The Banking Swindle

Money Creation and the State

Kerry Bolton

• Editorial: Black House Publishing Ltd
• Año: 2019
• ISBN:
  9781912759750
• Edición: 1
• Categoría: Economics
• Categoría: Banks & Banking

The Banking Swindle is not an economic textbook filled with technical jargon that only serves to obscure important issues. Rather, this is a book intended to explain in a straight-forward manner the way private banking interests - which have no loyalty to anything other than to greed - create credit and money as profit-making commodities which has driven individuals, businesses and entire states to ruin through debt.As importantly, The Banking Swindle examines the many communities and states that have rejected the fraudulent banking system, and sometimes had to fight to do so, and brought prosperity where there was destitution, by taking issuing money and credit for their legitimate purpose: as mere tokens for the exchange of goods and work, debt-free. The Banking Swindle is unique also in regard to its coming from the ‘Right’, and redefining the ‘Right’ with precision, after decades of having been misinterpreted by both the Left and Classical Liberals as being synonymous, especially in the English-speaking world, with Free Market Capitalism, which it is not, and never has been. Indeed, as The Banking Swindle shows, drawing on such thinkers as Oswald Spengler from the Right, and Karl Marx himself from the Left, Free Market Capitalism is subversive and anti-conservative. The Banking Swindle shows that historically it has been the Right that has fought Usury, that it was Rightist parties that offered clear policies on overthrowing the power of the bankers. The Right has largely forgotten this background, at the very time when policies are needed to address the world’s Number One issue: Debt.

States that Broke the Bondage of Usury

Any efforts to advocate alternatives to banking that might extricate nations from the grip of the money-changers are dismissed as ‘funny money’ by defenders of a system that has for centuries resulted in ‘poverty amidst plenty’, cycles of economic bust and war, and servitude at every level. Yet there are many examples of states that have broken free and implemented alternative forms of banking that have brought well-being, while others have languished in stagnation at best while paying their hidden masters for the privilege via usury.

Of course it is not in the interest of the financial and economic status quo that any light be shed upon these historical examples, and they are put down the Memory Hole, or the nature of their financial systems is obscured by focusing entirely on other factors. Hence, while many financial reformers are aware of the way Lincoln funded his war partly through the issue of Greenbacks, few even among banking reformers realise that the Confederacy was also funded with state credit called Graybacks, and that system is obscured by focusing on questions of slavery. Likewise, few understand much about the manner by which Germany extricated itself from socioeconomic misery through a new financial system and the matter is buried by focusing on the Holocaust, war, or when there is an attempt to explain Germany’s reconstruction it is ascribed to ‘rearmament’.

It took a poet, Ezra Pound to explain more cogently about the history of money than economists and historians. Pound stated that:

The history of usury begins with the loans of seed-corn in Babylon in the third millennium BC. The first mention I know of a state monetary policy refers to the year 1766 BC when an Emperor of China, in order to alleviate distress caused by famine and aggravated by grain monopolizers, opened a copper mine and coined discs of metal perforated with a square hole. We read that he gave this money to the starving, and that they could then buy grain where the grain was.1

Nearly four thousand years later and the politicians either did not have the wisdom or the courage to adopt a similar policy for getting food on the table of the starving during the Great Depression, or for dealing with the present global debt crisis without getting into further debt or implementing ‘austerity measures’.

Pound wrote of the Medici bank, the Monte di Paschi, that had been founded in 1600 and remained standing in his own time: ‘Siena was flat on her back, without money after the Florentine conquest’. Cosimo, first Duke of Tuscany, guaranteed the capital of the bank, using grazing lands as collateral. He underwrote 200,000 ducats, paying 5% to shareholders and lending at 5½%, with minimum overheads and salaries, and profits going back into hospitals and public works.2

Of the American Colonies Pound wrote that, ‘The Colony of Pennsylvania lent its colonial paper money to the farmers, to be repaid in annual instalments of ten percent, and the prosperity that resulted was renowned throughout the western world’.3 He wrote that in 1750 there were sanctions imposed by the Bank of England forbidding Pennsylvania from issuing its own ‘scrip’, which played its role in fomenting the American revolt.4.

Guernsey

One of the most successful and enduring examples of usury-free state credit has been that of Guernsey, British Channel Islands, whose banking experiment was initiated in 1820. Guernsey’s banking system was prompted by dire need, the island being in serious financial trouble from the beginning of the 19th Century. Guernsey’s town was undeveloped, the roads were cart-tracks, and there was no prospect for employment. The most serious problem however was the encroaching sea that was washing away large tracts of land because of the disrepair of the dykes. Neither tax increases nor further loans were practicable.

