasing the circulating money supply. In England, ALL the money in circulation was "lent" into existence by the privately-owned Bank of England, which collected interest on every pound and penny in circulation. However, unlike a real loan, the Bank of England didn't demand the return of its bank note money, it was content just to sit back and collect interest on it - year after year after year forever. The Bank lent the government the money it needed, in the form of paper bank notes and the government gave the bank an equal amount of interest-bearing government bonds as "collateral." The interest payments were made by taxing the citizens of England and her colonies, and the money continually flowed from the producers and workers, into the hands of the owners of England's bonds, the privately-held, Bank of England. This debt money system continually siphons the earnings of all of the producing classes and transfers it through the government - to the wealthy bankers in a manner few would recognize.
Realizing Colonial Scrip was cutting into their profits, the Bank of England demanded an end to the practice and pressed Parliament for the passage of the Currency Act of 1764. Franklin "...went before a committee of Parliament to answer a report of the Board of Trade, dated February 9, 1764, containing reasons for restricting the issue of paper bills of credit in America 'as a legal tender,' and, in his unanswerable argument against the restriction, he said: 'If carrying out all the gold and silver ruins the country, every colony was ruined before it made paper money. But far from being ruined by it, the colonies that have made use of paper money have been and are all in a thriving condition. ... Pennsylvania, before it made and paper money, was totally stripped of its gold and silver ... The difficulties for want of cash were accordingly very great, the chief part of trade being carried on by the extremely inconvenient method of barter; when, in 1723, paper money was first made there, which gave new life to business, promoted greatly the settlement of new lands (by lending small sums to beginners on easy interest, to be paid in installments), whereby the province has so greatly increased in inhabitants that the export from hence thither is now more than tenfold what it then was, and by their trade with foreign colonies they have been able to obtain great quantities of gold and silver to remit hither in return for the manufactures of this country." Freeman Otis Willey, Whither are We Drifting as a Nation, 1882.
"In 1763 the British Parliament declared all Colonial acts for the issue of paper currency to be void. 'Every medium of exchange,' said the British Board of Trade, 'should have an intrinsic value, which paper has not.' Dr. Franklin there and then exploded this bosh more than a century and a quarter ago though many parrots are still repeating it. 'However fit, (said Franklin) a particular thing may be for a particular purpose, whenever that thing is not to be had, or not to be had in sufficient quantity, it becomes necessary to use something else, the fittest thing that can be got in lieu of it. Bank bills and banker's notes are in daily use here (in London), as a medium of trade, yet they have no intrinsic value, but rest on the credit of those that issued them, as paper bills in the Colonies do on the credit of the respective settlements there." ... "Being payable in cash upon sight by the drawers is indeed a circumstance that cannot attend the Colony bills, their cash being drawn from them by the British trade; but the legal tender being instituted, is rather a greater advantage to the possessor, since he need not be at the trouble of going to a particular bank or banker to demand the money." Gordon Clark, Shylock: As Baker, Bondholder, Corruptionist, Conspirator, 1894.
The British Parliament apparently cared more for the Bank of England's argument than Ben Franklin's. The passage of Parliament's 1764 Currency Act forced the Colonies to use only British money Bank of England notes, and put the colonists squarely under the thumb of the British central bank, just like the citizens of England. The American colonists were forced to borrow all their money from the Bank of England and pay them interest, in order to conduct their business without resorting to barter.
