Here is a guest post from Orrin Woodward! He is working on a study of Andrew Jackson's "Battle against the Bank." Jackson was mentally and physically tough, kind of a forerunner to the Mental Fitness Challenge program. :) Here is a preview:
Andrew Jackson, right or wrong, was always a man of strong convictions. He stood by his libertarian principles even when it hurt him politically to do so. It takes courage to stand by one’s convictions, especially when a person is offered peace and financial rewards to surrender them. Courage isn’t the absence of fear; rather, it’s the acknowledgement that one’s principles are bigger than one’s fears, regardless of the consequences.
In today’s “situational ethics” society, principles are sold out for pragmatism, making courageous stories like Andrew Jackson’s as rare as gold-backed currency. Consequently, much could be learned by the study of Andrew Jackson’s stand against the “moneyed interest” drive to re-charter the Second National Bank. Indeed, through reading Jackson’s battles against the Bank, one yearns to find leaders with similar backbones to break the Federal Reserve monopoly on America’s money. Let’s examine this historic battle between the President Andrew Jackson of the United States of America versus President Nicholas Biddle of the Second National Bank. Several questions come to mind. First, what are the leadership lessons learned from this historic struggle between the statist and anti-statists philosophies of money? Second, how do the lessons from Jackson’s battle apply in today’s battle for monetary freedom?
Jackson resided in the thriving American West, witnessing first hand the dire effects of inflationary banking policies in the western land prices. Jackson learned the salutary lesson of hard money (gold and silver coins) vs. the prevalent paper based inflationary policies loved by bankers and wealthy merchants. Inflationary methods allowed banks to print paper, pretending the paper had value, even thought it wasn’t backed by gold or silver. Without a check on the banks, like requiring banks to submit gold for paper dollars when requested, one can easily see how banks would fall into the trap of printing more paper than could possibly be redeemed on demand. Profits for banks can increase greatly in the short term by interest collected on nothing more than paper, causing more money to flow into the marketplace which raises the prices of consumer goods as more printed dollars are available. The splurge of printed money only corrects itself when consumers become aware of the inflationary policies of banks, quickly requesting gold for their inflated paper dollars before the banks runs out their reserves. In theory, paper money should be a promissory note, representing gold, but easier to carry on one’s person. The minute the promissory note is not backed by real value (gold, silver etc), it becomes fraudulent with the bank benefitting by printing monopoly money at the expense of all consumers who now own dollars less valuable than before the fraudulent activity. For example, if we doubled the amount of dollars in circulation today, giving everyone twice as much money as they have currently, each dollar would quickly fall to half of its former value, prices would rise as each person’s dollars bid up the prices in an attempt to purchase the means for living. Printing money does not produce wealth, but it can benefit the few at the expense of the many, a temptation too lucrative to be left in the hands of government politicians and their wealthy patrons.
When Jackson was elected President of the United States, one of his missions was to end the syndicate of control over America’s money supply by three power hungry groups: foreign interests, big business, and big politicians. Jackson believed that banks ought to run like any other businesses, having to sink or swim based upon their own business acumen, needing reserves to secure their loans provided. But when a national bank receives the protection of the federal government to ensure its solvency, this is no longer free enterprise, but a form of fascism, where government and business partner, reducing competition amongst banks, and increasing the cost of the entire system. It would be similar to all automotive companies agreeing to fix prices on cars, certainly improving the profits for manufacturers, while decreasing the downside risk of the manufacturers, all of this, at the expense of the customers. The Second National Bank received the deposits of the America, ensuring its solvency, providing a special deal for the bank and its investors at the expense of other banks and all customers.
Nicholas Biddle, the president of the Second National Bank, was not alarmed initially with Jacksons rhetoric, having heard many politicians boast of drastic changes when entering office only to conform into the system when elected. But Jackson character was different, his campaign promises before election aligned with his actions afterwards, necessitating a showdown between the President and the money interest behind the Bank.