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Date:         Thu, 8 Oct 1992 20:36:00 CST
From:         "NAME 'Robert E. McElwaine'" <MCELWRE@UWEC.BITNET>
Subject:      "Remarks on Currency and Banking" (historical document review)
Comments: To: history@finhutc.bitnet

               The historical document "REMARKS ON CURRENCY AND
          BANKING" was created by Nathan Appleton in 1841.

               Nathan Appleton was an American businessman, banker, and
          politician, born in New Ipswich, New Hamshire on October
          6,1779.  After the embargo on British imports during the War
          of 1812, he contributed significantly to the development of
          the American textile industry, promoting his feeling that
          success in the industry depended on the use of power
          machinery, cheap female labor, and a separate selling
          organization.  As a politician serving in Congress, he
          drafted a protective tariff bill for President John Quincy
          Adams.

               Appleton's purpose in creating the document was to
          suggest remedies for "the present derangement [disturbance
          and disorder in the operation and function] of the
          circulating medium in the United States".  He most certainly
          intended that the reforms that he was promoting become
          permanent far into the future, for the benefit of future
          generations, but there is no obvious evidence in the document
          that he expected the document itself to be preserved as a
          "historical" document.

               The intended audience of the document were bankers,
          government officials (both elected and appointed, on both
          state and federal levels), and the general public.  The
          government could create laws and rules to bring about the
          needed corrections in the American banking system, and the
          bankers (those who were honest and interested in serving the
          public) could strongly influence the government, as well as
          change any abusive policies in their own banks.  And Appleton
          expressed his belief that the greatest obstacle to the
          restoration of a sound currency and banking system was an
          ERRONEOUS PUBLIC OPINION.

               The date of the document's writing (1841) was four years
          after the end of President Andrew Jackson's second and final
          term.  During his terms in office, President Jackson had
          vetoed a Bill that would have renewed the 2nd Bank of the
          United States for another twenty years.  There was little
          regulation of the remaining private banks, and abuses by the
          banks were becoming widespread, causing many problems for the
          whole country.

               Appleton's document was divided into four main sections
          or chapters: "Circulating Medium", "Suspension of Payment",
          "A National Bank", and "Improvements in the Banking System".

               In the first section, he defines some basic terms
          related to money.  Gold and silver are acknowledged to be the
          common measure of other commodities, called "money" when in
          the form of coins, but the intrinsic value of those two
          "specie" also makes them the common EQUIVALENT.  Bank notes,
          when payable in specie coin on demand, are PREFERABLE to the
          coin which they represent.  But this preference is based, not
          on the "faith" that the notes can be redeemed in specie on
          demand, but rather on the POWER to demand, and this power
          should be put to the test frequently at the commercial center
          of the district through which the notes circulate.

               At the time when this document was written, many
          existing banks had circulated bank note currency far in
          excess of their ability to redeem in specie.  The currency
          was greatly depreciated in value, and many banks had
          suspended specie payment.  In the second part of the
          document, Appleton expresses alarm that this evil was being
          tolerated by public opinion.  He viewed the suspension as a
          broken promise which tended to give other people and
          enterprises an example and excuse to dishonorably break other
          contracts.  The over-circulation and suspension led to
          inflation of prices, speculation, and over-trade (increased
          importation, decreased exportation, and resulting rise in
          foreign exchanges and export of specie).  Appleton's solution
          was to correct public opinion and bring about a gradual (not
          sudden nor simultaneous) return to specie payments and fully-
          backed circulation of currency.

               In the third chapter, "A National Bank", the author
          expresses his support for a national bank, but one with
          limited capital (only 10 to 15 million dollars, with one
          third belonging to the government), limited circulation (no
          more than two-thirds of capital), and limited power.  One
          purpose that it could serve would be as an agent for the
          United States Treasury.  "There can be no doubt that a bank,
          as fiscal agent of the treasury, can receive and distribute
          the moneys of the government, with more safety and ease than
          any other instrument or agency which can be devised."  The
          national bank might also help to regulate the currency.
          Appleton advised, however, that the establishment of such a
          national bank be postponed until specie payments have been
          resumed in most Atlantic cities.

               In the final section, "Improvements in the Banking
          System", the author recommends that circulation of bank notes
          be authorized only for banks with a solid paid-up capital of
          at least half a million dollars, which must greatly exceed
          its issues of notes.  He further advises that a three percent
          annual tax be levied on circulation, but not on bank capital,
          and that balances between banks be settled frequently (weekly
          if not daily).

               Except for a reference to the Bank of England, and
          British money problems, Appleton made no mention of the
          European Banking System, controlled by the Rothschild
          Dynasty, and their tactics of MONEY MANIPULATION to CREATE
          WARS, economic depressions, and other problems between and
          within the countries of the world.  Like most people even
          today, including learned experts and authorities, he was
          either unaware of these manipulations, or was afraid to
          discuss them publicly.  (People who know too much, and cannot
          keep their mouths shut, often do not live long.)

               Also, the writer expressed no consideration of the full
          application of DEMOCRACY to economics.  This would include
          the periodic ELECTION of all banking and financial officials
          (ideally with a 4th branch of government: Banking and
          Finance), the establishment of CREDIT UNIONS in place of
          banks (including any national bank), and the creation of
          COOPERATIVES in place of corporations simply by allowing only
          one vote per share HOLDER rather than per share of stock.  A
          true democracy cannot exist unless the principles of
          democracy are fully applied to economics where they count the
          most.

               Appleton feared having a national bank that was too
          large and powerful: "In fact, the great and decided objection
          to a bank of great power, to act as general regulator of the
          currency, is the apprehension that it may itself suspend
          specie payments, under the sanction of the general
          government, and thus fix upon the country an inconvertible
          paper currency."  Unfortunately, this feared event has taken
          place.  The PRIVATELY OWNED "Federal" Reserve System, under
          control of a central national bank (the Federal Reserve bank
          in New York; the other eleven Fed banks are only an impotent
          formality), has issued worthless SCRIP as our currency,
          neither redeemable in gold or silver, nor even backed by
          these precious metals.  And as during the time of Nathan
          Appleton, this ORGANI$ED CRIME is tolerated by public
          opinion!


               UN-altered REPRODUCTION and DISSEMINATION of this
          IMPORTANT Information is ENCOURAGED.


                                   Robert E. McElwaine
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU