American Independence and the French Aid package to America was what was foremost on Mayer’s mind, for that was the way he would become sole banker for the American Congress, just like the shareholders of the East India Company had become sole creditors to the English Parliament in 1694. 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 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 planned, he met up with Washington’s army at Wethersfield, Connecticut, in late May. When Rochambeau saw Washington’s army in tatters, he also realized there was mutiny in the air. The troops had had it with Washington’s leadership and his ‘military family’, a group of young aides-de-camp who rode well-bred horses with fine saddlery and spent a lot of time feasting with the General. So, Rochambeau proceeded to pay the American troops what was owed them, gave 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 had a change of plan.
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 his change of plans. Luckily for everybody, the two admirals agreed to go along with Rochambeau, and both headed for Chesapeake Bay. Admiral de Grasse got there first and easily defeated the English fleet off the Virginia coast, while Admiral de Barras arrived from Newport and blockaded Cornwallis’ army by positioning his fleet at the mouth of the York River. Having joined forces, the two French fleets easily outnumbered anything the British were able to muster. When Rochambeau and Washington arrived at Yorktown, they had the troops dig 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. As the naval and land artillery kept pounding away from front and rear, Cornwallis realized he didn’t have a chance. The English redoubts were taken one by one, forcing Cornwallis to surrender. When the English Parliamentarians learned they had lost another army, they decided to put an end to the war, but it wasn’t to be made official for another two years.
Meanwhile, in Frankfurt, Mayer was telling Gutle, his only confidante, how Haym had convinced a lot of Hessians to defect while he was under house arrest, 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 then made 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 Gutle that he had chosen Robert Morris instead of Haym as the one to deal with Congress. Because America was no readier than Europe to accept Jews in a leadership role, it was Robert Morris, a goy, who would look after Mayer’s finances 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 Gutle 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 it was officially all spent but that it remained stockpiled in his 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 the economic structure, whereas it accomplishes nothing if used as currency. Gold bullion is meant to be gathered in a pile, as huge as possible, and the pile is meant to 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. Confidence in the bills issued is what makes it all possible. 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 and shoring up the monetary system is.
Creating credit is akin to controlling the monetary system, and controlling the monetary system isn’t about increasing the wealth of one individual. In Mayer’s case that’s already a given. It’s more 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 is sure to founder under the weight of their greed, corruption and short-sightedness. Only objective private interests totally intent on building thriving market economies can succeed. However, because the privately-owned Bank of England was myopic and parochial in nature, contrary to Mayer’s bank that was international in nature, his bank would one day take over the prestigious Bank of England.
He continued by giving a brief account of what had been accomplished so far. The Bank of North America had been created 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 Mayer’s bank became the first private commercial bank in the USA.
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 gratefully accepted. Thomas Willing, the original President of the bank of Philadelphia, and William Bingham, were both given shares as well. But Robert Morris was the one chosen to front Mayer’s bank, and he held more than 90% of the shares, thanks to the French gold in his possession.