21-BANK OF NORTH AMERICA

Mayer may have been busy in Frankfurt supervising the construction of Grunenburg Schloss outside the city gates, but the real action was going on in America where France was playing a major role.

After the Trenton defection of nearly 900 Hessians in 1776, and especially after the capture of Burgoyne’s army in Saratoga, in 1777, Louis XVI, impressed with Benjamin Franklin as a man and in awe of the American victories, had seized the moment and signed the Treaty of Alliance with the 13 Colonies, thus declaring war on England in the process. Thanks to Benjamin Franklin’s diplomatic skills, France had come to America’s aid.

The English High Command retaliated by attacking the French fleet which was in the Caribbean. Clinton, the new commander of the British forces, then sent Cornwallis to re-establish control over the southern colonies. Cornwallis’ army won major victories in Charlestown and Camden, but the English Navy had a bad time of it in the Caribbean. To make matters worse for the English, the American general, Nathaniel Greene, started hit and run tactics against Cornwallis, forcing the latter to chase him throughout the Carolinas. Eventually, Clinton had Cornwallis rest his demoralized army in the ice-free port of Yorktown in Chesapeake Bay. Clinton intended to resupply him as needed, and Cornwallis was to go back on the offensive after a much needed rest. But they hadn’t taken into account General Rochambeau, Commander-in-Chief of the French forces, and a great military strategist.

Rochambeau was a professional soldier trained in the art of warfare, and he singlehandedly coordinated the military operations that would lead to the Yorktown victory. He marched his very well rested and disciplined army out of Newport towards New York City, and as intended, he met up with Washington’s army at Wethersfield, Connecticut, in late May, 1781. Washington’s army was in tatters, and there was mutiny in the air, for the troops had had it with Washington’s leadership and his ‘military family’, a group of good-looking young aides-de-camp who rode fine horses and spent a lot of time feasting with the General. Needing Washington’s army, Rochambeau took it upon himself to pay the American troops what was owed them in silver, giving them food, proper uniforms and much needed military supplies. The allies then got ready to attack New York City. But when Rochambeau got word that Admiral de Grasse had defeated the English in the Caribbean, he changed his plans.

He knew Cornwallis’ army was recovering in Yorktown and realized how vulnerable it was. It was obvious that defeating Cornwallis’ army would be easier and have a greater impact than facing Clinton’s well-entrenched and well-supplied army in New York City. After convincing Washington, he sent word to Admiral de Grasse in the Caribbean and Admiral de Barras in Newport informing them of the change of plans. Luckily for everybody, the two admirals agreed to go along with Rochambeau, and they sailed to Chesapeake Bay. Admiral de Grasse got there first and easily defeated the English fleet off the Virginia coast. Meanwhile, Admiral de Barras arrived from Newport and blockaded Cornwallis’ army by positioning his fleet at the mouth of the York River. The two French fleets having joined forces easily outnumbered anything the British were able to muster. When Rochambeau and Washington arrived with their armies, they dug a siege line behind Cornwallis’ position, thus entrapping his army. The allies then tightened their stranglehold, digging a second siege line closer to Cornwallis’ army while the allied artillery pounded it from front and rear. The English redoubts were taken one by one, forcing Cornwallis to surrender, and when the English Parliamentarians got the news they had lost another army, they decided to put an end to the war. However, it wasn’t to be made official for another two years.

Meanwhile, in Frankfurt, Mayer was telling Gretel, his only confidante, how Haym had been treated by the English during their occupation of NYC, and how he had convinced a lot of Hessians to defect while he was under house arrest. He continued by telling her about the French gold and how Haym had later been named broker to the French Consul, and Treasurer of the French Army when he arrived in Philadelphia. Haym had been free to spread the pork with abandon while making sure the French army, as well as Washington’s army, the 13 militias, and the politicians, had everything they needed. But now that the politicians were about to take over, Mayer hated to tell Gretel that he had chosen Robert Morris instead of Haym as the one to deal with Congress. Because America was no more ready than Europe to accept Jews in a leadership role, it was Robert Morris, a goy, who had become the figure head of Mayer’s operations in 1781. The continental currency that Congress had issued at the start of the war and that had somewhat helped to finance the war had by now completely depreciated. Fortunately for Congress and for Mayer, the ‘Morris Notes’ backed by the French gold had replaced the worthless currency.

When Gretel asked if Mayer has stolen the French gold, Mayer gives her a long homily on the magic of gold. He starts by telling her that gold can be spent by remaining stockpiled and untouched in the vaults. He continues by saying there are two ways of looking at gold bullion. The first is where the owner uses it to further his personal ambition in order to gain influence, and the second is where it is used to establish a credit system and to build a monetary system like Mayer was doing. The gold provided by France was doing what it was supposed to do. It was helping America win the war like Louis XVI had wanted, but it would do much more than that, it would help create a government, a country and an economy. When gold bullion is used to make more credit available, it becomes the cornerstone of credit, whereas if it is used as metal currency, it accomplishes very little. Gold bullion is meant to be gathered in a pile, as huge as possible, and the pile must remain inviolate and observable. The notes and the bills are issued and spent, but the gold stays in a neat pile. The banker who possesses the gold can issue bills of exchange in which everybody has the highest confidence, and as the pile of gold grows, it acts as a starter or mother for more notes and more bills. Of course, the process of creating credit makes the gold holder richer, but beyond a certain point, getting rich is no longer the point, amassing more bullion is.

Creating credit is akin to controlling the monetary system, and controlling the monetary system isn’t about increasing the wealth of one individual, for that’s already a given in Mayer’s case, it’s about pointing the economy or the country in the desired direction and creating more credit and more wealth, and buying more gold. Elected individuals can’t possibly control a monetary system, for they are too subjective and think too short-term, and the monetary system can only founder under the weight of their greed, corruption and short-sightedness. Only objective private interests totally intent on building thriving market economies can succeed. The privately owned Bank of England was myopic and parochial in nature, but it was the only bank in the history of man that had withstood the test of time. The bank Mayer was creating was international in nature, and would one day dominate the prestigious Bank of England.

He continued by giving a brief account of what had been accomplished so far. The Bank of North America was chartered on May 26, 1781 by the Confederation Congress, at which time Alexander Hamilton had recommended Morris for the position of Superintendent of Finance. The constitution for the Bank of North America had been drafted by Alexander and was modeled after the Bank of England. Morris had then submitted his legislative proposal based on that draft, and that’s how the first private commercial bank in the United States, Mayer’s bank, was born.

When Robert Morris became superintendent of finance the continental currency had ceased to be issued. On April 30, 1781, Alexander Hamilton was advised to tell Morris that the bank’s capital would consist of 1,000 shares priced at $400 each. When Mayer offered Benjamin Franklin, who was still in France, a symbolic share in order to show the great American’s faith in the Federalists and his confidence in the new bank, he readily accepted. Thomas Willing, the original President of the bank offices in Philadelphia,  and William Bingham were given shares as well. But it was Robert Morris who held more than 90% of the shares, thanks to the French gold and the promissory notes representing the war debts of the 13 Colonies that he had in his possession.

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