With the loss of Colonial Scrip, there was a sharp decrease in the American money supply, resulting in an economic depression. Whenever the money supply of a nation is reduced, you invariably have a recession or, if severe enough, depression. You will see this principle in action again and again throughout our history. "I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money, and equally of no sharp decline in the stock of money that was not accompanied by a severe depression." Milton Friedman, economist. Friedman's statement is as close to a hard truth as you can get in the (intentionally) mushy field of economics. He didn't discover it, it's not anything new, he's just repeating the obvious - It is axiomatic. It's the economics version of: "The sky is blue." We all know that if the money supply of a nation is INCREASED, we have inflation and prices rise. If you are an American, over the age of four, congratulations! - You have lived in inflationary times and have seen first-hand how this works. But, when you DECREASE the amount of money available, (and, as you'll see, there are several ways to do that), there are fewer dollars to go around and prices drop. If the economy of our nation consisted of ten bushels of wheat and our money supply was ten dollars, each bushel would be worth a dollar. If our money supply suddenly inflated to $20, each bushel would be worth $2 That's inflation. But if the money supply dropped to $5, each bushel would be worth 50 cents. That may sound good, it's cheaper, but everyone's debts and monthly bills remain the same. In this economy, you are most likely a wheat farmer and you are getting half as much money for your crop every year. However, you still owe the bank the same amount every month for your mortgage, you owe the same amount to the utility company for your electricity, you have to pay the same on your car loan, clothing, insurance, groceries, gas, ... Debts don't decrease just because the money supply falls. (They should.) You suddenly find that you cannot pay your bills and neither can your neighbors. Sure, you can cut down on some little things, and you will, but by doing that, everybody else relying on your spending for their livelihood, suffers too. Businesses fail, people become unemployed, foreclosures rise, and farmers and manufacturers get less money for their crops and products. A contracting money supply creates a downward, deflationary tailspin with its probable end - a nationwide Depression (with a capital "D.") Only the wealthy prosper. How? Because, by definition, they have money and can now buy your crops, products, farms, businesses, homes, land, and labor cheaper. - A whole lot cheaper. Sound like today?
"After Franklin gave explanations on the true cause of the prosperity of the Colonies, the Parliament exacted laws forbidding the use of this money in the payment of taxes. This decision brought so many drawbacks and so much poverty to the people that it was the main cause of the Revolution. The suppression of the Colonial money was a much more important reason for the general uprising than the Tea and Stamp Act." Peter Cooper, industrialist, inventor, philanthropist, and Presidential candidate.
"In an evil hour, the British Government took away from America its representative money, commanded that paper bills of credit should be issued no more and cease to be legal tender, and collected the taxes in hard silver. This was in 1763. Mark the consequences. The contraction of the circulating medium paralysed all the industrial energies of the people. Ruin seized upon those once flourishing colonies; the most severe distress was brought home to every interest and every family; discontent became desperation. In 1775 the first Congress was held in Philadelphia. In 1776 America became an independent state." John Twells, London Banker, Parliamentary Debates, Volume 80, 1895.
Franklin reported that one year after the implementation of the Currency Act that the streets of the Colonies were filled with unemployed beggars, just like in England. The amount of circulating money had been cut in half. Franklin stated that the British Currency Act was the true cause of the American Revolution - and not the tax on tea or the Stamp Act. Franklin wrote, "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 colonists to get 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." Robert Lantham Owen, National Economy and the Banking System of the United States, 1939. The "Tea Party" of today unintentionally perpetuates the myth that American Colonists revolted because of a $1 per year tax on tea. We would all be better served following the true lead of our Founding Fathers and revolt against the curse of debt money, the evil monster currently running amok, destroying our nation and goring us taxpayers. As you will soon see, restoring the issuance of our nation's currency to the U.S. Treasury, as demanded by our Constitution, would be a simple cure and would quickly revive our ailing economy.
"The Bank of England has played a prominent role in American history Without it, the United States would not exist. The American colonists considered themselves loyal Englishmen to a man, but when they began to enjoy unequaled prosperity by printing and circulating their own Colonial scrip, the stockholders of the Bank of England went to George III and informed him that their monopoly of interest-bearing notes in the colonies was at stake. He banned the scrip, with the result that there was an immediate depression in the commercial life of the Americas. This was the cause of the Rebellion; as Benjamin Franklin pointed out, the little tax on tea, amounting to about a dollar a year per American family, could have been borne, but the colonists could not survive the banning of their own money." Eustace Mullins, The World Order, 1985.
"Our early history books strangely omit the facts that for some years prior to 1773 the British Parliament had busied itself annulling the laws under which the American Colonies had exercised their fundamental right to create and issue their own money. Much is said of Taxation without Representation, but what underlies that phrase is omitted. The fact that the Bank of England manipulators, having gained control over British industry through frequent depressions, cast their greedy eyes on the commerce and industry of America, and set to work to lay hold of the money of the Colonies and, hence, the industry of the Colonists." Gertrude M. Coogan, Money Creators, 1935.