38-WILDCAT BANKING

Mayer created the Bank of North America in 1781, and after sending his son, Nathan to take over the Bank of England in 1798, by 1810, the two banks were operating under one roof. The City would henceforth be the board room of world finance headed by Nathan’s bank in the City, while the Secretary of the Treasury in the District of Colombia would unofficially be its chief executive. This seems to be confirmed by the fact that, in 1810, Nathan’s bank in the City was already fixing the daily price of gold for the whole world, which it continues to do to this day.

Things were going smoothly when suddenly the US President threatened to get rid of private banking. When the 20-year charter for the 1st Bank of the United States was about to run out in 1811, hostility to private banking in the US was at a peak, and the hot-head, Andrew Jackson, convinced James Madison, the President, not to renew the bank’s charter. A year before, in 1810, Nathan had seen the problem developing and had issued an ultimatum: “either the application for the renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.” Madison and Jackson couldn’t believe that one man could have that kind of clout, and they didn’t alter course. After declaring that he would teach the impudent Americans a lesson and bring them back to colonial status if they didn’t renew the bank charter, he proceeded to do just that.

In early 1812, the English Navy started harassing the American merchant marine by impressing 10000 American sailors into her Majesty’s service. It was an intolerable situation, and President James Madison was forced to declare war on the English, a war he could ill afford, especially since the bank created by Nathan’s father, the Bank of North America-cum-1st Bank of the United States, no longer officially existed. Nathan’s plan was to force the United States to fight a war and sink them deeply into debt. Surprisingly, after the US declared war against England on June 18, 1812, it was the English that attacked.

The English moved troops into Canada. Some units went up the St. Lawrence and the great lakes right up to Fort Erie and Detroit while others went up the Richelieu River to Lake Champlain. Meanwhile, the English Navy was blockading all the ports it could along the Atlantic coast. All in all, it was a war of attrition that cost the Americans dearly. When the English burned down the White House on August 24, 1814, it was a determining moment. The Treaty of Ghent was signed on December 24, 1814, and the US Senate ratified it on February 16, 1815. All territory went back to its original owners, and nothing changed. The real results were unofficial and never linked with that treaty. The 20-year charter for the 2nd Bank of the United States was signed on April 10, 1816. There was a welcome result in that anglophone Upper Canada and francophone Lower Canada had found a degree of identity in adversity, an element that would lead to the creation of the country we know today.

When the second charter for the 2nd Bank of the United States came up for renewal in 1836, President Andrew Jackson didn’t hesitate to veto it. If, contrary to 1812, Mayer’s dynasty in the City didn’t insist on getting the charter renewed at this time, it was because of the possibility of making a silk purse out of a sow’s ear. After completing the Louisiana Purchase in 1803, the West had naturally opened up. Now, in 1836, thirty years later, the City bankers decided it was time to let America expand at breakneck speed, a period that would become known as the Wildcat Banking Years.

The modus operandi was simple. During the period of 1836 to 1863, they would let ambitious men open banks, claim land, prospect for gold, drill for oil, and do all the dirty work so to speak. The frenetic development that ensued was like a gigantic rodeo where no-nonsense men rode bulls and wild broncos. It was definitely wild, but it was OK because the rodeo was taking place in a secure corral. In other words, the dollar used by the defunct but still operating 2nd Bank of the United States and its affiliates on the east coast was tied to the English pound which was tied to gold, and all the funny money being printed in the emerging American States had no choice but to stay more or less pegged to the dollar. The shinplasters, as the state currencies were called, were meant to fail just like the Continental currency had during the War of Independence. When the time came and everybody cried for more financial stability, the dollar would again be officially re-instated throughout the country.

In 1863, Congress passed the Banking Laws Act, and the dollar became the official currency in all the States. Key industries working in the US dollar financial zone had prospered, and their tentacles reached across the entire nation. The oil industry, the railroads, the steel industry and industrial America generally, were run by men like Westinghouse, Carnegie, Morgan, Rockefeller, while the Lehmans, the Kuhns, the Loebs, etc. continued running the branches of the defunct 2nd Bank of the United States. The Federal Reserve Board would have to wait until 1913.

During the Wildcat banking years, from 1836 onwards, Lionel, Nathan’s son, who had become head of the family dynasty in the City, was satisfied to let the American West open up in a free-wheeling manner, for he had three other worldly matters that required his attention. The most pressing one was getting the Spanish-Mexicans to move South of the Rio Grande in order to establish a permanent Southern US border. The French administration along with its military had left America in 1763, that of England in 1783, and now it was the Spaniards’ turn. Once that was accomplished, the Manifest Destiny concept could then be realized, for Lionel would populate California with Americans, and he already had an idea on how to do it.

The two other matters had to do with China and France. On the one hand, it was imperative to get Japan to invade China and get rid of the Chinese warlords, and on the other, to give France political stability by exiling the federalists, who controlled Paris, to New Caledonia, and then bulldoze Paris, the center of power, and re-establish the central state concept laid down under Napoleon. In the process, transforming Paris into the City of Lights would help to have the population swallow the pill. The building of democracies in the ancient regime countries of Europe with their many languages, traditions and cultures would not happen overnight, and it was best to get started as soon as possible. The Chinese and Indian democracies would be easy enough to establish, but Europe would take a very long time. Although globalization was very much on Nathan’s mind when he created his bank in the City, in 1810, it was Lionel, his son, who would be the catalyst.

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