Creature From Jekyll Island by G. Edward

When banks cannot honor their contracts to deliver coin in return for their receipts, they are, in fact, bankrupt. They should be allowed to go out of business and liquidate their assets to satisfy their creditors just like any other business. This, in fact, is what always had happened to banks which loaned out their deposits and created fractional money. Had this practice been allowed to continue, there is little doubt that people eventually would have understood that they simply do not want to do business with those THE SECRET SCIENCE 179

kinds of banks. Through the painful but highly effective process of tnal and error, mankind would have learned to distinguish real money from fool's gold. And the world would be a lot better because of it today.

That, of course, was not allowed to happen. The Cabal is a partnership, and each of the two groups is committed to protect each other, not out of loyalty, but out of mutual self interest. They know that, if one falls, so does the other. It is not surprising, therefore that, when there was a run on the Bank of England, Parliament intervened In May of 1696, just two years after the Bank was formed, a law was passed authorizing it to 'suspend payment in specie. By force of law, the Bank was now exempted from having to honor its contract to return the gold.

THE PATTERN OF PROTECTION WAS SET

This was a fateful event in the history of money, because the precedent has been followed ever since. In Europe and America the banks have always operated with the assumption that their Partners in government will come to their aid when they get into rouble. Politicians may speak about 'protecting the public,' but the underlining reality is that the government needs the fiat money produced by the banks. The banks, therefore-at least the big ones- mus

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It is commonly observed in modern times that criminals often are treated lightly when they rob their neighbor. But if they steal trom the government or a bank, the penalties are harsh. This is merely another manifestation of the Cabal's partnership. In the eyes of government, banks are special, and it has been that way even trom the beginning of their brotherhood. For example, Galbraith tells us:

In 1780, w h e n L o r d G e o r g e G o r d o n led his m o b through L o n d o n in protext against against the Catholic Relief Acts, the B a n k w a s a principal target It signified the Establishment.

F o r so long as the Catholic districts of London were being pillaged, the authorities were slow to react. W h e n the siege of the Bank began, things w e r e thought m o r e serious. T r o o p s intervened, a n d ever since soldiers h a v e been sent to g u a r d the Bank by night.1

198 THE CREATURE FROM JEKYLL ISLAND

BOOMS AND BUSTS NOW GUARANTEED

Once the Bank of England had been legally protected from (lie consequences of converting debt into money, the British economy was doomed to a nauseating roller-coaster ride of inflation, booms, and busts The natural and immediate result was the granting of massive loans for just about any wild scheme imaginable. Why not?

The money cost nothing to make, and the potential profits could be enormous. So the Bank of England, and the country banks which pyramided their own money supply on top of the Bank s supply, pumped a steady stream of new money into the economy. Great s t o c k companies were formed and financed by this money. One was for the purpose of draining the Red Sea to recover the gold supposedly lost by the Egyptians when pursuing the Isrealites.

?150,000,000 were siphoned into vague and fruitless ventures in South America and Mexico.

The result of this flood of new money—how many times must history repeat it?-was even more inflation. In 1810, the House of C o m m o n s created a special committee, called the Select Committee on the High Price of Gold Bullion, to explore the problem and to find a solution. The verdict handed down in the final report was a model of clarity. Prices were not going up, it said. The value of the currency was going down, and that was due to the fact that it was being created at a faster rate than the creation of goods to be purchased with it. The solution? The committee recommended that the notes of the Bank of England be made fully convertible into gold coin, thus putting a brake on the supply of money that could be created.

IN DEFENSE OF THE GOLD STANDARD

One of the most outspoken proponents of a true gold standard was a Jewish London stockbroker by the name of David Ricardo.

Ricardo argued that an ideal currency 'should be absolutely invariable in value.'1 He conceded that precious metals were not perfect in this regard because they do shift in purchasing power to a small degree. Then he said: 'They are, however, the best with which we are acquainted.'

1 D a v i d Ricardo, The Works and Correspondence of David Ricardo: Pamphlets 1825-1823, P i e r o Sraffa, ed . ( C a m b r i d g e : C a m b r i d g e U n i v e r s i t y Press, 1951), Vol . IV, p. 58.

2. Ibid., p. 62.

THE SECRET SCIENCE