However it was the need to upgrade the Public Market that prompted a committee to report back with a solution in 1816 to issue £6000 worth of States Notes.5 The committee also recommended that the States Notes be used not only for the new market, but also for Torteval Church, road construction and other State expenses. The notes’ issue was started in 1820, and was followed by other issues, until by 1837 £55,000 of the Notes were in circulation, debt-free and having created prosperity and development, which in turn stimulated visitors to the island.6

Of course there were complaints to the Privy Council that such debt-free issues were being made, but the States Financial Committee gave such good account of the island that the objections were unsuccessful. However two banks on the island flooded Guernsey with their own notes to undermine the State Notes, and for reasons unknown it was the Island that agreed to limit the issue of its Notes.7 It was such a tactic used by the North to undermine the Graybacks of the South during the American Civil War that caused inflationary problems, but these manoeuvres do not discredit the efficacy of state credit. With the outbreak of war in 1914 Guernsey restarted the Notes issue according to requirements. While State Notes continue to circulate alongside British Pounds Sterling there has never been inflation, and the prosperity of the island continues as it has since 18208, operating on minimal taxation.9

The Wära

Like Guernsey a century previously, a ‘free money’ movement was started in Germany in 1919, in the aftermath of the world war, based on the ideas of the unorthodox economic theorist Silvio Gesell, who advocated a type of voucher currency to keep up consumption. In an attempt to eliminate its war debts German currency had been inflated and had brought ruin to ordinary folk. This hyperinflation, with the often-cited image of a barrow load of currency being wheeled to pay for a loaf of bread, is frequently used to claim that state currency causes inflation. This is nonsense. It was the debt system that caused Germany’s hyperinflation, ruining the working and middle classes, while international bankers continued to reap the rewards of debt. A period of deflation followed, stagnating the economy.

The American economist Professor Irving Fisher of Yale University, stated that in 1926 Hans Timms, a friend of Gesell’s established the Wära Barter Company, which issued its own ‘scrip’, the Wära. He stated that Wära was a word compounded of two others, ‘Ware’ and ‘Währung’, meaning respectively ‘Goods’ and ‘Currency’. It is an apt name for a token that was intended to function as all currency and credit should: to exchange goods.

By October 1929, the year of the Wall Street Crash, the Company had issued Wära in five denominations, which could be purchased with an equivalent amount of Reichsmarks.10 In 1930, with the Great Depression hitting Germany with full force, causing massive unemployment, Hebecker, the owner of a disused coal mine in the town of Schwanenkirchen, with a population of 500, borrowed 40,000 Reichsmarks from the Wära Barter Company, and issued the equivalent amount of vouchers for his coal. The miners were persuaded to accept the Wära as wages, which were in turn accepted by the village trades people, because they were redeemable as coal from Hebecker or, if necessary, as Reichsmarks. The Wära vouchers levied a fee of 1% every month on the holder, paid to the coal mine and used to fund the publicising of the system; therefore it was in the interests of the voucher holders to keep spending them into circulation prior to arrival of the month’s tax.

Schwanenkirchen prospered while the rest of Germany fell into destitution. Reporters from all over Germany descended on the village to write about the ‘miracle’. Even although the number in circulation was never more than 20,000 Wära, because they were kept in circulation, 2.5 million people used them as a means of exchange.

The Wära currency spread throughout Germany, and was accepted and backed with different commodities by 2000 corporations. In November 1931 the Government passed an emergency law prohibiting the Wära, and the condition of unemployment and destitution was resumed.11

Woergl

Woergl, an Austrian town of 4300, where factories were closing down, followed the example of Schwanenkirchen, and the Mayor, Unterguggenberger, formed a Local Relief Committee, not to dispense charity but to create work. Professor Fisher states of this:

Herr Unterguggenberger had watched the Schwanenkirchen Wara experiment with intense interest. The solution of the Woergl situation pointed to Stamp Scrip. The town would issue it, with the consent of the workmen and of a sufficient number of the merchants and also of the local savings bank. The bank was to hold the guarantee fund (in the form as previously described of a bookkeeping transaction). There was to be no final redemption; and the stamps, at 1 per cent per month, were to be sold by the town, and the proceeds used … for the enlargement of the town’s welfare work. But though there was to be no final and complete redemption, every holder of the scrip was to have the privilege of redeeming it at the town treasury or at the local banks at any time; but for such redemption a service charge of two per cent had to be paid. As the stamp was only 1 per cent, the disadvantages of redemption at 2 per cent were, at any given moment, greater than the probable disadvantages of going on at 1 per cent. Redemption, therefore, was not likely to hurt the circulation of the scrip. Moreover the banks and the town were to re-issue any that was redeemed. And so it worked out in practice.

All city employees, including the mayor, were to receive 50 per cent of their salaries in scrip, and the new emergency workmen, were to be paid 100 per cent in that form. According to plan, on August 1, 1932, 32,000 Schillings' worth of the scrip (equivalent to about $4500) was issued, in denominations of 1, 5 and 10 Schillings. This amount was later found to be in excess of the actual need, and ...

Índice

• The Banking Swindle
• Table of Contents
• Introduction
• The Empire of Mammon
• Rothschilds: Lords of International Finance
• The Global Debt-Finance System
• Breaking the Bondage of Interest
• States that Broke the Bondage of Usury
• Playing Cards Saved Quebec
• ‘Graybacks’ & the Confederacy
• Czar Nicholas Sacrificed to the Golden Calf
• The Real Right’s Answer To Socialism & Capitalism
• Conclusion
• About the Author