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Alexander Hamilton’s Central Bank
In today’s time there are few larger controversies than the one centered on central bank of America known as the Federal Reserve. Most people if asked would say that the Federal Reserve was started in 1913 with the passing of the Federal Reserve Act by Woodrow Wilson. Most people would be wrong.
The Central Bank of America actually had a much earlier start than most believe. It was originally made by one of the founding fathers of our country, Alexander Hamilton and it did exactly as it does today.
Alexander Hamilton formed the Bank of America in 1784 and became its first director. His objective was to create a central bank modeled after the Bank of England which at the time had been an institution of ruin for England for several decades. The United States government becoming a Federal government under Washington’s presidency was to then assume all the State’s debt and borrow all its money from Alexander’s bank.
In 1791 his goals were realized and the Bank of America received its charter from the US government and became The United States of America’s first Central Bank. The charter ran for 20 years until 1811 (approximated) when it failed to be renewed for five years. After a five year period the Bank of America reacquire its charter and continued to push America into debt, much the same way the Banks of England and France did to their countries.
Not all things went as planned for the central bank though. In 1836 President Andrew Jackson vetoed the bank and it lost its power for 37 years. In 1867 the bank was chartered once again. Finally in 1913 the Bank of America became the Federal Reserve that we all know.
The Central Bank was created to allow people to profit at the expense of the nation and had a great impact on history of America; a history that is often overlooked. To pay for the debt the government accumulated Alexander proposed a tax on goods. After he had become the Secretary of Treasury he pushed a tax on distilled liquor through.
This action resulted in people who lived in the mountains refusing to pay the tax. Alexander insisted to the Washington that he crush this with the militia and Washington did so. These events were known as the Whiskey Rebellion of 1794.
The Central Bank caused the United States much financial distress later on by causing the financial panics of 1893 and 1907. Though Hamilton was long dead by then it was his backers who continued to operate the Bank of America and whom continue to exert much influence over America and it’s foreign policy.
In 1811 The Bank of America Failed to Receive its charter’s renewal but why? It was because of a large opposition to the central bank. They wanted the government to make its own money. Leading the opposition was James Madison and Thomas Jefferson.
Jefferson was did not like the Central Bank for he feared that it would affect America’s foreign policy and America during times of War. His fears as history shows were not unfounded. These worries are illustrated in a letter dated December 13 1803 in which he says:
This institution is one of the most deadly hostility existing, against the principles and form of our constitution. The Works of Thomas Jefferson by Paul Leicester Ford
It continues saying:
… 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. Ibid
Thanks to these men the Central bank’s charter expired but was eventually picked back up after five years.
History shows us that Central banks were made to keep a nation in debt giving a few wealthy people money and power to control a nation and America’s Central Bank was no different. A bank not started in the 19th century but in the late 17th. A bank, which as you have seen has carried a controversy through the ages to modern time, a controversy that people still are as passionate about as Thomas Jefferson and James Madison.